14 june 2003

alf to mop up rs 105 cr through preferential issue
chennai: chennai-based ashok leyland finance ltd plans to raise rs 105 crore through the issue of 2.08 crore cumulative convertible preference shares to the existing shareholders of the company. the board of directors, in their meeting held on friday, has decided that the shareholders will be issued two ccps for every three equity shares held. the ccps will have a face value of rs 50 and carry an interest rate of 7.5 per cent per annum. the ccps will be converted into equity shares after a three year period at a premium of rs 40 (face value rs 10) or the average of the six month trading price at the exchange, where the stock is frequently traded (with a minimum of rs 10), whichever is lower. the issue of ccps will help extend the firms financing capabilities besides boosting capital adequacy, which stands comfortably at 16 per cent (march 2002), as against the rbi stipulated 12 per cent. currently, the paid-up share capital stands at rs 31.13 crore and the ccps will be considered as tier ii capital.

ifc likely to pick imgc stake
chennai: the national housing bank is likely to get a $6 million (approximately rs 30 crore) equity investment from the international finance corporation, washington for its india mortgage guarantee company. imgc is being promoted by nhb in association with four foreign partners as the first mortgage guarantee company for housing finance firms in the country. though nhb has not yet finalised the initial equity capital base, the paid-up equity of the company is expected to go up to $40 million as per business requirements. ifc has evinced keen interest in investing in the venture and is expected to take a final decision in this regard by early next month, senior nhb officials said. ifc director board would consider the investment in imgc at its next meeting scheduled to be held on july first week, ifc has notified.

hdfc targets 30 per cent growth in loan approvals, disbursements
kolkata: housing development finance corp ltd has set a 30 per cent growth target in loan approvals and disbursements during the current financial year 2003-04, hdfc managing director keki m mistry said. "during the financial year ended march 31, 2003, hdfc's total loan approvals stood at rs 11,732 crore and we hope to achieve a 30 per cent growth during the current fiscal," he said, while attending a seminar on real estate and housing - new growth sectors in eastern india - organised by the bengal chamber of commerce & industry here on friday. during the fiscal 2002-03, hdfc disbursed a total loan of rs 9,957 crore. "we have set a target to increase this figure by 30 per cent as well during the current financial year," he said, adding hdfc has securitised rs 500 crore worth of loan in 2002-03. "we have done this securitisation in six indian states where the stamp duty on loan securitisation has been reduced," he said. these six states are west bengal, andhra pradesh, tamil nadu, karnataka, gujarat and maharashtra

hdfc expects to borrow rs 6,000 cr from markets
kolkata: housing development finance corporation expects to borrow over rs 6,000 crore this year from both domestic and global markets. it is specifically looking at a $200-million package from international finance corporation. hdfc, said keki m. mistry, corporation's managing director, is in negotiations with the washington-based agency with regard to the loan. this will form a critical part of the company's overall borrowings. the housing finance company also expects to close the year with a 30 per cent growth in loan approvals and disbursals. last year, its approvals stood at rs 11,732 crore, and disbursements at rs 9,957 crore.

hdfc sells 20 lakh shares of amc to standard life
mumbai: housing development finance corporation ltd has sold 20 lakh equity shares of rs 10 of its subsidiary, hdfc asset management company ltd, to standard life investment ltd for a consideration of rs 34 crore. in an intimation to the bombay stock exchange, hdfc has said that consequent to this sale, the corporation would hold 50.10 per cent of the total paid-up capital of hdfc amc and the balance 49.90 per cent would be held by standard life investment ltd.

rs 28-cr loan default to karur vysya bank - interim injunction passed against hamsaveni spinners
coimbatore: the debt recovery tribunal, coimbatore, has passed an interim injunction against hamsaveni spinners (p) ltd - a spinning unit - for defaulting their bankers - karur vysya bank to the tune of rs 28 crore. the order was passed on june 9. the drt, in its order, identified shivashanmugham as the official receiver to take possession of the property. kvb had extended various credit facilities to this unit, which had filed a reference with the board for industrial and financial reconstruction under section 15 (1) of the sick industrial companies (special provisions) act in september 2001.

arvind mills commercial paper gets `p1+' rating
mumbai: the rs 20-crore commercial paper programme of arvind mills ltd has been assigned a `p1+' rating by crisil, which indicates a "very strong" rating for the paper. according to crisil, the rating is based on the unconditional and irrevocable standby facility provided by state bank of saurashtra to the extent of the rated amount. the standby facility will be available for the entire duration of the commercial paper to make timely repayments. the rating on the rs 25.36-crore non-convertible debenture has been upgraded to bb, indicating "inadequate safety," from d, which falls in the "default" category.

