The facility is available in Mumbai, Delhi, Calcutta, Chennai, Bangalore and Pune and enables inter-city payments The bank said the facility is available to cardholders with a good credit history.

Citigroup to merge two units
New York: Citigroup said it is combining its private banking business and asset management arm into a new group.

The new SSB Citi Asset Management, which has an asset base of $347 billion, will combine with Citibank private bank and Citibank retirement plan services, the company's chief executives John Reed and Sandy Weill told senior executives of the company.

The action will enable the group to combine profits when the company reports earnings, they added. The new group will be run by the head of its funds management operation.

Citibank private banking, run by Shaukat Aziz and emerging markets pensions funds, headed by Ricardo Zabala, fell under Citigroup's global corporate and investment bank division, but they will join the new group.

RBI collects another Rs 2,000 crore from market
Mumbai: The Reserve Bank of India has sold five- and 14-year paper worth Rs 2,000 crore in the open market on 6 August in addition to mopping up Rs 3,000 crore through the sale of 10-year paper on 5 August. This is seen as a move by the central bank to control the money market and excess speculative activity in the forex market.

Market analysts said the extraordinary action of the Reserve Bank has brought the volatility in securities prices under control.

Open up repo market,  suggests sub-group
Mumbai: The repurchase agreements market should be opened up for corporate dealings, a sub-group set up by the Reserve Bank of India to suggest liberalisation in this sector, has recommended. The sub-group has also called for urgent amendment in legislation to expand this market.

The report said all entities, including companies, may be allowed to undertake repos and reverse repos in gilts, corporate debentures and bonds of financial institutions.

Rupee slides again
Mumbai: The rupee lost seven paise to the dollar, ending at 43.47/4750, its lowest close since 20 August 1998. The rupee had lost 15 paise in one week.

The central bank had around this time last year staged a rescue act to save the falling rupee, but this time money market analysts say it appears to be not intervening since the depreciation has been steady.

The current fall in the value of rupee against the dollar is a result of demand for dollars from public and private sector enterprises, especially a number of small firms in textiles, cables, plastics and diamond industries.

SBI plans to involve associate banks in card venture
Mumbai: SBI Cards and Payments and Systems, the credit card venture of the State Bank of India with GE Capital, is planning to join hands with all State Bank associate banks to launch co-branded cards.

The tie-up will enable the company to take the card business to centres where the associate banks are located. The bank expects to launch its new cards by December 1999.

Canfin Homes to enter consumer finance
Bangalore: Canfin Homes will enter the consumer finance business. It expects to do this by the last quarter of 1999-2000.

The company will table a special resolution to alter its memorandum of association for this purpose at its annual general meeting on 25 August.

Canfin Homes proposes to extend finance for consumer products, consumer durable, equipment and machinery, vehicles, home appliances, furniture and fixtures, air-conditioners and the like.

Deutsche Bank introduces automated payment system
Mumbai: Deutsche Bank has launched its financial system integration interface that will eliminate the manual process of sending payment instructions between a client and the bank.

The system called db-direct eliminates the step of manual re-keying of payments and also automates the transfer of payment instructions from the ERP application of the client to the bank's electronic banking system. Through db-direct, corporate clients of the bank will have direct access to the bank's accounts around the world.
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IDBI to resume lending to NBFCs
Mumbai: The Industrial Development Bank of India is planing to resume medium and long-term lending to non-banking finance companies. This is part of the development bank's plan for expansion and portfolio diversification.

The IDBI has also approved short-term loans worth Rs 1,500 crore to companies out of the current year's target of Rs 4,000 crore. The loans to NBFCs to be sanctioned by end-August will have no restriction on the end use, which means the NBFCs can use them for both retail finance and for capital expenditure purposes.

IDBI, ICICI record low net asset growth
Mumbai: The net asset growth of the Industrial Development Bank of India and ICICI have not been showing an encouraging trend. The Economic Times, in a report, said, quoting sources, that although the two development institutions have been able to disburse Rs 6,161 crore in the first quarter of 1999-2000, their net asset growth reached only Rs 252 crore.

The report attributed the low growth of net assets to prepayment of loans by companies, while the new focus on short-term lending has pushed up disbursement levels

Rupee at lowest against dollar
Mumbai: The Indian rupee reached its lowest level in the financial year 1999-2000, touching 43.4050/41 against the dollar on 5 August.

The rupee has been losing ground since the last week of July although it had been steady after the Kargil conflict. But, dealers said, dollar demand from the corporate sector has caused the downtrend.

SBI preparing for virtual banking: Vaidya
Mumbai: C.G. Vaidya, chairman of the State Bank of India, feels that the biggest challenge of the banking industry in the next millennium will be technology. Manual banking is losing its relevance and virtual banking is taking over, Mr Vaidya told the annual general meeting of the bank at Bhopal on 5 August.

Mr Vaidya said the State Bank of India is aware of this scenario, and is taking steps to expand its network of ATMs and wide area networking of branches so that the bank's clients will be able to access their accounts from anywhere in the world. The bank is also preparing itself for ushering in internet banking, he added.

