Trai had earlier stayed Mahanagar Telephone Nigam Ltd's plan to give free telephone connections to its internet subscribers.

Mr Sodhi was delivering a keynote address on "Telecom policy initiatives: the road ahead" at the Centre for Telecom Policy Studies of the Indian Institute of Management here.

Canbank factoring looking for JV ally
Bangalore: Canbank Factors is on the lookout for joint venture partners from Europe or US for its export factoring services.

Canbank Factors, which has got an export factoring licence from the Reserve Bank of India, has started undisclosed factoring on an experimental basis. It is planning to join Factor Chain International soon.

BNP bid on SocGen fails
Paris: France's banking regulator said Banque Nationale de Paris has failed in its bid to take control of Societe Generale and create Europe's first bank with trillion dollar assets.

The regulator said with only 31.8 per cent of Societe Generale's voting rights, BNP did not have effective control of its target and as the two banks had failed to reach a compromise, BNP cannot retain the shares it has purchased.

Societe Generale had a merger plan with Paribas in February when rival BNP stepped in with a hostile bid for both Paribas and Societe Generale. BNP has already taken over Paribas.

Allahabad Bank lends through the net
Calcutta: Allahabad Bank has started accepting applications and sanctioning its educational loans through the Internet. It is also thinking of doing the same with car and home loans.

The bank has a website called www.allahabadbank.com. During the financial year 1999-2000, more than 50 per cent of its educational loan applications have come through this website. The website contains an application form, which can be filled and sent to the bank online. The online application can be used by students getting into courses such as IIT and IIM.

Allahabad Bank has achieved Y2K compliance.

RBI sucks out Rs.4,500 crore
Mumbai: The Reserve Bank of India has absorbed over Rs.4,500 crore from the system by way of open market operations, which accounted for Rs.2,000 crore, and Rs.2,500 crore by way of auction of 11.99 per cent 2009 paper.

The central bank is in the process of mopping up the excess liquidity in the market. For the financial year 1999-2000, the amount sucked out has touched over Rs.23,495 crore, while for the entire financial year 1998-99, it was Rs.29,579 crore.

Amex to launch global credit card
Mumbai: American Express Bank will launch its global credit cards in India in the next couple of weeks. All existing card holders of the bank will be able to change their cards into global cards at no extra fee.

After Standard Chartered Bank and Citibank, Amex is the third bank to offer its global card in India.

Amex had earlier entered the credit card market in November 1998 and offered the best monthly rates. Currently, the bank has a credit card customer base of 80,000. In comparison, Standard Chartered has a base of around 1 lakh customers for its global credit card.

CBDT issues circular on tax exemption for research bodies
New Delhi: The Central Board of Direct Taxes has issued a circular on tax benefit on donations, stating that scientific research bodies can now apply to the central government directly, instead of the director general income tax, exemptions, or DGITE. Approval of the secretary, department of scientific and industrial research has also been done away with.

Donations made to certain scientific research organisations are eligible for a deduction of 125 per cent. This benefit is applicable only for organisations approved under section 35(1)(ii) and 35(1)(iii) of the Income Tax Act. They have to file for exemption using form 3CF.

All applications pending with the DGITE as on 25 June 1999 and pertaining to assessment year 2000-2001 or later will be transferred to the central government. Applications pending with the DGITE for assessment year 1999-2000 or earlier will continue to be with the DGITE.

Moody’s says ratios do not show true worth of banks
Mumbai: According to Moody’s Investors Service, financial ratios are not adequate to evaluate banks in the emerging markets. The rating agency says that financial ratios are generally lagging rather than lead indicators. It says that in emerging markets, economic environment is a more important measure of financial strength.

Syndicate Bank to redeploy staff
Mumbai: Syndicate Bank has planned to redeploy its excess staff in recovering loans, doing door-to-door canvassing for deposits and working in ‘boutique branches’. It is planning to come out with a Rs.125-crore public issue at par, opening on 25 October 1999 and closing on 5 November 1999. A tenth of the issue has been set aside for employees.

IBA panel on policy issues
Mumbai: The Indian Banks Association has set up a panel of 11 members to advise on policy issues. The members are, Dinesh Vyas, Ajit Balakrishnan, Gurcharan Das, Mukesh Ambani, N V Iyer, Omkar Goswami, Sampat Singh, G V Ramakrishna, M B Athreya, S M Datta and Y H Malegam.

Tokyo-Mitsubishi eyes minority stake
Tokyo: The Bank of Tokyo-Mitsubishi, the biggest Japanese bank, is eyeing a minority stake in Kokusai, the country’s fourth largest brokerage. This could mean that the tie-up will extend automatically to Nomura Securities too, which holds more than 30 per cent of Kokusai. BTM is in talks with Nomura for picking up a five per cent stake in Kokusai.