drt recovers rs 53 cr till april
coimbatore: the year-old debt recovery tribunal) here has recovered rs 53 crore up to april 2003. appreciating the efforts taken by the presiding officer of the drt at the second annual meet of banks and fis, the co-ordination committee for drt (represented by bankers) noted that the tribunal had performed reasonably well during last year.

sidbi seeks govt nod to buy securitised assets
mumbai: the small industries development bank of india is envisaging a new role for itself, as a buyer of securitised assets in an attempt to increase the lending capacity of banks to the small-scale sector. "the board of directors of the development financial institution has approved the idea and we are now writing to the union government for permission to buy securitised assets. we should be starting the process in a month's time once we procure regulatory consent,'' said p. srinivasa rao, chief general manager, sidbi. the sidbi act 1989 does not specifically authorise the institution to purchase securitised assets and therefore the government's approval is necessary. the aim is two-fold for sidbi, to increase bank credit to ssis and to grow its own asset book.

ifc to advance $15 million to balrampur chini mills
new delhi: the international finance corporation will be providing a loan of $15 million (rs 72 crore) to balrampur chini mills ltd, one of the leading manufacturers of sugar in the country. according to an ifc release, this loan will partially finance an integrated greenfield sugar mill with a capacity of 4,000 tons of cane a day and an associated 20 megawatt co-generation power plant in haidergarh in uttar pradesh. it will also partly fund a 60 kilolitre a day ethanol distillery with a biomass fertiliser unit at the company's existing babhnan plant in up. the new plant is expected to process sugarcane from about 40,000 farms in the area. production of ethanol is also expected to reduce the environmental impact of relying on fossil fuel. ethanol and gasoline will be blended to generate electricity on a sustainable basis through the use of bagasse, a by-product of the milling process.

13 june 2003

irda nod for afp courses
hyderabad: the association of financial planners (afp) has received recognition from the insurance regulatory and development authority (irda) as its approved training & examining body. in a press release here on thursday, afp said it was the first organisation whose courses had been given irda's approval to be equivalent of 100 hours of training and pre-licensing examination. at present, any candidate desirous to become an insurance agent is required to have, from an irda approved institution, a practical training of minimum of 100 hours and appear for pre-licensing examination. afp, a non-profit professional association, based in new delhi was established in april 2001 through the contributions of financial services companies such as alliance capital, american express, bajaj capital, cholamandalam finance, deutsche bank, franklin templeton investments, hdfc mutual fund, hsbc, icici prudential life insurance, idbi principal, il&fs amc, prudential icici mutual fund, skp securities limited and sun f&c mutual fund.

andhra bank to offer new services
hyderabad: andhra bank proposes to diversify into other financial segments such as distribution of insurance products, mutual fund products, cash management services, health insurance for customers, hassle-free electronic card for people who are going abroad. the bank has realised that its spreads would continue to be under strain in the soft interest regime and also in the framework of stringent income recognition and provisioning norms. "reduction in costs, increase in income flows and improving delivery channels by effectively using the technology initiatives would be focussed with clear-cut strategic intent," the bank assured its shareholders. aimed at leveraging information technology for better customer service, reducing costs and imparting the ability to handle higher volume of business, the bank has computerised 1,087 out of 1,100 branches. "the bank is racing towards seamless integration of branches through cluster banking solution by september 30, 2003."

syndicate bank to adopt new risk management system
hyderabad: aimed at effectively addressing the three categories of risks - credit, market and operational, syndicate bank has decided to put in place a new risk management architecture. this is expected to enable the bank prepare groundwork for the implementation of new basel framework on risk management. "for the first time, a comprehensive risk profile of the bank has been prepared on the basis of templates provided by reserve bank of india," the syndicate bank chairman and managing director, michael bastian, said. the risk profile captures eight business risks and four control risks. further, the risk profile indicates level and direction of risk in each of these areas, michael bastian informed the shareholders in the management discussion and analysis enclosed to the latest balance sheet. according to him, a board level sub-committee on risk management (irmc) has been constituted to oversee the risk profile and implementation of various risk management and control policies and procedures. separation of risk control and risk taking functions were clearly delineated, he said.

