SBI chairman and managing director G.G.Vaidya said the bank will issue certificates in denominations of 10 gm and 100 gm. A depositor will have to deposit a minimum of 200 gm.

SBI plans Rs 4,000-crore issue
New Delhi: The State Bank of India is planning  simultaneous domestic as well as overseas issues to mobilise around Rs 4,000 crore. The issues are, however, subject to the Reserve Bank of India not subscribing to its rights issue.

The bank’s chairman and managing director G.G. Vaidya said a proposal is being sent to the RBI. "We are exploring all possibilities, including an overseas offering, and everything would depend on whether the RBI would want to subscribe to the rights issue." In case the bank comes out with the issue, the RBI’s holding in the bank will come down to 40 per cent from the present 59.74 per cent. This will require an amendment to the SBI Act.

Mr Vaidya said the bank may also consider a rights-cum-public issue in the domestic market if the RBI is ready to infuse more funds. The bank is also interested in a listing on a US bourse.

GIC to engage consultant for AMC
Mumbai: The General Insurance Corporation of India is engaging a consultant to prepare a restructuring plan for its subsidiary GIC Asset Management Company. The consultant is expected to prepare a plan to infuse equity capital, evolve a technology superstructure and devise a mechanism to leverage the parent’s branch network. GIC also intends to appoint a new chief executive officer of the asset management company as the present incumbent’s term ends in June 2000.

LIC appoints Booz, Allen as advisors
New Delhi: Life Insurance Corporation of India has decided to appoint Booz, Allen & Hamilton to advise it on restructuring the company and to operate in a new environment. The global consultants have been given six months to prepare their report. LIC has also decided to appoint domestic consultants to help it implement the restructuring plan recommended by Booz, Allen and Hamilton.

Import duty on oil may be cut
Mumbai: The government is considering reducing the import duties on crude oil. Petroleum minister Ram Naik said the ministry is in consultation with the finance ministry in this regard. "When end users have to pay a very steep price we have to consider a change in the duty structure," he said.

Mr Naik said the ministry is considering a proposal to speed up the dismantling of the administered price mechanism as the system is scheduled to end by 2002. He also reiterated the government’s stand that diesel and LPG prices may have to be increased if international prices continue to go up.

Meanwhile, oil prices hit a nine-year high in the world markets after leading oil producers decided to maintain supply curbs until April 2000. Brent blend crude futures for January 2000 touched $25.09 a barrel, the highest since January 1991.

LIC Housing to offer 3 new schemes
Mumbai: LIC Housing Finance is launching three consumer loans schemes. The schemes are Sampurna Griha A and Sampurna Griha B, which will provide loans for its new and existing housing loan takers to buy consumer durables. The third scheme is Apna Chikitsalaya, which is for doctors to finance purchase, construction, repair or renovation of nursing homes or clinics. The interest rates under these schemes have been pegged at lower levels – 13.5 per cent against the normal bank interest rates of 17 to 18 per cent.

Catholic Syrian integrates treasury
Kochi: The private sector Catholic Syrian Bank has commenced integrated treasury management from Kochi. It will be the first bank in Kerala to initiate such a move. This will help the bank to offer a better price both to depositors and borrowers. The bank’s domestic treasury department dealing in money, capital and securities market has been functioning from Thrissur and its forex treasury dealing in foreign currency investment operations has been functioning from Kochi. The bank has now combined the domestic and forex treasuries.

Economy is recovering: Sinha
New Delhi: Finance minister Yashwant Sinha says the country’s economy is recovering and the GDP growth rate in the current financial year will be 6.5 to 7 per cent. He said, however, that a structural correction in the government’s finances is required to sustain growth.

Speaking at an Economic Editors’ conference in New Delhi, he said barring the deteriorating fiscal deficit, all other signs in the economy are positive. Industry is also showing sustained growth, and there are clear signs of recovery in exports this year on the back of a recovery in several Asian countries.