Indian Bank to roll over MF arm's scheme
Chennai: Indian Bank has approved a roll-over plan for one of the closed-end schemes -- Ind Navratna -- of Indian Bank Mutual Fund for a period of five years. The bank, itself in a financially precarious condition, has provided for Rs 46 crore in the balance sheet for 1998-99 for another mutual fund scheme, IndJyoti.

Ind Navratna has been performing poorly. Its compounded annual growth rate was minus 1.18 per cent in the third year of the fund, and worsened to minus 11.99 per cent in the fifth year.

The bank is understood to have appointed credit rating agency ICRA to draw up a strategic revival plan for all its subsidiaries.

Public issue from SBI Caps
Mumbai: The State Bank of India will reduce its stake in its merchant banking subsidiary SBI Capital Markets to 40 per cent from the present level of 86 per cent through a public issue of shares.

SBI favours greater functional autonomy for SBI Caps, and is negotiating with the Asian Development Bank a plan to rework its earlier agreement according to which SBI Caps would have gone public at a price not less than Rs 89 per share. The ADB had acquired a 13.84 per cent stake in SBI Caps at this rate. The bank will persuade ADB to reduce the offer price, bank officials said.

20 million income tax payers by 2001
New Delhi: India will have 20 million income tax payers by 2001, according to the chairman of the Central Board of Direct Taxes, Ravi Kant. "By 2001, we would certainly have crossed 20 million, which would mean double of what we were a few years back," he said.

Apart from traditional sources like salaries and corporate income, the tax department is targeting new areas where income is being earned and spent, he said.

10-year paper auction over-subscribed
Mumbai: The Rs 3,000-crore auction of 10-year government paper on 5 August was over-subscribed by 141 per cent, enabling the Reserve Bank of India to fix a cut-off price of Rs 102.90. This will mean a yield of 11.48 per cent.

The RBI received 236 bids totalling Rs 7,253.05 crore, of which it accepted 79 bids for the notified amount of Rs 3,000 crore.

Analysts in the gilt market said nationalised banks are going in for risk-free government securities as nationalised banks led the bidding in this auction with higher price quotes.

With this auction, the government will have raised Rs 51,630 crore, which works out to 61.77 per cent of the Centre's gross market borrowing programme of 1999-2000.
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Bank of India, IDFC in deal
Mumbai: Bank of India and Infrastructure Development Finance Company (IDFC) have entered into a take-out financing arrangement, under which IDFC will take over an infrastructure loan from Bank of India after a fixed period of three to five years provided the project meets all its requirements. The arrangement is worth Rs 300 crore.

IDFC managing director D.J. Balaji Rao said that apart from arranging finance for infrastructure, IDFC is also working with various ministries and the government for formulation of policies and development of legal and regulatory framework for the growth of infrastructure.

IDBI to give short-term loans
Mumbai: The Industrial Development Bank of India is planning short-term rupee and foreign exchange loans to companies at market-related interest rates.

In sanctioning these loans, IDBI will make use of its short-term cash surpluses to generate income. The loans will be for periods ranging from six months to 18 months.

IDBI had recently spelt out that  it would reorient its portfolio and short-term and working capital lending will be a priority item. It is planning to extend  loans in the range of  Rs 20 to Rs 100 crore and will offer dollar and yen funds under this option.

Athreya to guide IDBI's strategy
Mumbai: Noted consultant Mrutyunjaya Athreya has been engaged by Industrial Development Bank of India (IDBI) to guide it in its "mission, vision and strategy" program called Vision 2005.   This is to help IDBI in its bid to become an international and universal bank.

IDBI will have a meeting of its senior functionaries on 7 August, when Mr. Athreya is expected to hold discussions  with the key functionaries of the bank. IDBI has already constituted five working groups which would also be making presentations at the meeting.

Bank of Baroda to get into insurance
Baroda: Bank of Baroda is planning diversification into the insurance sector with focus on the rural population.

The bank will enter the health and general insurance business, where it will target rural areas, which are relatively less exposed to the benefits offered by insurance companies, K. Kannan, chairman and managing director of the bank, said.

The bank in which the government has a 66 per cent equity, is planning to tie up with Life Insurance Corporation and General Insurance Corporation for the venture, Mr. Kannan said.
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SBI to have an ADR issue
Mumbai: State Bank of India has decided to adopt the generally accepted accounting principles of the US for its accounts with a view to finally launch an American Depository Receipts issue some time next year. The bank has already raised $370 million through a global depository receipt issue in October 1996 and the proposed ADR , the bank expects, will enable it to maintain its capital adequacy ratio at 12 per cent at all times.

The Economic Times, in a report said, that the bank is planning market shows and road shows in the US in November, in preparation for the ADR.

Reliance Capital told to provide FDI details
New Delhi: The government has sought details of investments planned by foreign investors in the two mutual funds proposed by Reliance Capital Asset Management. The two funds, Reliance Assured Income Fund and the Reliance Growth Fund, will not be allowed to have foreign investment until this information is provided.