exim bank pays out rs 45 cr to govt
mumbai: exim bank has paid rs 45 crore dividend to the union government for the financial year ended march 31, 2003. the dividend payout amounts to 22 per cent of the bank's net profit of rs 207 crore. t.c. venkat subramanian, managing director and chief executive officer, handed over the cheque to anandrao adsul, union minister of state for finance.

corpn bank cuts rates on forex deposits
mangalore: corporation bank has revised its interest rates on fcnr(b) deposits with effect from june 9. according to a bank release issued here today, the interest rates on dollar deposits for tenures of one year to less than two years and two years to less than three years remain unchanged at 0.90 per cent and 1.20 per cent respectively. the interest rate applicable for deposits for a period of three years only is 1.55 per cent (previously 1.65 per cent). currently, fcnr(b) deposits are accepted in three currencies - us dollar, pound and euro. interest rates on euro deposits have also been revised. euro deposits for a period of one-year to less than two years will earn interest at the rate of 1.90 per cent (1.95 per cent earlier). the revised rate for deposits of two years and less than three years is 2.00 per cent (2.05 per cent) and for deposits of a period of three years 2.25 per cent (2.30 per cent).

rating for new india assurance
mumbai: a.m. best co, an international insurance rating company, has affirmed the financial strength rating of new india assurance company ltd at a (excellent), for the fourth time in a row. the rating reflected the company's excellent capital position, the maintenance of its leading position in the domestic insurance market and substantial returns from its investment portfolio, said a press release. according to a.m. best co, new india's capital adequacy is excellent. the company's capital fully supports its plans for growth and diversification.

centurion prunes net loss
mumbai: centurion bank, which is being taken over by the rana talwar-led sabre capital worldwide, has reported a sharp drop in net loss for the quarter ended march 31, 2003 of 89.6 per cent to rs 11.39 crore from rs 109.66 crore in the corresponding period of the previous year. the bank has convened an egm in goa on june 14 to seek shareholders' approval for change of management control and infusion of capital to revive it. for the full financial year, the bank has registered 84 per cent decrease in net loss for the year ended march 31, 2003 at rs 25.36 crore, down from rs 161.84 crore in the previous year. v. janakiraman, chairman and managing director, told newspersons that the net loss of rs 25.36 crore should be viewed against the fact that the bank had taken an "extraordinary one-time loss of rs 14.10 crore on account of the sale of certain non-banking assets, namely windmills.''

hdfc sells 10 per cent in hdfc amc for rs 34 crore
mumbai: hdfc on thursday sold 10 per cent stake in its subsidiary, hdfc asset management company ltd (hdfc amc), to standard life investment for rs 34 crore. with this sale, hdfc's holding in its asset management arm has come down to 50.1 per cent from 60.1 per cent, and the balance 49.90 per cent is now with standard life investment, hdfc's treasury head conrad d'souza said. hdfc amc has a corpus of about rs 7,500 crore. hdfc has sold 20 lakh shares of rs 10 each of hdfc amc to standard life investment. this is the third time, hdfc sold its stakes in hdfc amc to bring in its holding to 50.1 per cent level.

kotak bank wants 'reasonable mass' before inorganic growth
mumbai: kotak mahindra bank ltd will endeavour to attain reasonable mass and size by strengthening its branch network and expanding its customer base, before giving a concrete shape to its plan to grow through mergers and acquisitions (m&a).
"we are open to mergers and acquisition, but not in the near future. the bank, for the time being, will concentrate on infrastructure, expansion of branch network and technology," bank executive director dipak gupta said. the promoters of the bank are required to lower their stake by 11 per cent to 49 per cent after march 2004, in order to comply with reserve bank of india's stipulations. the bank is exploring various options for offloading promoters equity, which now stands at about 60 per cent. it will consider mergers, public offers, private placements and other options and work out the plans. "we are open to these ideas. but not now," gupta said.

stanchart courts consumers with mega loan mela
pune: class bankers are now wooing the masses. standard chartered bank has for the first time organised a mega mela to promote its home loan, auto loan and consumer loans at pune. it has got 60 builders, 15 automobile companies and 50 consumer durable brands under one roof to offer customers a range of products. if the response is good it will take the mela to other cities as well. it also plans to take home loan to 22 cities by the end of this year, including nasik, nagpur and indore, using its dsa network in places where it doesn't have branches. murali mn, gm and head, home loans, car loans and banking strategy, said that the bank's home loan portfolio grew four fold since 2001, but did not disclose the exact size. "our portfolio has grown at a brisk rate of 25 to 40 per cent in the market we operate," he said.

