The 1998 low was owing to factors such as the Russian crisis, the Pokhran effect and a general currency crisis in the South Asian region. The fall of the rupee now is owing to genuine dollar demand from companies. Some sections of the dealing community also attribute the fall to the negative stand taken by G-8 nations towards India's draft nuclear doctrine.

The Reserve Bank of India, intervened in the markets in 1998, while this time around, the central bank is staying away.

SBI may start exchanging examined gold
Mumbai: Four bankers – Credit Suisse First Boston, UBS, Bank of Nova Scotia and NM Rothschild – and the State Bank of India will enter an agreement to exchange assayed gold. This is part of the gold deposit scheme of the SBI, where the bank collects assayed gold. The bank will enter into an exchange for its assayed gold with standardised and tradable gold bars.

The State Bank of India already has a joint venture for gold assaying with CS First Boston and three other Indian banks.

Govt. allows registration of private insurance firms
New Delhi: The government has allowed the registration of private insurance firms under the Companies Act, thereby bringing the sector closer to deregulation.

The Registrar of Companies will be allowed to register such firms with names containing words such as 'insurance' or 'risk corporation', after consulting the Reserve Bank of India and the Insurance Regulatory Authority.

IndusInd's forex mechanism to be speeded up by PwC.
Mumbai: PriceWaterhouseCoopers, global management consultancy firm, has been appointed by IndusInd Bank to make its foreign exchange trading system work faster.

PwC will offer advice on the bank's treasury operations and any upgradation of software required. IndusInd envisages becoming the best foreign exchange service provider in India.

Feedback Ventures plans urban infrastructure fund
New Delhi: Feedback Infrastructure, wholly-owned subsidiary of Feedback Ventures, will launch an infrastructure fund. The corpus will be Rs.100 crore and it will be a closed-ended fund.

Feedback will participate in the equities of mid-sized urban infrastructure projects. Mid-sized projects are those between Rs.75 crore and Rs.250 crore in investment.

Vijaya Bank, Hudco in take-out financing agreement
Mumbai: Vijaya Bank and Housing and Urban Development Corporation have signed a Rs.200-crore take-out financing deal for funding infrastructure projects. Both institutions would joint appraise projects. Vijaya Bank will then fund the projects for an amount not exceeding Rs.200 crore, with a tenure of 15 years. The loan will later on be taken up by Hudco after five years.

US banks aim at Europe
New York: US banks JP Morgan, Chase Manhattan, and Citigroup are targeting the European market where banking activity is booming. They are hiring staff and are concentrating on boosting profits from this region.

The reason for the boom: Europe is currently seeing a wave of privatisation, and mergers and acquisitions.

Japanese banking giant is open to alliances
Tokyo: The giant banking company that will be formed with the merger of Industrial Bank of Japan, Dai-Ichi Kangyo Bank and Fuji Bank is open to the idea of tie-ups with foreign firms.

The banks will probably form a holding company which will manage the operations since an outright merger would be very difficult, given the size, according to Masao Nishimura, president, Industrial Bank of Japan.

Banks changing rate structure
Mumbai: The State Bank of India plans to come out with a new rate structure for long term deposits of tenures of five to ten years. This, the bank feels, will create a solution for any asset-liability mismatch that may occur in future.

This move is significant since banks have so far been looking at fixing rate structures for deposits of over five years on a case by case basis.

The interest rates are expected to be in the region of 11.5 per cent for 10-year deposits, which is similar to the yields on government paper.

Bank of India revised its interest rates on FCNR (B) US dollar deposits, applicable from 21 August 1999. The bank will pay 4.75 per cent interest on foreign currency non-resident-B accounts for deposits with maturities between six months and one year. For deposits between one and two years, the rates will be 5 per cent, and those between two and three years 5.25 per cent. Three-year deposits will yield 5.50 per cent interest.

ICICI board decides on equity issue
Mumbai: ICICI Ltd. will make three equity issues aggregating Rs.2,165 crore ($ 500 million) to help its institutional shareholders retain their percentage holdings in the company while it goes for overseas funds.

