The company will be investing Rs.100 crore in computerising its 1,100 branches by April 2001. It has set up a restructuring committee comprising former Union finance secretary, K P Geethakrishnan, former GIC chairman, Ashok Goenka, C N Ramachandran, a chartered accountant and former general manager, United India, T G Menon.

IDBI will seek reduction of govt. stake
Mumbai: The Industrial Development Bank of India wants the government to reduce its stake in the institution from the current 72 per cent to below 51 per cent. The IDBI may ask the government to do this in two stages; one, to bring it to 51 per cent, and the next to take it below 51 per cent after necessary amendments are made to the IDBI Act.

Kotak Mahindra to buy Ceat Financial's assets
Calcutta: Kotak Mahindra Finance is understood to be acquiring a significant part of the assets of Ceat Financial Services, the RPG group company that is facing difficulties. Kotak Mahindra Finance will buy the good and not-so-good assets of Ceat Financial Service's loan portfolio at prices that will depend on the quality of the accounts while Ceat Financial Services will try to recover money from bad debtors. The sales proceeds will be utilised by Ceat Financial Services to repay depositors.

Ceat Financial Services, a registered non-banking financial company, has stopped accepting deposits after the recent inspection conducted by the Reserve Bank of India. It has a current deposit liability of over Rs 240 crore. The RPG group has recently infused Rs 100 crore into the ailing company.

Warburg picks up stake in HDFC
Mumbai: Warburg Pincus, a private equity fund, has bought a 6 per cent stake in the Housing Development Finance Corporation from the secondary market. The cap of 30 per cent investment by foreign institutional investors in HDFC has already been breached. Warburg would now have to seek permission from the government to keep the stake.

ANZ revamping
Calcutta: ANZ Grindlays Bank will create a division comprising excess staff, who will now be given specific business tasks. According to a report in the Business Standard, ANZ’s restructuring plan will be similar to that adopted by Standard Chartered Bank.

ANZ would revamp the junior, middle and senior management cadre and also go in for a voluntary retirement scheme.

United India wakes up
Chennai: United India Insurance Company has decided to pay greater attention to strategy as the insurance sector is finally about to be privatised.

The public sector insurance company has set up a committee comprising K P Geethakrishnan, former finance secretary, government of India, Ashok Goenka, former chairman, General Insurance Corporation, T G Menon, former general manager, United India Insurance, and C N Ramachandran, a chartered accountant, for this purpose. The committee will submit a report to chairman and managing director K N Bhandari in a month, suggesting strategies to be adopted by United India.

ING to source IT needs from 3 Indian companies
New Delhi: The world's largest financial services company, the ING group, is planning to outsource its information technology requirements worldwide from three Indian companies -- NIIT, Tata Consultancy Services and BFL Software. This is for the first time that the $50-billion Netherlands-based group has decided to outsource its IT project requirements to companies outside the group. The three companies have been shortlisted after a worldwide search.

The information technology expenditure of the group is close to $2 billion annually. It has close to 83,000 employees spread over 60 countries.

SBI Factors applies for ‘FI’ category
Pune: The State Bank of India’s factoring arm, SBI Factors Ltd, has sought Reserve Bank of India approval to change its categorisation from 'non-banking finance company' to 'financial institution'.

Insurance licences to take some time
New Delhi: Private players intending to enter the insurance sector in India will have to wait at least for some more time after the insurance bill is passed to get their licences. Insurance Regulatory Authority chairman N. Rangachary says the IRA will take some nine to 12 months to process the applications and issue the licences.

Addressing a seminar on Indo-US economic partnership organised by the Confederation of Indian Industry. Mr Rangachary said there will be no limits on the number of players that will be allowed to enter the sector. The IRA will carefully consider the financial strength of each of the players before licences are issued.

Centre places security paper with RBI
Mumbai: The government has privately placed Rs 3,500 crore of the 12.29 per cent 2010 security with the Reserve Bank of India at a price of Rs 103.75 crore. With this, the government has raised Rs 72,130 crore in the current financial year, thereby completing 86 per cent of its targeted gross market borrowing for 1999-2000.

Meanwhile, the RBI has discontinued purchase of 17 outstanding issues of 364-day treasury bills from the market. The central bank had indicated an offer to purchase these bills on its purchase window since October 16.

J&K Bank to enter insurance sector
New Delhi: Jammu & Kashmir Bank will enter the insurance sector in association with a foreign partner. Bank chairman M.Y. Khan said the details are being finalised and the Reserve Bank of India has already given in-principle clearance for the proposed venture. The bank is in talks with two prospective partners and it will deal in life as well as non-life insurance products.

