The Reserve Bank of India released these details in its
weekly statistical supplement. The government will be able to bring down the balance
within the prescribed limit in a few weeks as over Rs 7,000 crore has come into the
governments kitty by way of advance tax collections.
Money supply grew Rs 4,039 crore to Rs 10,67,124 crore
during the fortnight ended 3 December 1999, the supplement said. The total foreign
exchange reserves, including gold and SDRs, rose $68 million during the week ended 17
December to $34,389 million.
SBT plans e-transfer from Gulf
Thiruvananthapuram: The State Bank of Travancore is launching an
electronic fund transfer facility for its Middle East customers. The facility will allow
expatriates from Kerala located in Middle East countries to remit money quickly to their
families. The infrastructure for the system is ready, and the facility will initially be
available at three new exchange houses at Al Faradan in Abu Dhabi in the UAE, Trust
Exchange at Doha in Qatar and Al-Mozzanni in Oman. The foreign exchange department of the
bank at Kochi will serve as the hub for the operations.
GIC plans new company
Mumbai: The General Insurance Corporation of India is setting up a
management services company to oversee its savings-linked insurance products. The new
company will market and process the tasks involved in introducing the new products.
However, the premium income and the liabilities will be on the books of the four
subsidiaries of GIC.
GIC has already received clearance from the government to
set up a separate company for its managed healthcare products.
IDBI Bank plans credit card
Hyderabad: IDBI Bank is coming out with its
credit card as a co-branded product with a foreign bank. The bank is also introducing in
January 2000 'MoneyExclusive', a product offering banking and investment consultancy to
high net worth individuals. A bank spokesman said the announcement about the credit card
will be made jointly by the bank and its foreign associate. IDBI Bank will shortly add
nine more bank branches, taking the total to 40.
No diesel price hike
New Delhi: The petroleum ministry is
understood to have decided not to increase the price of diesel for the time being. The
decision seems to have been taken in the light of an assurance from the finance ministry
that the duty structure on petroleum products would be rationalised.
Petroleum minister Ram Naik has said discussions are going
on with the finance ministry on the rationalisation of duties. The pressure to raise
prices is owing to petroleum prices in the global markets moving up
Bank strike plan deferred
Mumbai: The proposed strike on 27 December
called by three bank employees unions has been deferred following assurances from
finance minister Yashwant Sinha that their demands will be looked into. The National
Confederation of Bank Employees, the Indian national Bank Employees Federation and the
National Organisation of Bank Workers had jointly announced the strike plan.
3 Taiwanese banks merge
Taipei: Three Taiwanese government-owned
banks have merged in order to consolidate banking activities in the country, overcrowded
by too many banks. The three banks are Bank of Taiwan, Land Bank of Taiwan and the Central
Trust of China. All three banks are wholly-owned by the ministry of finance. They have
combined assets of Taiwanese $3.712 trillion ($117.46 billion).
IFCI needs restructuring, says IDBI
Calcutta: The Industrial Development Bank of
India, which is a 30 per cent equity holder in Industrial Finance Corporation of India,
feels there is an urgent need for restructuring of IFCI. IDBI chairman G.P. Gupta says the
proposed equity issue by IFCI will not solve the developmental finance organisation's
problems as it has a high level of non-performing assets and a low capital adequacy ratio.
Mr Gupta indicated that one of the options could be a
merger of the two organisations.
IDBI too plans insurance venture
Calcutta: The Industrial Development Bank of
India is in talks with Principal Financial Group of the US and ING of the Netherlands for
its proposed insurance venture. IDBI plans to enter the pension business initially and
then other sectors. Plans are to set up a new company with the selected foreign partner to
run the insurance business. Principal Financial Group is already IDBI's partner in its
asset management company, IDBI Investment Management Company.
HDFC Bank to set up B2C system
Mumbai: HDFC Bank is aligning with BPL to
offer Internet-based business-to-business e-commerce services to companies. The bank
has already installed facilities in Mumbai to enable its customers, including brokers,
banks and stock exchanges to settle payments electronically. The link-up with BPL will
also cover a supply chain management system under which dealers and vendors can transact
Income tax collection up in Mumbai
Mumbai: Income tax collections from Mumbai
have gone up 18 per cent during 1999 compared to 1998. However, there has been a three per
cent decrease in corporate tax collections. Chief commissioner of income tax, Mumbai, B.
Mishra, says the combined income tax and corporate tax collections from Mumbai during the
year have increased by Rs 100 crore over last year's level. The years collection is
in the range of Rs 20,000 crore, he added. Mumbai has 1.85 million tax payers, up by 2.5
lakh compared to last year.