$10-m usaid deal for insurance sector
new delhi: the united states agency for international development (usaid) has awarded a $10-million contract to bearingpoint for a four-year programme to develop the insurance sector in india. under the contract, awarded late last month, bearingpoint (formerly kpmg consulting) will implement a programme of technical assistance with the insurance regulatory and development authority (irda). bearingpoint has set up a project office in hyderabad to maximise its interaction with irda, also based there.

the us assistance will help irda to build its institutional capacity in the areas of solvency and market conduct supervision, promote an enabling policy and a regulatory and institutional environment for the development of health insurance system, develop key professions associated with the insurance sector, and also develop comprehensive database on insurance such as health insurance, non-life and life insurance, a press release issued by the us embassy said here on thursday.

sundaram finance net up 13 per cent to rs 46 cr in fy03
chennai: chennai-based sundaram finance ltd (sfl) has reported a 13 per cent growth in its net profit during the year-ended march 2003. net profit of the company was rs 45.66 crore as against rs 40.36 crore in the previous year. gross income, including other income, has gone up to rs 476.06 crore (rs 467.64 crore). the company has recommended a tax-free dividend of 75 per cent for the year. this includes additional dividend of 15 per cent to commemorate the commencement of the 50th year of operations of sfl. the outgo towards dividend would be rs 20.30 crore. capital adequacy ratio was 17.29 per cent. net non-performing assets of the company was 1.45 per cent (2.37 per cent). addressing a press conference on thursday, gk raman, managing director, sfl said the company has shown a 25 per cent growth in hire purchase and loan disbursements.

bonds to protect banks from rate swings: crisil
mumbai: the domestic banking system is sitting on unrealised appreciation of rs 63,900 crore on its investment portfolio, with the sharp fall in interest rates over the last few years. a study released by credit rating and information services of india ltd (crisil) on thursday indicated this potential and estimates that this would provide a cushion to withstand an interest rate shock of up to 241 basis points (bps). interest rates have slumped by about 600 bps in the last four years, which has led to a significant rise in the prices of outstanding dated stocks. given the soft interest rate outlook, the cushion seems to be adequate to protect banks from an interest rate shock, at least in the short term. crisil's chief rating officer and executive director roopa kudva said: "we do not expect any material change in interest rates over the one-year time horizon and hence there is low likelihood of erosion in banks' investment portfolio."

12 june 2003

idbi caps declares 100 per cent dividend
mumbai: idbi capital market services ltd (icms), a wholly-owned primary dealing subsidiary of the industrial development bank of india (idbi), has announced a 100 per cent dividend for the latest fiscal, though it has posted a two per cent lower lower net profit for the fiscal 2002-03 at rs 228.14 crore. it paid a dividend of 25 per cent the previous year. icms has also retained its leadership position in the industry by posting a 72.34 per cent rise in its turnover for the fiscal at rs 2,52,644 crore.

centre asks rbi, sebi to expedite probe into shcil
new delhi: government has asked rbi, sebi and idbi to expeditiously decide on their investigation reports on the role of stock holding corporation of india (shcil) in the payorder scam in calcutta stock exchange. "the matter (alleged irregularities of shcil) is under the consideration of idbi, rbi and sebi," official sources said, adding that these three organisations had come out with their investigation reports and had been asked to take action expeditiously. the speeding up of the case comes after the joint parliamentary committee, that went into the stock scam of 2001, had highlighted the need to carry out follow up action by the rbi, sebi and idbi to punish the wrong-doers. idbi, being one of the promoters of shcil, had decided to carry out a special investigation into shcil's role so as to fix the responsibility and punish the guilty and had submitted the report to the committee.

krc plans rs 370-crore bond issue
mumbai: the state-run konkan railway corporation (krc) proposes to raise rs 370 crore through a privately placed bond issue. the bond issue, likely to be floated next week, will have a coupon rate ranging from 6 to 6.75 per cent. merchant banking sources told that the proceeds would be used by krc to meet operational expenses. krc has been looking at a coupon rate of 6 to 6.20 per cent for five year tenor, 6.25 per cent to 6.40 per cent for 10 year tenor and 6.40 per cent to 6.75 per cent for 12 year tenor. krc had raised around rs 114 crore early this year through a privately placed bond issue at the coupon rate of 6.35 to 6.85 per cent annually. it had planned to use the proceeds to augment its long-term resources for working capital requirements.