The proposal gets a boost as the government has cleared the insurance sector privatisation bill.

RBI guidelines to banks on credit risk
Mumbai: The Reserve Bank of India has asked banks to evaluate both balance sheet and off-balance sheet credit exposures on a daily basis and has sought the creation of board-level credit committees as part of its final guidelines on risk management.

The RBI has asked the banks to take up these guidelines for discussion at their next board meetings and review the progress in its implementation at half-yearly intervals. The guidelines specify credit risk as the top priority.

Foreign banks seek permissions for V-SATs
Mumbai: Foreign banks including Citibank, American Express Bank, Bank of America and Chase Manhattan Bank have sought the department of telecommunications' permission to set up V-SAT systems as a second line of defence in case the normal telecom set-up malfunctions as a result of the Y2K glitch. The banks have sought a single window clearance for these systems.

Some of these banks have already received DoT permission to set up V-Sat systems under the supervision of Videsh Sanchar Nigam Ltd. They want single window clearance in order to speed up approvals from the Wireless Planning Commission and Special Advisory Committee for Frequency Allocation, whose permissions are required for setting up V-SATs.
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Insurance bill cleared
New Delhi: The Insurance Regulatory and Development Authority Bill has been cleared by the Union cabinet. The bill restricts foreign equity participation in Indian insurance companies to a maximum of 26 per cent of their paid-up capital. The privileges granted to the General Insurance Corporation and the Life Insurance Corporation so far by the GIC Act and LIC Act will be suitably amended.

In the meantime, the General Insurance Corporation has asked the government to ensure that the new private companies entering the general insurance sector obtain a no-objection certificate from it before they reinsure risks abroad.

RBI changes rights norms for NRIs
Mumbai: Companies can issue rights and bonus shares to non-resident Indians without seeking permission from the Reserve Bank of India. This is provided the issue does not change the shareholding composition for foreign equity as approved by the Foreign Investments Promotion Board. The issue should be made at the same price at which it is made to the general public.

This permission is applicable only for those issues where the company’s original project cost as approved by the FIPB is not more than Rs.600 crore.

RBI refuses retail licence to KSIIDC
Bangalore: The Karnataka State Industrial Investment Development Corporation’s proposed entry into the insurance sector may be in jeopardy as the Reserve Bank of India has denied it the retail banking licence. KSIIDC says the RBI may review the decision.

KSIIDC has appointed management consulting firm PricewaterhouseCoopers to prepare a restructuring plan. It had earlier planned to enter the insurance sector with the help of its branch network in Karnataka.

Indian Bank restructuring plan
Mumbai: Indian Bank, described in the Verma Committee report as a ‘weak bank’, will be restructured, a plan for which will be prepared by a committee headed by HDFC chairman Deepak Parekh. Other members of the panel are S D Kulkarni, former chief executive, Larsen & Toubro, Ram Gupta, former managing director, State Bank of Patiala, and Dileep Chokshi, senior partner with chartered accounting firm C C Chokshi.
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Insurance bill in this session
New Delhi: The government is likely to introduce the insurance bill during the current session of the Parliament beginning on 20 October. A meeting of the cabinet is being convened to discuss the matter and approve the bill.

The bill proposes to privatise the insurance sector in the country and allow 26 per cent private equity participation in the insurance business that is now run by public sector companies.

AIG plans $1 billion investment in India
New Delhi: US-based AIG is planning to invest close to $1 billion in India. The insurance and investment company is looking at provident funds, infrastructure and financial markets, which it hopes will be further opened up with the new government pronouncing its emphasis on freeing the economy.

AIG's vice chairman (external affairs) Frank Wisner, has been quoted by The Economic Times as saying that the investment will be routed through its Asia Fund operating from Hong Kong and if the situation demands the entire earmarked amount can come in less than a year.

The company foresees provident funds, infrastructure financing through pension funds, insurance sector and forms of risk insurance as areas of growth.

PSU bank unions not averse to reforms
Calcutta: Trade unions in nationalised banks appear to be giving in for reforms and structural changes in order to be market savvy and to compete with the more resourceful foreign banks. One of the largest trade union body in the sector, the All India Bank Employees Association is said to be not averse to the extension of the banking hours and marketing of banking products by the employees. The association has already agreed to extending the working hours in computerised branches. The association has also welcomed moves towards increasing the nationalised banks' business.

IDBI not to issue LoI to Hinduja power project
Mumbai: The Industrial Development Bank of India is understood to have decided not to issue a letter of intent to Hinduja National Power Company for its proposed 1,040 MW coal-based power project in Visakhapatnam. The letter of intent is a preliminary document to power projects to enable them to achieve financial closure.

