"The moratorium has been issued in the public interest, in the interest of depositors and the banking system," the RBI statement said.

Canbank MF schemes perform well
Mumbai: Restructuring of equity portfolios of the schemes of Canbank Mutual Fund during 1997-99 improved the performance of all its 15 schemes, a report of the board of trustees has revealed.

Though all the schemes outperformed the BSE Sensex, Canpep 94, Canpep 95 and Canganga have net asset values below Rs 10. The report said Canstar's contingent liabilities emanating from the transactions in securities entered into by the scheme prior to 1992 stood at Rs 133 crore as on 31 March 1999.

RBI committed to 3% CRR
Mumbai: The Reserve Bank of India is committed to reduce the cash reserve ratio to the minimum statutory level of 3 per cent prescribed in the RBI act.

This policy was reiterated by Y.V. Reddy, deputy governor, while delivering the keynote address at the third South Asian Assembly at Kathmandu.

"The medium-term objective of reducing cash reserve requirements to the minimum prescribed in the statute, and the long-term objective of proposing amendments to the statute to make all reserve requirements flexible, will be pursued, consistent with developments in fiscal and monetary conditions, Mr Reddy said.

He also said RBI will continue with the policy of restricting arbitrage between the money markets and the foreign exchange markets.
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ADB approves $250 million loan
New Delhi: According to a report in the Business Standard, the Asian Development Bank has approved a loan of $250 million with a tenor of 25 years, including a five-year grace period. The amount is to be divided between Hudco, ICICI, and Infrastructure Development Finance Corporation. Hudco will get $90 million while the other two financial institutions will each receive $80 million.

After India's nuclear tests in May 1998, this is ADB’s first loan to India. The amount will be primarily applied on developing urban infrastructure.

Vibank to increase equity base
Bangalore: Vijaya Bank’s subsidiary, Vibank Housing Finance Ltd., will increase its equity base by Rs.4 crore from its current level of Rs.10 crore. It is expecting a Rs.10-crore term loan from Vijaya Bank.

Out of the Rs.4 crore to be infused into Vibank, Rs.3.2 crore will come from Vijaya Bank, and the rest from the National Housing Bank, provided the latter agrees to bring in the money. Vijaya Bank and NHB hold 80 per cent and 20 per cent respectively of Vibank's equity. If NHB decides not to bring in the amount, its stake in Vibank will reduce.

Common investment bank proposed in Europe
Frankfurt: Commerzbank AG of Germany, France’s Credit Lyonnais, Spain’s BSCH and BCI of Italy may merge their investment banking divisions to form a common investment bank. The investment bank merger is expected to happen some time in 2000. These banks are already jointly distributing banking products. Martin Kohlhaussen, Commerzbank’s chief, said that at a later date, even a full-scale merger cannot be ruled out.

The market analysts in Europe say that they could not believe that the chief of Commerzbank had voiced his opinions so openly and so well in advance. They also feel that Commerzbank is not big enough to survive on its own. There are bigger banking giants in Germany such as Deutsche Bank and Dresdner Bank, which have grown through the acquisitions route.

Stanchart to buy Nakornthon Bank
Bangkok: Thailand's financially weak Nakornthon Bank will be taken over by Standard Chartered Bank for $320 million, for a 75 per cent stake.

Nakornthon was nationalised in July 1999 and has 67 branches. Its name will be changed to Standard Chartered Nakornthon Plc.

Stanchart’s deal puts it the winner in a race for Nakornthon Bank, in which Citibank and Singapore’s United Overseas Bank also contested. In the meantime, United Overseas Bank is expected to clinch the deal for taking over Radanasin, another beleaguered Thai bank.

