MUMBAI, July 26: The Securities and Exchange Board of India (Sebi) has cancelled the merchant banking licence of ITC Classic Finance. This follows the erosion of networth of the outfit below Rs 5 crore, which is the minimum required for registration as a category I merchant banker.

The regulatory body has written to the company, intimating it of the decision. The company has booked losses to the tune of Rs 285 crore for the year 1996-97 resulting in its networth being nearly wiped out.

In fact, sources say that the merchant banking division of the firm has been shut for the past six months with no activities both in Calcutta and Mumbai. Market observers therefore find it surprising that ITC Classic had applied for a renewal of the registration at all.

There was reportedly a lot of flight of personnel from the firm. Adding to the woes of the company was the fact that there was not much to share in the merchant banking cake as the primary market was still pretty much in the doldrums for most of the year.

Sebi had earlier issued a showcause notice to ITC Classic Finance, asking them why they should renew the licence.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.