This morning I came accross an article on twitter under #Discover an article on www.livemint.com
" Policymakers must tighten rules on expense accounting "
M/s Macquarie Research India (Pvt) Ltd a subsidiary of Macquarie Group Ltd ( An Australian firm)
HERE IS NORMS OF JOURNALISTIC CONDUCT of PRESS COUNCIL under subhead " Financial Journalism 1996 " ) at any given point of time before making their conclusions, that HDFC had wrongly debited ecpenses of interest on zero coupon bonds into " share premium account instead of " profit and loss account" , which is in my view, is baseless , unfair, unjustified and unethical.conclusion.
I have on public domain proved by quoting Sec 78 (2) (d) of The Companies Act 1956 that the 1st previous allegation by Macquarie is Baseless and Inaccurate.
If these statements are pointing towards flaws/ lacunae / loophole in the system, I can take that view is ethical. But frivolous statements by securities research firms, especially on financial institutions can lead to Grave and Serious consequences, normally affecting the existence of the State as well as downgrade of its soveregin debt
PLEASE UNDERSTAND THE GRAVITY OF THE SITUATION:
As far as Use of Section 78 it is legal and Macquarie Capital Securities India (Pvt.) Ltd's charge is baseless, inflammatory and creating negative sentiments about the BEST MANAGED HOUSING FINANCE FIRM IN INDIA.
Now Macquarie Capital has come up with this new allegation !!!
"Similarly, when the National Housing Bank increased provisioning norms for certain loans, HDFC adjusted it against additional reserves. Prudence demands that any expense incurred by a company must get reflected in the profit and loss account. Even if the expense is capitalized, it must get reflected by means of depreciation, amortization or write-offs. "
A ) I presume , the accounts of HDFC are subject to
i) Internal Audit 9 which may ignore)
ii)Statutory Quarterly Audit of its Financials
iii)RBI Annual Audit
All auditors are well versed with Accounting Norms as per Generally accepted Accounting Principles (GAAP) (GAAP)
I STRONGLY OBJECT TO OPEN LEAKS OF NEWS ON ANY INDIAN FINANCIAL/BANKING INSTITUTION BY a predominantly foreign (australian) firm which itself has disclosed a loss of $US201 Million in Fy ending 31st March 2012
This may end up in a run on the bank, or a major economic crisis , or also trigger a bear cartel on the stock exchanges.
It is my earnest request to Macquarie and livemint to desist from discussing such issues on big financial institutions on public domain, without inquiring into the legal position fully.
PS : I am a conservative banker, but in no way cnnected to HDFC, in my 20 years of relationship as a customer I have come across best practises applied by the firm, when I happenned to be its customer( I am no longer even a customer)
Inspite of being a banker, my first home loan was from HDFC and not my employers, such are their services .
Hope someone in SEBI / BSE / RBI read it
There has to be some control on utterances by media.
Freedom of speec comes with a responsibility
My comment is a comment, a suggestion, please view it postively, in the interest of Nation