NatWest plans acquiring Legal & General
London: National Westminster Bank is in talks to acquire life assurance and pensions group Legal & General group in a $17.24 billion dollar deal. Talks have been confirmed by the London Stock Exchange. Final terms of the cash and stock bid, worth 210 pence a share are to be announced next week,

Once finalised, the deal will create a powerful new financial services group with a market value of 30 billion pounds.
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Citibank widens customer access to accounts
Mumbai: All Citibank customers who have ATM cards will now be able to access their accounts in more than 100 countries, up to a maximum of $3,000 per annum. There are around 4,63,000 ATMs, that includes one in Antartica. The bank’s tie-up with MasterCard International enables its customers to access the MasterCard Cirrus network globally. 

Government may recapitalise Indian Bank
Mumbai: An amount of Rs.1,400 crore is expected to be infused by the government to strengthen the balance sheet of Indian bank. The recapitalisation is expected to be completed by the end of the financial year 1999-2000.

The beleaguered bank is saddled with losses of Rs.778 crore.

T S Raghavan, chairman and managing director of Indian Bank has said that the bank has set itself a growth target of Rs.3,000 crore for deposits, Rs.1,300 crore for advances, Rs.640 crore for recovery of non-performing assets.

Exim Bank to finance R&D
Mumbai: The Export and Import Bank of India will start financing Indian companies for their research and development activities at marginal rates of interest. Though the main focus will be on pharmaceuticals, information technology, electronics and engineering sectors, the bank is not averse to funding other sectors as well.

Term loans up to a maximum of Rs.15 crore at an interest rate of around 7 per cent are the features of the proposed scheme.

JV for gold assaying
Calcutta: According to a report in the Business Standard, State Bank of India, Canara Bank, Corporation Bank and Allahabad Bank have entered into a joint venture for assaying of gold. The foreign bank that will be partnering these banks in the joint venture is Credit Suisse First Boston.

These banks will start off by targeting temples with huge gold reserves. The gold deposit scheme will contain a one-year lock-in period and certificates that contain maturities of five, seven and ten years.

These banks feel that the temples and trusts would benefit as they will get returns on the gold that has so far been lying idle with them, coupled with the safety that the banks provide by keeping them in their safe custody.

Corporation Bank to study customer satifsfaction
Mumbai: Gallup MBA will undertake a study of the customer satisfaction levels on behalf of Corporation bank. The study will span 25 branches of the bank spread across 12 cities and target 1500 customers as samples. A mix of customers will be taken up for the survey.

The bank will also be spending a huge amount on promotional activities during the financial year 1999-2000.
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Verma panel recommendations on NPAs
Mumbai: The M S Verma Committee, set up to restructure Uco Bank, United Bank of India and Indian Bank has recommended the takeover of sticky assets by an asset reconstruction company, set up for the specific purpose.

The government may be asked to participate in the equity of the asset reconstruction company. The committee feels that further recapitalisation of these banks is no solution.

The Verma panel is also in the process of studying ways of stopping further increase in non-performing assets, and banks’ internal credit assessment skills.

ICICI move on NPAs
New Delhi: As per a report in the Business Standard, India’s premier financial institution, ICICI Ltd. will recall loans of Rs.1,467 crore made to over 700 borrowers. ICICI feels this would bring down its net non-performing assets from 7.6 per cent as of June 1999 to 4.5 per cent. ICICI has identified these borrowers from a category called ‘recovery cases’.

GDP, fiscal deficit shoot up
New Delhi: The good news first. India’s gross domestic product is likely to see an increase of around 1 per centage point, or Rs.18,000 crore. This is on account of the increase in the value-addition estimates of the information technology sector, as part of the current GDP estimates. The amount for this sector had earlier been pegged at just 500 crore, which will now go up to Rs.18,000 crore, as per estimates of the department of electronics.

Now, for the bad news. As of July 1999, the fiscal deficit has gone up to Rs.54,354 crore, which is an increase of more than 28 per cent, compared to 42,300 crore during 1998-99. For 1999-2000, the government had estimated the fiscal deficit, which includes savings, at Rs.1,04,955 crore.