BTM previously had ties with Nikko Securities, which formed an alliance with Citigroup of the US.
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RBI to create committee for large loans by banks, FIs
Mumbai: The Reserve Bank of India will create a permanent working group for a cooperative approach while lending large amounts to companies. The group will comprise members from banks and financial institutions.

Such an approach, the RBI feels, is required because of the need to maintain the capital adequacy ratio.

RBI looks for a clearing house for repos
Mumbai: The Reserve Bank of India is planning to channel repo deals with the help of a clearing house. This clearing house will be similar to that of the government securities clearing corporation in the US.

According to Usha Thorat, chief general manager, RBI, the clearing corporation need not be necessarily promoted by the RBI. It will facilitate tri-partite repos wherein the corporation will act as the third party.

The Reserve Bank may also stretch the repo market to the non-banking sector.

Escrow limit finalised for three power projects
Mumbai: SBI Capital Markets Ltd. has fixed the escrow capacity for three private sector power projects in Uttar Pradesh. The three are Rosa Power – promoted by the A V Birla group and Powergen, Jaiprakash Industries’ Vishnuprayag and Srinagar Hydro Power.

The UP state electricity board had appointed SBI Caps for ascertaining its escrowable capacity. This limit has been fixed at 1,460MW.

GIC plans novel instruments
Calcutta: General Insurance Corporation is planning to introduce instruments that will promise market-related returns to investors as well as offer several personal insurance schemes. These instruments will have the insurance premiums in-built into them.

This means that investors will not have to pay an additional sum as premium for obtaining insurance cover offered with the instrument.

IndusInd Bank to toe the retail line
Pune: IndusInd Bank, which started off focusing on wholesale investors, has now decided to shift its attention to the retail segment. It will target demand deposits and reduce dependence on non-resident Indian deposits.

The bank is also focusing on reducing its non-performing assets and its cost of deposits, which are 7.2 per cent and 10.3 per cent as of year ended March 1999.

As per Reserve Bank of India guidelines, IndusInd Bank’s promoters have to bring their holding to 40 per cent from the current 62 per cent.

Kaiga nuclear power plant to start production in January 2000
Kaiga: The second unit of the 220 MW Kaiga nuclear power plant is scheduled to attain criticality in September 1999 and is expected to commence commercial production in January 2000. The final clearance will come from the Atomic Energy Regulatory Board.

The reactor will use both uranium and thorium. It will supply electricity to the southern grid comprising Karnataka, Tamil Nadu, Kerala, Andhra Pradesh and Goa.

ABN Amro bids for Bouwfonds
Amsterdam: The largest Dutch bank, ABN Amro, has made a friendly offer to take over the Dutch property group -- Bouwfonds Nederlandse Gemeenten -- for $1.27 billion. The bank feels this will boost its European real estate and mortgage business.

Bank Indonesia to be audited
Jakarta: Indonesia’s central bank, Bank Indonesia, will be audited, as per an order passed by Satrio Budiardjo Yudono, head of the Supreme Audit Agency. He has said that he will invite management consultancy firm PriceWaterhouseCoopers for the audit.

The audit order follows the banking scandal that rocked the country. Bank Indonesia feels that such a move would need the Indonesian parliament's approval.
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Crisil to help Canara Bank estimate credit risk
New Delhi: Crisil, one of India’s top rating agencies, has developed a credit risk assessment model for Canara Bank. The model has been developed in the form of software that will be installed in all 13 circles of the bank. Canara Bank is now training its staff to use the package.

Crisil is developing a similar model for two other banks.

Bank of Maharashtra’s bond issue over-subscribed
New Delhi: The Bank of Maharashtra’s private placement of 12.6 per cent bonds aggregating Rs.100 crore has been over-subscribed by Rs.70 crore. The tenure of the bonds is 80 months.

The bonds are unsecured, non-convertible, and subordinated as in the case of promissory notes. They will be redeemed at par on maturity. The bank has issued these bonds to enhance its tier II capital.

India included in Chase’s Asian bond index
Mumbai: Chase Manhattan Bank, which comes out with bond returns statistics, has included India in its Asia’s fixed income index. The eight countries included in the index are India, China, Malaysia, Indonesia, Korea, Hong Kong, Philippines and Thailand.

This marks an acknowledgement by the international community of India’s debt market and its relevance in the Asian economy.

Morgan Stanley and Sanwa tie up
Tokyo: Morgan Stanley Dean Witter and Japan's Sanwa Bank have tied up for retail asset management. Morgan is trying to get a foothold in the Japanese market, where the financial sector is undergoing deregulation.

Sanwa Bank will sell Morgan’s products and Morgan in turn, will provide investment advice. These two institutions will also jointly develop a pilot scheme for the creation of a distribution network for mutual funds.
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RBI builds $5.3 billion war chest for rupee
Mumbai: The Reserve Bank of India has built a contingency reserve of around Rs.23,000 crore or $5.3 billion for countering any speculative attack on the rupee.