Mr Sinha said the government will bring a bill to regulate non-banking financial companies, press for passage of the bill on a new revenue-sharing arrangement between the Centre and the states and take a decision on the corpus of the proposed Fiscal Facility Fund.

Gail disinvestment: Mr Sinha defended the government’s decision to disinvest the 155 million shares in the Gas Authority of India Ltd at Rs 70 per share. He also defended the decision to offer 6 per cent of the total divested stake to Enron and British Gas, reiterating that no norms have been breached and there was no distress sale.

Petro products: Petroleum minister Ram Naik told the conference that the government plans to reduce subsidies on liquefied petroleum gas and take a relook at the tariff structure of petroleum products. This will include a review of the diesel prices by end-November. He said the oil pool deficit is likely to swell to Rs 4,800 crore by the end of the current financial year if corrective measures like reducing subsidies are not taken. Mr Naik also said unleaded petrol will be available all over the country by March 2000.

IOC divestment: The government will sell 10 per cent of its holding in Indian Oil Corporation in the first quarter of 2000, Mr Naik said.

Maruti stake sale: Heavy industry and public enterprises minister Manohar Joshi said a portion of the proceeds from disinvestment must be used to strengthen  public sector enterprises. The funds collected from disinvestment should not be used entirely to bridge fiscal deficit, he said. He also added that the government is not thinking of selling its equity in Maruti Udyog.

Mr Joshi added that the government has drawn up a plan for public sector enterprises which is a mix of strategic sale, privatisation through gradual disinvestment or strategic sale, and viable rehabilitation programmes for weak units.

Desu to be restructured
New Delhi: The Delhi state government is restructuring the Delhi Electric Supply Undertaking with a view to finally privatising its operations. It is likely to entrust the restructuring work to SBI Capital Markets.

The restructuring will cover generation, transmission and distribution of power by Desu. It is expected that three separate companies will be created to handle each of these activities.

Bank of Madura to invest in venture fund
Chennai: Private sector Bank of Madura is planning to invest $3 million in Chrysalis Capital, a US-based venture capital fund. The bank’s chairman K.M. Thiagarajan said this is the first time an Indian bank is investing in a fund abroad.

Chrysalis Capital is promoted by Ashish Dhawan, formerly of Goldman Sachs, and Raj Kondur of Morgan Stanley. It caters to Indian information technology industry. The fund will be brought to India by Gurucharan Das, former chief executive officer of Procter & Gamble, and Saurabh Srivastava, chairman of IIS Infotech, who are investors in the fund.

Centurion Bank plans for insurance business
Mumbai: Private bank Centurion Bank has firmed up plans for business in the life insurance sector. The bank has a tie-up with Canada Life to write life insurance policies, pensions, annuities and segregated funds in India. Canada Life earlier had a memorandum of understanding with 20^th Century Finance Corporation, whose businesses were merged with Centurion Bank in 1998.

Canada Life’s chief marketing officer Jim Connolly says a joint venture company may be set up to sell insurance products to Centurion Bank customers.

RBI curbs on debit/smart cards
Mumbai: The Reserve Bank of India has introduced a number of restrictions on the issue of debit cards and smart cards by banks. In its guidelines on the issue, the RBI has barred the banks from tying up with non-banking entities and the use of such cards to withdraw cash/make deposits from point of sales. It has also imposed existing reserve requirements on smart card balances.

The central bank said banks can introduce smart/debit cards with the approval of their board without any prior approval of the RBI. However, banks have to inform RBI the details of the cards introduced with a copy each of the agenda note put up to their boards and the resolution passed. The card operations are to be reviewed at half-yearly intervals with fortnightly reports on operation sent to the RBI.

RBI notification on NBFCs
Mumbai: The Reserve Bank of India has notified that non-banking financial companies’ borrowings from mutual funds will be exempted from the purview of public deposits. The NBFCs have also been asked to give three months’ prior public notice about change in ownership or control.