psb to market bajaj allianz products
new delhi: punjab and sind bank (psb) will be marketing the products of bajaj allianz general insurance, marking its foray into the insurance sector. "being non-fund and non-risky business for psb, the marketing of insurance products is expected to have a positive impact on income and profitability," psb chairman ns gujral said here on wednesday. with rs 6,200-crore advances extended to the industry, psb has a captive insurance business which it insures with other companies. besides marketing insurance products, it will aim at reduction of deposit cost and improving deposits mix as part of its strategy to finetune its fundamentals and bottomlines. it is also continuing with its retail lending drive to increase advances, portfolio, non-fund and other earnings. the insurance business would be conducted through its nationwide network, he added.

return on main income of 18 nbfcs up
mumbai: return on main income of 18 non-banking financial intermediaries (nbfcs) increased during 2002-03 as against the corresponding period last year, indicating better performance by nbfcs. of the 18 nbfcs selected for study, 61 per cent were found to have raised their efficiency during 2002-03. only profit making nbfcs during 2002-03 and 2001-02 have been considered for this study, which traces the trend of return on main income for the 18 nbfcs during 2002-03 against the same period in 2001-02.

total income of 18 nbfcs rose 8.73 per cent to rs 5,686 crore during 2002-03 from rs 5,328 crore during the previous year in the same period and their combined profits increased by 13.44 per cent, resulting in an increase in return on income, higher from 20.18 per cent in 2001-02, to 21.45 per cent in 2002-03. of these companies, the top five according to profit after tax (pat) to income ratio during 2002-03 are pnb gilts (40.52 per cent), axis capital markets (33.33 per cent), bajaj auto finance (28.72 per cent), hdfc (23.26 per cent) and reliance capital (22.82 per cent). out of the 18 nbfcs, seven witnessed a fall in pat to income ratio, while eleven showed a higher ratio in 2002-03, compared with 2001-02.

hdfc bank to extend forex trading business
mumbai: hdfc bank is planning to introduce forex facilities in most of its branches in india by the end of 2003. this decision has been primarily made with a view to provide standard and uniform facilities to customers all over the country. at the moment, hdfc bank provides forex facilities in around 75 per cent of it's branches. the number of branches providing forex facilities has moved up from seven to 175 in a period of eight months. currently, hdfc bank has 236 branches in india. said hdfc bank vice president and head (retail liabilities) amresh acharya: "we want to be aggressive in providing forex facilities to woo our customers. there is a huge potential in this area to tap." with this, customers across the country can avail of facilities like demand drafts and traveller's cheques in foreign currencies, opening of nri accounts for foreign exchange denominated deposits among others. customers will also get money changing facilities in hdfc bank branches.

co-op bank victims to hold rally
hyderabad: the welfare association of co-operative bank depositors are going to hold a rally on june 16 in the city demanding that immediate steps be taken to return their deposits locked in various crisis-ridden co-operative banks. c.c. reddy, the founder trustee of the visu trust, said the rally would start at punjagutta and end at reserve bank of india office near the secretariat. addressing a news conference here on wednesday, reddy, who has taken the initiative to represent the victims through the trust, alleged that huge amounts collected by some co-operative banks had been frozen by the rbi. manam anjaneyulu, the chairman of ap urban and town co-operative banks' association, called for attachment of properties of directors of erring banks and recovering non-performing assets and reimbursement of deposits to the victims, a visu trust statement said.

bob pares rates on farm, ssi credit
chennai: bharat overseas bank ltd has lowered interest rates on credit to agriculture and small-scale sectors. ``the revised interest rates to agriculture and ssi sector will be at plr minus one per cent for loans up to rs 25,000 and at plr for loans between rs 25,000 and rs 2 lakh,'' says a press release from the bank. however, for agricultural loans above rs 2 lakh, interest rates will be at plr plus two per cent. for ssis, the rates will vary between plr and plr plus two per cent, depending upon the bank's view of the risk. also, the bank has reduced interest rates on deposits by 25 to 50 basis points, in different tenors. at present, the rate on deposits between one and three years is six per cent.

idbi capital net down 2.5 per cent on interest rate volatility
mumbai: idbi capital market services ltd, a primary dealer in the indian debt markets and 100 per cent subsidiary of idbi, has posted a 2.5 per cent drop in net profit for the year ended march 31, 2003 at rs 228.15 crore as compared to rs 233.99 crore in the previous year. the decrease in trading profits is attributed to changing interest rate scenario. the rate of increase in g-sec prices was more rapid in 2001-02, providing more trading opportunities as compared to 2002-03. this was due to the fall in interest rates of 3 per cent in the year 2001-02 as compared to one per cent fall in 2002-03. rapid fall and volatility in interest rates give a trader more opportunities to trade and make profits.