This figure is higher from the revised estimates for 1998-99 of Rs.1,03,737 crore. Total expenditure of the government in the first four months ended July 1999 stood at Rs.90,232 crore, up around 16 per cent.

United Western Bank to tie-up
Mumbai: United Western Bank is planning to enter an equity tie-up with a foreign bank. P N Joshi, chairman of the Satara-based bank said that for the bank to survive and remain fighting fit such a tie-up is be the only solution.

In 1998-99, United Western Bank saw a growth of 28.7 per cent in deposits and 22.4 per cent growth in credit. The banking industry average is around 18.5 and 12.9 per cent for deposit and credit growth respectively. The bank’s non-performing assets increased from 5.7 per cent in 1997-98 to 8.3 per cent in 1998-99.

VSNL plans Rs.400 crore investment
Mumbai: Videsh Sanchar Nigam Ltd. is planning to install voice and data enabled networks at a cost of Rs.400 crore. At each of the centres in Mumbai, Kochi, Delhi, Calcutta and Chennai, VSNL has leased 34 megabits per second of cable band width and 8 megabits per second of satellite bandwidth.

It is also installing an eight-node asynchronous transfer mode network, which it will use once it moves into the domestic long distance telephony market. On 1 January 2000, the department of telecommunication’s monopoly on domestic long distance telephony is scheduled to end.

IPCL, Guj Inds Power, Kirloskar Electric ratings down
Mumbai: Indian Petrochemicals Corporation Ltd. has been downgraded from AA (high quality) to A+ (adequate safety) by Credit Analysis and Research. This rating has been assigned to the company’s Rs.750-crore outstanding non-convertible debentures, and to its fixed deposit scheme up to Rs.500 crore.

Care has also downgraded Gujarat Industries Power and Kirloskar Electric from A to A- and BBB to C- respectively.

Centurion Bank to toe the retail line
Mumbai: Centurion Bank is yet another bank that has planned to go retail. After just four months of taking over 20th Century Finance Corporation, the private bank is going retail.

The bank’s two-wheeler financing has gone up to Rs.15 crore in July 1999 from around Rs.7 crore in April 1999. Its automatic teller machine network, which currently has 30 machines, is expected to be doubled by March 2000. It is also planning to tie-up with a credit card company, and at a later date, also issue debit cards and credit cards.

Centurion Bank has already introduced tele-banking in Bangalore, and schemes such as loans against shares and dematerialisation services.

GIC reports huge underwriting losses
Mumbai: According to a report in The Economic Times, General Insurance Corporation’s consolidated results for 1998-99, show a 78 per cent increase in underwriting losses at Rs.686.4 crore. The main contributors to the underwriting losses were GIC’s subsidiaries. Oriental Insurance’s underwriting loss was Rs.257 crore, National Insurance’s was Rs.212.8 crore, United India Assurance’s was at Rs.128 crore and GIC’s at Rs.101 crore.

The GIC group managed to show a net profit on account of its investment income, which stood at Rs.2,282 crore for 1998-99, compared to Rs.2,057 crore in 1997-98.

In this consolidated report, Oriental Insurance’s figures are only provisional as the company has not yet submitted its results.

Bank of Nova Scotia performs well
Toronto: The third quarter earnings for the period ended July 1999 of the Bank of Nova Scotia, were C$ 397 million compared to C$358 million for the same period in 1998. On a per share basis this works out to 75 cents as compared to 68 cents for the quarter ended July 1998.

Bank of Nova Scotia is Canada’s most active bank internationally.
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RBI announces sale of 23 state govt. loans
Mumbai: The Reserve Bank of India announced on 31 August 1999 the sale of 10-year, 11.85 per cent state government loans from 23 Indian states, amounting to Rs.3,250 crore. The coupon is 26 basis points above the cut-off placed for the recent auction of 10-year government paper. A couple of weeks back, the states of Andhra Pradesh and Tamil Nadu raised loans of Rs.400 crore and Rs.200 crore at rates of 11.77 per cent and 11.74 per cent respectively.