• a Rs.500-crore ($115 million) issue to Unit Trust of India, Life Insurance Corporation of India, and General Insurance Corporation at Rs.73 per share

• the second, a Rs.275-crore ($70 million) issue at Rs.73 per share with a 10 per cent greenshoe option, and

• an overseas issue for $315 million.

This was decided at the ICICI board meeting that took place on Thursday.

Govt. allows banks to do forward deals in gold
New Delhi: The government has allowed banks to enter into forward trading in gold, so as to complement the gold deposit scheme that was announced in the 1999-2000 budget.

This was stated in a government. The Reserve Bank of India and the authorised banks will be allowed to trade freely in gold within the country. So far, gold was not included in the list of commodities permitted to be hedged.

RBI: Banks should file global asset details
Mumbai: The working group on international statistics set by the Reserve Bank of India has asked banks to file details of their global assets and liabilities. This, the bank feels would ensure effective monitoring of the banking systems, and also provide banking statistics to the outside world.

The data will be required to be submitted on a quarterly basis and will be in the five major currencies of the world, viz., the US dollar, the yen, the deutsche mark,  the pound sterling, and the euro.

IDBI-assisted companies fare well: study
Mumbai: A study reported in The Economic Times has state that the companies that the Industrial Development Bank of India has lent to, have performed well in the first quarter of the current fiscal. Sales rose 11 per cent, while profits have risen 13 per cent during the period. The study covers a sample of 333 companies and does not include finance companies.

Rabo Bank selects Lucknow
Lucknow: Rabo Bank, the Netherlands-based agri finance institution, has selected Lucknow as its base in India. It is the world's largest agri-finance institution, with global lending to the tune of $154.2 billion and income of $6 billion.

IDBI selling out AMC to US company
Mumbai: Principal Group of the US will be offered a majority stake in the IDBI Investment Management Company, a wholly-owned subsidiary of the Industrial Development Bank of India. Principal Group has already made an offer at a premium, for the majority stake.

The Indian financial institution is considering issuing fresh shares or divesting its holding in the company.

IDBI is also seeking government sanction to hike salaries for its employees. It has asked the government to delink its pay scales from those of the Reserve Bank of India.

CAR – reason enough to come out with a public issue
Mumbai: Vijaya Bank is planning a Rs.100 crore equity issue, after the Union budget for the year 2000-2001. The aim is to help the bank maintain its capital adequacy ratio. Before the end of 1999, the bank is planning a Rs.60-crore tier-II bond issue.

Vijaya Bank has net owned funds of Rs.407 core, more than the Rs.100 crore needed for claiming autonomy.

Canara Bank subsidiary Canfin Homes will also expand its equity base by 30 to 40 per cent over the next year, in order to maintain a capital adequacy ratio of 12 per cent. The subsidiary may come out with a rights or preferential issue, or offer a stake to a UK-based mortgage firm.

IDBI Flexibonds garner Rs.1700 crore
Mumbai: The Industrial Development bank of India's Flexibond VII issue has netted Rs.1,700 crore. The issue closed on Thursday, 19 August 1999. The issue had a target of Rs.1,500 crore, including a greenshoe option of Rs.750 crore.

World's largest bank being formed
Tokyo: The merger of the Industrial Bank of Japan, Fuji Bank and Dai-Ichi Kangyo Bank could create a bank with assets of US$1.3 trillion. This is more than the world's largest bank at present, Deutsche Bank AG.

The banks are yet to come to a final agreement on the issue.

IFCI fixes Rs 200 crore ceiling for loans
Mumbai: The Industrial Finance Corporation of India has now decided not to lend more than Rs 200 crore to any one company. IFCI has also decided to reduce its maximum exposure limits to 30 per cent of net worth for business groups and 15 per cent for companies by March 2001.

IFCI chairman P.V. Narasimham said it has approached the Reserve Bank of India for a one-time exemption for over-stepping its exposure limits while granting loans to the Essar and Ispat groups.

IFCI's credit rating has been lowered recently.