The Hinduja promoted company is one among the seven fast-track power projects with a counter guarantee from the government. The company expects to achieve financial closure by February 2000.

IDBI has stressed on the condition asking the promoter to bring in an equity contribution of 40 per cent against the conventional norm of 30 per cent. IDBI is worried over the high project cost and it felt a need o take a fresh look at the project cost before issuing the letter of intent. The bank says the promoters will have to increase their contribution due to the cost overrun by Rs 177 crore.

Indonesia hopeful of IMF loans
Jakarta: Indonesia says it is hopeful of the International Monetary Fund resuming loans to the recession-hit country once the controversial audit of the Bank Bali scandal is published. Finance minister Bambang Subianto said he expects the help will really come once the report is published.

The IMF is leading a $45 billion bail-out for Indonesia, which is now seeing faint signs of an end to recession. But the IMF and also the World Bank had stopped loans until the government resolved the Bank Bali issue which revolves around a $70 million loan collection fee the bank paid to a company headed by a senior official of president B.J. Habibe's Golkar party.

Ayala buys stake in Far East Bank
Manila: Ayala Corporation, a Philippine conglomerate, has bought 20 per cent stake in Far East Bank, the seventh largest bank in terms of assets in the Philippines. The deal paves the way for the merger between Far East Bank and Bank of Philippine Islands, an Ayala subsidiary.

Metrobank, a rival and the Philippines' largest bank had made an attempt to acquire some six per cent stake in Far East Bank.
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Banking sector reforms being initiated
New Delhi: The government proposes to amend four laws to usher in the much-awaited reforms in the banking sector. They are the Banking Regulation Act, the Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1994, or the Nationalisation Act, the Debt Recovery Tribunal Act and the Sick Industrial Companies Act.

The proposed amendments will, in effect, amount to denationalising the public sector banks and providing a single regulator in the sector, the Reserve Bank of India. At present both the RBI and the government perform regulatory functions. Some structural changes are sought to be made in order to make the RBI the sole regulator.

IDBI to lower stake in CARE
Mumbai: The Industrial Development Bank of India has engaged SBI Capital Markets to recommend ways to reduce its stake in Credit Analysis and Research from 26 per cent to 10 per cent. Earlier, the Securities and Exchange Board of India had said promoters of credit rating agencies should not hold more than 20 per cent in these agencies.

Besides IDBI, Canara Bank and Unit Trust of India hold 23 per cent and 12.5 per cent stake respectively in CARE.

HSBC, Royal & Sun to set up call centres
Mumbai: Two multinational finance entities, the Hongkong and Shanghai Banking Corporation, and Royal and Sun Alliance, the insurance company, are planning to set up global back-office processing activities and call centres in India.

Revealing Royal and Sun Alliance's plans, Antony Jacob, its chief executive officer, said the company had chosen India to set up a worldwide hub for providing back-office processing services to the entire group. The company will set up a call centre, which will cater to customer queries from all over the world. The group will expand the activities of its 100 per cent subsidiary in India, Royal and Sun Alliance IT Solutions India, to undertake the processing and call centre work.

HSBC India's chief executive officer Zarir J. Cama said the bank is considering expanding its already existing processing services in India to cater to the group's worldwide needs.

HypoVereins, Dresdner may merge
Frankfurt: HypoVereins, Germany's second largest bank in Germany in asset terms, is said to be merging with the No 1 German bank, Dresdner Bank. HypoVereins, however, did not respond to queries.

Analysts say a merger is likely next year, in the light of comments made earlier this year of such a possibility. They say a merger will combine HypoVereins' strength in mortgage banking with Dresdner's capabilities in asset management and investment banking.
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‘FI nominee’ controversy to be put to rest
Mumbai: The Kumar Mangalam Birla Committee on corporate governance appointed by the Securities and Exchange Board of India has informed financial institutions that it only wants companies to be as transparent to shareholders as they are with fund managers and analysts. The panel only wants fund managers not to be present on the boards of companies.

If the financial institutions are confused about the concerned section of the report, the panel may redraft the section. This puts to an end the controversy created by the corporate governance committee report, which financial institutions perceived as wanting to restrict their nomination of directors to the boards of companies to which they have loaned substantial sums of money.

IFC seeks more time before conversion of GTB debt to equity
Mumbai: The International Finance Corporation, which has lent $5 million to Global Trust Bank, has sought a postponement of one year for converting the loan into equity. The loan, when converted into equity, will raise the IFC's stake in Global Trust to 13 per cent from the current 9.6 per cent.

IFC would have to provide for a depreciation of $2 million in its books if it marks to market the investment it has made in Global Trust. This is why the IFC is seeking time for the conversion of debt into equity.
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