GIC finalises on consultant
Mumbai: The General Insurance Corporation of
India has finalised on the consultancy firm to advise it on restructuring. GIC has
appointed a board sub-committee to oversee the restructuring so that it and its four
subsidiaries can function effectively after the insurance sector is opened up.
JM Mutual, Centurion Bank in tie-up
Mumbai: JM Mutual Fund and Centurion Bank
have entered into a marketing tie-up. Under the arrangement, Centurion Bank will market JM
Mutuals various schemes to its customers. The arrangement is, however,
non-exclusive, and JM Mutual Fund intends to tap other banks.
Newbridge Capital buys Korea First
Seoul: Newbridge Capital, a US investment
firm, will buy Korea First Bank. An agreement has been signed to this effect under which
Newbridge will pay $442 million to take a 51 per cent equity holding in Korea First, which
is one of Koreas top five banks. Newbridge will assume operational control of the
While the state-run Korea Deposit Insurance will retain a
49 per cent holding in the bank and the banks stocks will be listed on the Korean
Stock Exchange, there will not be any trading in the shares. The bank will have a new
chairman, Robert Barnum, a former president of American Savings Bank.
Sikkim Bank to be merged with Union Bank
Calcutta: The government has approved the
Reserve Bank of Indias proposal for amalgamation of Sikkim Bank with the Union Bank
of India. The amalgamation will take effect from 22 December. The RBI, in a press
statement, said all the branches of Sikkim Bank will function as branches of the Union
Bank of India.
Sikkim Bank is a non-scheduled bank registered in Gangtok,
with Ratan Singh Chowdhury holding nearly 60 per cent of its equity through a non-banking
financial company. It is not covered by the Banking Regulation Act. The RBI had
stepped in to stem what it found mismanagement in the bank, stripped the banks
former chief executive officer of his powers and appointed its own nominees to run the
bank. The banks shareholders and depositors have legally challenged the RBIs
action, including the proposal of amalgamation and the appointment of its nominees.
Reacting to the RBI action, Mr Chowdhury said it is illegal, and the matter is sub judice.
Back to News Review index page
Hubli-Dharwad banks application
Mumbai: The Reserve Bank of India has
rejected an application from the Hubli-Dharwad Urban Cooperative Bank of Dharwad,
Karnataka, for a licence to carry on banking business. The bank cannot transact the
business of banking and it will not be able to accept deposits from the public or allow
withdrawals by cheque, draft order or other such instruments.
Allahabad Bank postpones float
Calcutta: Allahabad Bank is understood to
have postponed its initial public offering. The banks management feels that it will
fetch better returns if it enters the market in financial year 2000-2001, as it will be
able to show improved results during 1999-2000.
The government has been insisting that the bank go in for
a float in the current financial year as its capital to risk weighted asset ratio is
nearly 13 per cent, against the Reserve Bank of India's stipulated rate of 9 per cent. The
bank had recently floated a subordinate debt issue, which was over-subscribed, enabling
the bank to collect Rs 125 crore.
GIC plans catastrophe bonds
Mumbai: The General Insurance Corporation of
India is planning catastrophe bonds as an alternative to transferring risks through
re-insurance. These bonds provide investors with a return in case there are no specified
catastrophic events like cyclone. The investors will not run a risk on their principal
investment. GIC intends to raise nearly Rs 2,000 crore from these bonds.
CII admits it has made a mistake
New Delhi: The Confederation of Indian Industry has admitted that it has
made a mistake in recommending the closure of three weak banks. CIIs director
general Tarun Das said CII is not backtracking on its recommendation as a result of
pressure imposed by any member or due to the threat of release of a list of defaulters.
The confederation says it has made a mistake by underestimating the emotion and
reaction that the recommendation would trigger off among employees and the management. Mr
Das added that the decision to withdraw the recommendation was taken jointly by CII
president Rahul Bajaj and chairman of the task force K.V. Kamath after consulting some
past presidents. He also said CII has no problem if the list of corporate defaulters is
RBI advises banks to maintain hard copies
Mumbai: The Reserve Bank of India has advised all the banks to maintain
hard copies of all customer accounts, right from 1 December 1999 as a precautionary
measure in order to avoid any problems on account of the Y2K bug. The entire banking
sector has reported full Y2K readiness at the end of November 1999.
The RBI said the Indian Banks Association and the banks are ready to provide
statements of accounts to account holders before 1 January 2000 from all the branches of
the banks at any time. This will serve as documentary evidence in case of any problems
later. The RBI has also ensured that a core staff of banks will supervise the rollover to
year 2000, and this exercise will begin from 27 December 1999. Customer support will be
available round the clock.