Meanwhile, the 1998-99 annual report of the Reserve Bank of India has estimated real gross domestic product to grow 6 - 6.5 per cent in the year 1999-2000. Industrial production is expected to grow 7 per cent.

The net income of the central bank was down 16 per cent to Rs.9,028 crore from 10,743 crore in the year ended 31 March 1999.

The Reserve Bank is worried about the high cost of small savings, provident fund and special deposit schemes, which grew 30.6 per cent in 1998-99, to touch Rs.43,588 crore.

The bank has emphasised the need for an upper limit on government borrowing since the accumulation of public debt and the rising interest costs are putting pressure on the economy. The government’s net borrowings have touched Rs.62,905 crore, overshooting the budget estimates by over 30 per cent. Gross borrowings touched Rs.93,953 crore, overshooting the target by more than 18 per cent. The ratio between gross and net borrowings has dropped from 1:0.84 in 1991-92 to 1:0.67 in 1998-99. This means that around 37 per cent of government’s fresh borrowing goes towards servicing past loans.

The central bank has also classified 249 banks as weak.

Union Bank to raise debt
Mumbai: Union Bank of India will issue a seven-year tier-II subordinated debt, with a target of Rs.500 crore on book building basis. This is aimed at enhancing the capital adequacy ratio of the bank. The Rs.500 crore includes a Rs.200 crore green-shoe option.

The issue, which opens on 27 August 1999 will be lead arranged by DSP Merrill Lynch and JM Morgan Stanley. The bank is expecting the rate to be in the region of 12.3 to 12.6 per cent.

Union Bank has a capital adequacy ratio of 10.07 per cent, and is expected to touch 12 per cent by March 1999.
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RBI plans for better rupee management
Mumbai: The Reserve Bank of India plans to meet the payments for debt servicing and for oil, directly – out of India’s foreign exchange reserves -- so that temporary gaps in demand-supply do not occur in the foreign exchange market. The rupee closed 6 Paise higher at Rs.43.50 to the dollar compared to Rs.43.56 on 20 August 1999.

There was growing dollar demand from foreign institutional investors, and a general weakness in the rupee owing to the nuclear issue, border tension and forthcoming elections.

Action force says majority of power units is Y2K compliant
Mumbai: The planning commission’s Y2K action force has reported that out of the 315 power stations in the country, 295 are 100 per cent compliant with Y2k norms.

Citicorp to expand lease and hire purchase
Calcutta: Citibank’s retail wing, Citicorp, will be financing first users of commercial vehicles. This is aimed at expanding its lease and hire purchase business. It will be financing such customers either directly or through its franchisee set up.
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Foreign banks asked to bring in capital for infrastructure funding
New Delhi: The Union finance ministry has decided that foreign banks with Indian operations cannot guarantee infrastructure projects based on just their Indian strengths, according to a report in the Business Standard. This means that foreign banks have to bring in capital from their parents to match the guarantees provided for such projects.

Non-fund based financing will now be curtailed to the financial players of Indian origin. Some foreign banks are protesting this move since their balance sheets are cleaner and stronger compared to those of some of the Indian banks that are providing financial guarantees for infrastructure.

Cellular usage increases in Mumbai
Mumbai: Mumbai’s cellular phone usage has almost doubled between 1998 and 1999. It is expected to compete with the levels prevailing in some of the developed countries, once incoming calls are made free from 1 November 1999. Hutchison Max and BPL Mobile, cellular operators in Mumbai have a combined subscriber base of around 3 lakh.

FIPB decision on retail trading
New Delhi: The Foreign Investments Promotion Board has taken an in-principle decision to allow foreign investments in retail trading. The committee set up for this purpose has not given permission for such investments in a few other sectors.

Each sector will also have a maximum and minimum capitalisation norm. Other conditions include dividend balancing, 50 per cent export, and foreign exchange neutralisation.

SBI Securities to be converted
Mumbai: SBI Securites will be converted into a shell company with the transfer of the stock exchange cards that it owns to SBI Capital Markets at cost price. SBI Securities owns cards on the Bombay Stock Exchange and the National Stock Exchange.

SBI Securities, which has an equity base of Rs.50 crore, may well become the insurance arm of the State Bank of India. Its equity will then be increased to around Rs.200 to Rs.300 crore.

Quasi MMMFs to be allowed certain facilities
Mumbai: In a meeting that took place between the Reserve bank of India and the Securities and Exchange Board of India, allowing cash, liquid and gilt funds to offer a cheque writing facility to investors, was discussed. These funds will do this in association with banks. The RBI feels this would encourage wider retail investor participation in government securities.
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