Around Rs.4,000 crore will enter the money markets during the next few weeks owing to redemption of treasury bills and government securities. 

SBI’s Rs.125.7 crore dividend
Mumbai: State Bank of India paid Rs.125.74 crore as dividend for the year 1998-99 to the Reserve Bank of India. The latter holds a 59.7 per cent stake in the former.

IL&FS Venture closes two funds
Bangalore: IL&FS Venture Corporation has closed two of its funds – Auto Ancillary Fund and TamilNadu Infotek Fund. The first drawdowns of 5 per cent 15 per cent respectively in the two funds were made in April 1999.

IL&FS Venture has a fund base of Rs.300 crore. IL&FS holds a 19 per cent stake in the company. Other top shareholders are Bank of India, Asian Development Bank, Commonwealth Development Corporation and International Finance Corporation.

It is planning a capital restructuring exercise so as to set off its accumulated losses against its reserves, which will reduce its share capital from Rs.24 crore currently, to Rs.12 crore.

GIC asks KPMG to help in health insurance
Mumbai: According to a report in the Economic Times, management consultants, KPMG has been asked to study and suggest the plan for General Insurance Corporation’s launch of its health insurance scheme. KPMG has already given a first set of recommendations and this is part of the second stage of the study.

Some of the key issues are the accreditation of hospitals and approval of tariff structure for treatment. Under the current plan, GIC will appoint external administrators (called third party administrator) for its metro centres. These administrators will act as the link between GIC and the hospitals and laboratories that will be approved by GIC.

GIC will be opening 24-hour cells for patients who need hospitalisation. This facility will be available for those who take the company’s healthcare policy. This will be again done through the external administrator, who will maintain the 24-hour call centres.

GIC Mutual Fund is restructuring some of its schemes which are performing badly. It is planning to make some of the schemes open-ended. As of June 1999, GIC Mutual Fund claims to have got rid of around 75 per cent of its weak shares. 
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ICICI to reduce exposure in power sector
New Delhi: According to a report in the Business Standard, ICICI Ltd., one of India’s largest financial institutions, will cut its power sector exposure by around 50 per cent. K V Kamath, managing director, ICICI, said that the move is on account of an expected decline in the country's power requirement.

This is a fallout of a Central Electricity Authority survey that has projected a 10 per cent fall in power requirements. ICICI will now prune its exposure to 20 power projects.

SBI Act provision to be changed
Calcutta: According to a ruling by the Calcutta High Court, the State Bank of India Act provision that states that shareholders holding less than 50 shares are eligible for only only one vote, has been struck down. The bank currently has 61,935 shareholders holding more than 7 per cent of the share capital of the bank, who will now be able to have the enhanced voting rights. The order comes into effect from 1 January 2000.

FIPB approves Satyam ADR, AES JV, others
New Delhi: Satyam Infoway has secured  the approval of the Foreign Investments Promotion Board to increase its American depository receipts issue size from 4.8 million shares to 6.45 million shares. The issue premium has gone up from Rs.490 per share to Rs.790 per share and the target amount from around Rs.240 crore to Rs.516 crore.

The FIPB has also approved the US-based AES Corporation’s joint venture proposal with Jyoti Structures in the power sector. Bank Brussels Lambert, part of the ING group, has been allowed to increase its stake in Vysya Bank to 20 per cent from its current 9.9 per cent, at a cost of Rs.33 crore, through a preferential issue.

HDFC cuts interest rates
Mumbai: Housing Development Finance Corporation will cut its housing loan rates by one per cent to 13.5 per cent, for loans ranging from Rs.5 lakhs to Rs.10 lakhs, according to report in the Economic Times. This will be effective from 1 September 1999.