Tisco threatens to take AIBEA to court
Calcutta: Tata Iron & Steel Company says it will take the All India
Bank Employees Association to court for declaring that the companys managing
director J.J. Irani is one of the loan defaulters among members of the Confederation of
Indian Industries. Tisco clarified that Dr Irani is not a director on the board of any
companies that is a loan defaulter. No Tata group company, including Tisco, is a
The AIBEA had released a list of loan defaulters who are members of the CII, claiming
that Dr Irani, along with N.N. Kampani, had defaulted on a loan of Rs 25.4 crore from the
Industrial Development Bank of India availed of for Powmex Steel of Orissa. Tisco has
clarified that Dr Irani has never had any connection with Powmex Steel.
NHB comes out with priority bonds
Mumbai: The National Housing Bank is coming out with a Rs 300-crore worth
priority sector bond issue in the private placement market. The bonds will have an
eight-year tenor at a coupon rate of 11.70 per cent payable annually. They will have an
average maturity of six years and 11 months and will be partially redeemed in the ratio of
40 per cent, 30 per cent and 30 per cent at the end of sixth, seventh and eight year
RBI wants to cut CRR to 3%
Mumbai: The Reserve bank of India will seek to reduce the cash reserve
ratio to 3 per cent. This was stated by Y.V. Reddy, the central banks deputy
governor, at a seminar. The RBI has been wanting to cut the cash reserve ratio to this
level to conform to banking sector reforms of the government. As part of this policy, it
had reduced the cash reserve ratio from 10 per cent to 9 per cent earlier as a result of
which nearly Rs 7000 crore was released into the banking system.
Federal Bank plans e-com, insurance foray
Kochi: Federal Bank, one of the old generation private banks, is entering
e-commerce and insurance marketing businesses. The banks chairman, K.P. Padmakumar,
said the bank will interconnect its branches and introduce "any-where" banking
in Bangalore sometime in the second week of January 2000. The facility will then be
extended to branches in all the metros and some of the major cities later in the year, he
added. The Alwaye, Kerala-headquartered bank has also taken steps to introduce
Internet banking and enter e-commerce once the governments policy in this regard is
in place. The bank is also talking to some leading insurance companies abroad to
distribute their insurance products in the country.
Mr Padmakumar said the financial services subsidiary of
the bank, FedBank Financial Services, will be merged with the bank as part of the
3 professional institutes form apex body
Mumbai: Three professional institutions in India, the Institute of
Chartered Accountants of India, the Institute of Company Secretaries of India and the
Institute of Cost and Works Accountants of India, have decided to come together to
function under a common roof. The three institutions have set up a coordination committee
to evolve a method under which they will function in a unified manner. The three
institutes will prepare individual approach papers and a common approach paper will be
presented to the government sometime in April 2000. The three institutes are set up under
different acts of Parliament. A multi-disciplinary practice, where partnerships between
members of the three institutes would be permitted, had been agreed earlier.
Inflation rate down
New Delhi: The inflation rate has come down to 2.44 per cent for the week
ended 4 December, 0.2 per cent less than the previous week. The fall has been mainly on
account of continuous fall in the prices of major food products.
CII withdraws advice on banks closure
New Delhi: The Confederation of India Industry is withdrawing the
recommendation made by its task force on non-performing assets that three weak banks, Uco
Bank, Indian Bank and United Bank of India should be closed down. CII is learnt to be
writing to finance minister Yashwant Sinha on this. The decision comes in the wake of the
managements of these banks questioning the propriety and competence of the task force to
arrive at such a conclusion. CII has issued a statement saying it understands and respects
the sentiments and views of the management and employees of these banks and is, therefore,
asking the government no to consider this particular proposal. The task force, headed by
ICICIs managing director and chief executive officer had in all made 26
Private insurance to take off by end-2000
Bangalore: Chairman of Insurance Regulatory and Development Authority of
India N. Rangachary says private sector insurance operators will be able to start
full-scale activity by the end of 2000. The regulations will be in place by March 2000,
applications from intending players will be invited in April, and by end-September the
processing of applications will be completed, Mr Rangachary told newsmen after a seminar
on emerging scenario on insurance regulation and management. It will be made mandatory for
selected insurance companies to maintain solvency position on a daily basis and there will
be actuaries to interact with consumers and the regulator in order to protect
consumers interests, he added.
DBS eyes stake in UTI Bank
Mumbai: Singapore-based DBS Group Holdings is keen on acquiring a 20 per
cent stake in UTI Bank. The company, considered Southeast Asias largest banking
group, is reported to have held preliminary talks with UTI Bank recently. However, both
the sides did not elaborate on the talks.