Interest cap in FIs' fixed deposits may be relaxed
Mumbai: The Reserve Bank of India is likely to relax the cap on interest rates offered by development financial institutions under their fixed deposit schemes. At present, financial institutions cannot offer more than the State Bank of India's term deposit rates.

The institutions are likely to be allowed to offer 150 basis points over the rates offered by SBI. The institutions are pressing for a cap of 200 basis points over SBI rates.

ADB loan for Mumbai Port Trust projects
Mumbai: The Asian Development Bank has agreed to lend around Rs 420 crore over four years for part-financing some of the projects of the Mumbai Port Trust.

The major projects are replacement of submarine pipeline at a cost of Rs 270 crore, modernisation of marine oil terminal berths and replacement of common users pipeline from Pir Pau to the marketing storage at Sewree in south Mumbai.

The port trust has earmarked Rs 291 crore for its expansion project in the year 1999-2000.

ICICI announces home loans
New Delhi: ICICI is now in the housing finance sector. It has formally launched ICICI home loans with competitive interest rates under two slabs. Under the first category, for a loan between Rs 1 lakh and Rs 5 lakh, the rate will be 13.5 per cent, while under the second category for loans above Rs 5 lakh the interest rate will be 14.5 per cent.

The quantum of loan also varies from Rs 1 lakh to Rs 1 crore, depending on the repayment capacity of the individual. The loans will be for a maximum period of 15 years.

IDBI Mutual plans ATM facility
Mumbai: IDBI Mutual Fund plans to introduce ATMs for a new liquid fund it proposes to launch in the near future.

The fund, modelled on the lines of its existing money market mutual funds, will not have a 15-day lock-in period, which the money market mutual fund is subject to.

IDBI Mutual Fund is in talks with ABN Amro Bank to offer this facility. The facility will be similar to the one provided by the fund to investors in its IDBI I-nit 95, which allowed investors to encash their units at any of the 10 pre-designated centres of empanelled banks.

RBI to appoint consultants for settlement system
Mumbai: The Reserve Bank of India will appoint a consultant to implement the 'real time gross settlement' programme announced by governor Bimal Jalan in his monetary policy.

Four companies are in the fray -- Pricewaterhouse Coopers, Tata Consultancy Services, HCL and IBM.

The RTGS system, which is expected to be completed in 15 to 18 months at a cost of Rs 300 to Rs 400 crore, will put in place a system with V-SAT-based communications infrastructure for handling large inter-bank fund transfers.

Standard Chartered to stay with Bank Bali
Jakarta: Standard Chartered will not pull out of its investment in PT Bank Bali Tbk, in spite of a scandal in the bank that has hit investor confidence in Indonesia.

Standard Chartered Bank announced that nothing that has occurred in recent days has in any way detracted from the bank's commitment to invest in and develop the new Bank Bali.

The row is over a payment of $71 million by Bank Bali to a company controlled by a senior official of the ruling Golkar party to help recover a loan owed by the government banking overseer, the Indonesian Bank Restructuring agency.

RBI must set inflation band, feels Reddy
Mumbai: Deputy governor of the Reserve Bank of India Y V Reddy says the central bank should be given the task of managing inflation within a certain band. This, he feels, would result in a reduction in inflationary expectations.

Committees set up by the RBI on various subjects have come out with close conclusions on the range that inflation should be managed within. The range would be 3-6 per cent. Mr Reddy feels that the mandate of managing inflation should be given to the RBI, formally.

RBI rejects three NBFC applications
Mumbai: The Reserve Bank of India has rejected the registration applications of Nagma Mutual Benefit (I) Ltd, Grover Leasing and City Investment and Finance Ltd. This bars them from carrying out operations as non-banking financial service companies.

IDBI goes global
Mumbai: The Industrial Development Bank of India is looking at opening branches in Europe and other countries in Asia. It is also prepared to tie up with foreign banks in its venture overseas. The IDBI is not only looking at doing business for Indian companies abroad, but also for foreign ones.

IDBI has garnered closed to Rs.1,000 crore through its Flexibond VII issue. The issue opened on 27 July 1999 and is expected to close on 19 August 1999.