HDFC currently has two slabs of Rs.2 lakh to Rs.5 lakh and Rs.5 lakh to Rs.10 lakh. These will now be merged into one slab of Rs.2 lakh to Rs.10 lakh. This slab will be charged a rate of 13.5 per cent. Loans over Rs.10 lakh will be charged an interest rate of 14.5 per cent.
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HSBC consolidates
Mumbai: The Hongkong and Shanghai Banking Corporation has consolidated its broking and investment banking operations in India, and has cut its workforce by more than 25 per cent in these divisions, according to a report in the Business Standard.

The group’s corporate restructuring, mergers and acquisitions and project finance divisions will now be centralised at Mumbai. Offices in Delhi, Calcutta and Chennai will become supporting branches.

Exim to offer export credit for an intermediate tenure
Mumbai: The Export and Import Bank of India will henceforth also provide export credit for a period of six to 12 months. Exporters have been getting credit for periods of less than six months or over 12 months. The Exim Bank's decision will fill this gap.

Industries that export engineering, capital goods, auto ancillaries and pharmaceuticals would benefit from this move, as they have a working capital cycle longer than six months.

Banking secretary rules out cut in interest rates
Panaji: According to a report in The Economic Times, banking secretary Devi Dayal has ruled out a drastic cut in interest rates in the near future. He stated this while speaking to members of the Federation of Indian Chambers of Commerce and Industry.

Ficci president Sudhir Jalan said that industry was expecting a cut in interest rates of some three per cent. Mr. Devi Dayal said that the cut in rates will certainly not be to that extent, since the banking sector is faced with higher expectations of depositors and poor performance on account of non-performing assets.

He also said that it will be made mandatory for non-banking finance companies to have minimum owned funds of Rs.50 lakh by end-September 1999. The Reserve Bank of India has received around 30,000 applications for registration as non-banking finance companies, of which it has short listed around 8,000.

PriceWaterhouse survey on Indian stock market
Mumbai: PriceWaterhouseCoopers India Ltd will be doing a survey on the key forces determining share prices in the Indian stock markets. The management consulting firm will meet fund managers and analysts who between them handle close to 80 per cent of the assets in mutual funds and around 65 per cent of the assets of foreign insitutional investors in India.

The aim is to assist local companies understand market expectations and help them enhance the value from their shareholders' perspective. PWC has conducted three such surveys worldwide in the past. From mid-September onwards, the firm will hold seminars to disseminate the results of the survey.

NHAI’s mega project
Mumbai: The National Highway Authority of India will go ahead with its Rs.50,000-crore, ten-year project for four-laning of 1,300 km of roads. The project is part of the National Highway Development Project, which plans to connect the four metropolitan cities of Chennai, Mumbai, Calcutta and Mumbai which will run across the country.

The means of financing will include budgetary support, external funding from the Asian Development Bank, Japan's OECF, private projects on a build, operate and transfer basis, and borrowings through special purpose vehicles. Budgetary support is expected to fund around 15 per cent of the total project. Another 20 per cent will come through special purpose vehicles.

CDBT’s new orders on IT refunds
New Delhi: The Central Board of Direct Taxes has, in a letter dated 20 August 1999, asked all chief commissioners of income tax to ensure that refunds are accompanied with bank advices, wherever required. They have also been asked to be correct on the refund address, intimate the assessee through written means before adjusting refund against outstanding demand, and also pay interest on delayed payment of refund money.

BNP, Dresdner Bank to come closer
London: According to a report in Britain’s Observer, French bank BNP and German Dresdner Bank will come closer. BNP has just concluded the deal to take over Paribas, while it failed in its bid take over another French bank – Societe Generale.

The newspaper said that the integration of BNP’s London investment banking operations and Dresdner Kleinwort Benson would cause a loss of 1,000 jobs in London alone.

In February 1999, Societe Generale had launched a friendly takeover bid on Paribas, which was followed by BNP’s hostile bid on both Societe Generale and Paribas in March 1999. On 28 August 1999, the French banking regulator ruled that BNP had failed in its bid for taking over Societe Generale.
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