Industry ministry sources said the application from Reliance Capital Asset Management for grant of approval for foreign equity in the two funds does not contain this critical information.

Moody's may retain same rating for India
New Delhi: Moody's Investor Services in all probability will maintain India's sovereign rating at Ba2 at the next review later this year. This has been indicated by Moody's president John Rutherford.

Mr Rutherford said the concerns that governed the last rating on India, by and large continued to remain. "At the moment, the outlook is to assign the same rating," he said.

RBI sells $156.7 million in June
Mumbai: The Reserve Bank of India has sold a net amount of $156.75 million in June 1999 in the course of its market operation in foreign exchange market.

A RBI bulletin said the central bank had bought $2.348 billion and sold $2.504 billion during the month. The net outstanding forward sales at June 1999 end is $972 million, the RBI said, which is up from May $732 million.
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Rs 1,000 cr recap plan for Indian Bank
Mumbai: The government is formulating a Rs 1,000-crore recapitalisation plan for the ailing Indian Bank. The plan involves infusion of capital, and bringing the bank under a committee of top banking experts. The present management of the bank is likely to change, government sources say.

However, the plan will have to wait till the elections are over and a new government is in place.

The bank had reported a phenomenal net loss of Rs 788.50 crore for 1998-99 and its accumulated losses have touched Rs 3,180 crore, wiping out its entire net worth of Rs 2,899 crore as on March 1999.

Crisil foresees key role for international banks in India
Mumbai: Credit rating agency Crisil has said in a report that international banks and financial companies are entering into the retail business area in India in a big way.

These banks and financial companies are expected to perform a key role in the medium to long term as they have competitive funding costs, support of international parents and sophisticated mechanisms to control and monitor risks, says Crisil. These organisations are coming through joint ventures with domestic partners or through subsidiaries and the non-banking finance companies sector in the country is bound consolidate in the next two years.

MFs will overtake banks: Moody's
Mumbai: Moody's Investor Service has forecast that mutual funds in India will give banks a run for deposits as the insurance and mutual fund business grows in the country.

Deposits of scheduled commercial banks have grown at an accelerated pace of 16.5 per cent in financial year 1996-97, revving up 19.7 per cent in 1997-98 before slowing down marginally to 18.5 per cent in 1998-99, Moody's said.

However, in the period of April-July 1999, the rate of growth in bank deposits has dropped to a marginal 3.2 per cent, even while gross collections by mutual funds registered a spectacular year-on-year growth. Gross mobilisation of funds by mutual funds in India during April-June 1999 has grown by 115 per cent as compared to the corresponding period in the previous year, Moody's said.

RBI directive to chit funds, NBFCs
Mumbai: The Reserve Bank of India has directed all nidi companies, chit funds and non-banking financial companies holding public deposits to submit annual statutory returns on deposits before 30 September.

The central bank has also said that residuary non-banking finance companies should furnish their returns irrespective of whether they have been granted certificate of registration or whether their applications are pending with the RBI or has been rejected.

SBI hikes CP limit by Rs 500 crore
Mumbai: State Bank of India has increased its commercial paper investment limit by Rs 500 crore from Rs 2,000 crore.

The bank has adopted this strategy as companies have been found to be not willing to avail of cash credit and insist that short-term funds be extended to them at sub-prime lending rates.

G.G. Vaidya, chairman of the bank, confirmed that the bank has approved the increase in outstanding commercial paper exposure.
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RBI panel on legal infrastructure
Mumbai: The Reserve Bank of India (RBI) is setting up a standing committee on legal infrastructure for the entire financial sector, including banking, capital market and debt market segments.

RBI sources said the proposed committee will have representatives from academics, the market, industry and the RBI.

The scope of the committee will be broader than the erstwhile Andhyarjuna committee, which was appointed to specifically look into the legal issues relating to the implementation of the Narasimham Committee -II's recommendations. The new committee is expected to study and recommend amendments to the entire set of financial sector laws.

RBI inspecting IFCI books
New Delhi: The Reserve Bank of India is inspecting the accounts of Industrial Finance Corporation of India (IFCI) for 1998-99. The scrutiny comes following IFCI's heavy provisioning against accumulated bad debts, which resulted in a drop in net profit to Rs 23.5 crore in 1998-99 from Rs 370 crore in 1997-98.

Moody's ranks India 59^th in banking sector
Mumbai: Moody's Investor Service has ranked India 59^th among a list of 74 countries on its annual assessment of average bank financial strength ratings.

Indian banks' average financial strength rating stands at E+ (very weak with relatively higher standing within the category) above China at very weak and Korea, Pakistan and Thailand even weaker. The lowest ranked country is Russia, whose banking system is rated at zero.

Japan and Mauritius are ranked AAA, Brazil and the Philippines at D+, while Germany, US, Singapore and the US are rated good with relatively higher standing within the category.

The highest rated country is the Netherlands, followed by Liechtenstein and Switzerland.
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