Bank of Rajasthan’s rights issue
Mumbai: With the Rs 67.28-crore rights issue, the capital to risk weighted assets ratio of Bank of Rajasthan is expected to increase to six per cent from one per cent at present. The bank is offering existing shareholders a total of 4,48,55,480 shares of Rs 10 each at a premium of Rs 5 in the ratio of five equity shares for every two equity shares held. The issue is closing on 22 November. The issue will also see the stake of the bank’s chairman Pravin Kumar Tayal going up from the present five per cent to 14.5 per cent.

RBI seeks changes in NPA norms
Mumbai: The Reserve Bank of India, in a report on trends and progress in banking in India, has observed that there is need for tightening asset qualification and income recognition norms for non-performing assets as well as for more transparency in bank operations. The central bank feels that timely disclosure will help reduce the risk of failures in the banking system.

The report says the present norm of 18 months for categorising a sub-standard asset as doubtful should be changed to 12 months. For income recognition norms, the RBI has suggested that the international norm of 90 days be implemented in a phased manner by 2002. The current norm is 120 days.

NPAs shoot up
Mumbai: Gross non-performing assets in the banking sector increased by Rs 7,739 crore to Rs 58,554 crore in the year ended March 1999. Net non-performing assets during the year increased by Rs 4,013 crore to Rs 27,774 crore.

According to the Reserve Bank of India report on trends and progress of banking in 1998-99, the NPAs of public sector banks showed a marginal decline, while NPA levels have gone up in the case of all other banks. The public sector banks have been able to reduce their NPA levels mainly on account of an increase in the share of standard assets and a decline in the share of doubtful and sub-standard assets.

Comsat Max to offer VSATs to UTI Bank
New Delhi: UTI Bank has tied up with Comasat Max, a satellite service provider, to set up a communications network to interlink its banking operations. The plan covers a network of 50 VSATs at strategic locations so that reliable and consistent connectivity is established.

UTI Bank has 38 branches in the country, each with an ATM on its premises. Besides it has 12 off-site ATMs in five cities, which are connected to a central switch. The bank claims to be the first to connect all ATMs to the central switch located at its central office in Mumbai through a TCP/IP protocol on a distributed database. The satellite-based network will allow the bank to integrate all its ATMs, enabling its account holders to withdraw money from any of its ATMs.

China, US sign deal on WTO
Beijing: China and the United States have signed an agreement paving way for China's entry into the World Trade Organisation. The final document was signed by US trade representative Charlene Barshefsky and Chinese trade minister Shi Guangsheg after six days of talks and intervention by Chinese prime minister Zhu Rongji.

China hopes that with this agreement it will be able to join the WTO this year. Ministers of WTO’s 134 members are meeting in Seattle on 30 November to launch a new trade round.

Banks to market insurance products
New Delhi: The government intends to permit banks to distribute or market insurance products. It is amending the Banking Regulation Act to this effect. Only banks with a three-year track record of positive growth as well as with a strong financial background will be entitled to do insurance business.

In anticipation of the government move, some banks have begun talking of alliances with foreign insurance players. The State Bank of India has already made its intentions clear about entering the insurance business. Bank of Baroda and the private sector Vysya Bank are also planning entry into insurance.

Inflation dips
New Delhi: The inflation rate recorded a 0.17 percentage point fall in the week ended 30 October, after rising for four weeks. The annual rate of inflation, based on the wholesale price index, declined to 2.78 per cent. The drop is mainly on account of a marginal decline in the indices for food products and non-metallic mineral products.

Fuel cess earnings to be used to cover deficit
New Delhi: The government plans to make use of the revenue from the cess on fuel to meet its deficit instead of its avowed intention to develop and improve the road infrastructure in the country. The cess is expected to bring Rs 5,800 crore into the government kitty.

The government had announced at the time of introducing the cess that the earnings would be used to create a road fund. However, a proposal of the surface transport ministry to set up a road fund board has been kept in abeyance, and the finance ministry feels it is important to correct the fiscal anomaly immediately making use of the revenue, which is now available in the Consolidated Fund of India.