Lovelock to help Standard Chartered in processing
Calcutta: Standard Chartered Bank has engaged Lovelock and Lewes to do the processing work in its credit cards division. This will enable the bank to concentrate on its core areas such as selection of card holders. The bank has decided to outsource a substantial part of its non-core areas of operations.

The bank's employees' union has strongly protested against appointment of outside consultants, since the bank has identified a large number of employees as surplus.

Standard Chartered is keen on reducing around 200 surplus employees in the banking services division through its voluntary retirement scheme.

Bank Brussels wants larger stake in Vysya
New Delhi: Bank Brussels Lambert, which currently holds a 19.7 per cent stake in Vysya Bank, wants to increase the stake by ten percentage points. The Belgium-based Bank Brussels recently became a subsidiary of ING Bank recently after the Dutch bank acquired it globally.

Vysya Bank is one of India's top private sector banks. Foreign banks with Indian presence are not allowed to pick up a stake in a local bank.

The Foreign Investments Promotion Board, has deferred its decision, following a government request.

Ficci seeks delinking IDBI and Sidbi
New Delhi: The Federation of Indian Chambers of Commerce and Industry (FICCI) has sought the delinking of IDBI and Sidbi, and bring the latter under the purview of the Reserve Bank of India. This, it feels, would give greater autonomy to Sidbi.

FICCI quoted a recent survey which showed that this move was favoured by small-scale units. The survey also indicated that the credit evaluation of small-scale industries has to done using different criteria.

State Bank plans network
Mumbai: The State Bank of India is planning to enter internet banking and network 2,500 of its computerised branches and all its automatic teller machines by March 2000.

The bank will seek advise on the issue from global or local consultants, four to five of whom will soon be shortlisted for the task. G G Vaidya, SBI chairman, expects the blueprint to be ready in the next six to eight months.

BCCI's ambitious claims
London: The shattered Bank of Credit and Commerce International is claiming more than $1.5 billion from two Arabs. One of them is the Sheikh of Sharjah, Sultan bin Mohammed al Qasimi, who is being sued for $500 million. The other is a retired Saudi offical, Abdul Rauf Khalil, who is being sued for $1 billion.

The bank's liquidators, Deloitte & Touche, feel they can make substantial recovery, while creditors of the bank do not.

BCCI was closed by the Bank of England in July 1991, after it incurred $13 billion of losses. The fraud is the biggest in the international banking history.

Amex's new credit card
Tokyo: American Express Bank will launch a new credit card product aimed at Japan's small business.

The bank's chief, Kenneth Chenault, said that he sees a recovery in the offing in Japan as whole, and in particular in the small business sector.

The new card is aimed at 4.6 million small businesses, where a small business is defined as one having less than or equal to 200 employees.

Gold deposit schemes for banks may be notified
Mumbai:  The centre may be notifying shortly the gold deposit scheme as per the Income Tax Act. After the notification, gold will become a central government security and not a 'commodity', as it has been so far.

The gold deposit scheme will come under the Securities Contract Regulation Act and not under the Forward Goods Contract Act.

Next few months to see new heads at PSU banks
Mumbai: With the chairman of around nine public sector banks retiring, the hunt for replacements is already on.

State Bank of India deputy managing director Janaki Ballabh is likely to take over as chairman of Bank of Baroda, as K Kannan, the current chairman, retires in December 1999. Sharda Singh of Uco Bank, who retires in November 1999, is likely to be succeeded by P K Sarkar, a chief general manager at SBI.

Canara Bank which is currently headless, with its chairman T R Sridharan joining the Board for Industrial and Financial Reconstruction, is likely to see C V Krishnamurthy, chairman of Syndicate Bank, as its new chairman.

The other banks where the chairman's post will become vacant include Indian Bank, Indian Overseas Bank, and Bank of India. These appoinments will be finalised post-elections.

IDBI's new method for short term funds
Mumbai: The Industrial Development Bank of India will be issuing floating rate bonds with a rate linked to that of the call money markets.The financial institution has received Reserve Bank of India permission in this regard. These bonds will have a tenor exceeding one year. Such bonds are a first in the country.