11 june 2003

nhb mulls new scheme for weaker sections
mumbai: national housing bank (nhb), mainly a refinancing agency, is working on a new scheme to provide direct assistance to homeless poor. the scheme is essentially aimed at helping economically weaker sections, who are not able to get loans from housing finance companies, a senior nhb official on tuesday said. this would be a part of nhb's plan to intensify its direct lending. so far, nhb's direct lending confines to state housing boards and housing projects of public sector agencies. meanwhile, nhb, a wholly-owned subsidiary of the reserve bank of india, plans to raise rs 1,800 crore from the market in the current year. part of it would be to argument the bank's tier-ii capital. nhb has obtained a `aaa' rating from the credit rating agency care for its rs 1,800-crore bond issue. this is the first time the bank has gone in for a credit rating, said the official.

sbi kerala circle loan disbursal to touch rs 1,000 cr
thiruvanathapuram: the kerala circle of state bank of india has targeted to disburse loans to the tune of rs 1,000 crore in the current year. according to a break-up of the disbursement target provided by the circle office, industry and agriculture will be extended loans of rs 200 crore each, while small-scale industries and small business enterprises will get rs 150 crore and rs 100 crore, respectively. besides, housing and education sectors will be provided a total of rs 350 crore. the circle has also targeted to install 100 new atms in the current year, apart from the 44 atms already in operation. the atms are networked across the country and with the atms of state bank of travancore, an associate of sbi. plans are also afoot to open five specialised branches and six general branches in the circle. a commercial branch in thiruvananthapuram is also on the agenda of the bank.
the kerala circle of sbi, which came into being in november 2000 with an aggregate business of rs 5,988 crore, has since been able to add another rs 2,337 crore to its business. the figure was expected to cross rs 10,000 crore soon, an sbi spokesman said. in 2002-03, the deposits of the circle stood at rs 6,553 crore as against rs 5,799 crore in the previous year.

hdfc bank bullish on corporate business
mumbai: hdfc bank aims to achieve a 15-20 per cent growth in the corporate banking sector by capitalising on two relatively new areas- supply chain management and agri-business. the bank has an over rs 2,000 crore portfolio for its supply chain management business, through which it finances the suppliers and small- scale industrial units which provide components, raw materials or spare parts to large corporates, said ashima bhat, vice-president, head-supply chain management, hdfc bank.

"we are bullish on the supply chain business where the bank has had zero npas, 18 months after venturing into the business. we finance a few thousand ancillary units of several large corporates such as telco, reliance, mahindra & mahindra amongst many others," said samir bhatia, country head, corporate banking, hdfc bank. the bank gets an introduction to suppliers from the corporates, which are already customers of the bank. loans in this segment are typically between rs 1 lakh - 2 crore with tenors varying from 15 to 90 days and are rolled over on expiry, thereby remaining a permanent financing model for the suppliers, explained bhatia. about 20 per cent of the rs 2,000-crore portfolio consists of channel finance, where the bank offers finance to dealers towards distribution of a manufactured commodity. the bank has clients in varied sectors ranging from fmcgs, automobiles, pharma, petroleum and white goods. another private-sector bank to go aggressive on channel financing is uti bank.

state bank plea to raise foreign pie still on hold
new delhi: the government has yet to make up its mind on the state bank of india (sbi) request for permission to raise its foreign holding level. chairman ak purwar said on the sidelines of a seminar on accounting organised here by the controller general of accounts and the world bank that sbi had sought approval to raise its foreign stake level by around 8 per cent in order to improve its share value. it wanted that its global depository receipts (gdrs) totalling 7.89 per cent of its total shareholding be treated separately from its foreign holding of 20 per cent. "it is still under examination. the government takes its own time," he remarked. in case the gdr proceeds are treated separately, then the bank's foreign holding is slated to go up by 7.89 per cent. purwar also expressed himself in favour of attaching a premium on bank capital being returned to the government, though sbi has no role in the ongoing developments, "if i put money in risk capital, i would like to have a risk-related return," he commented.

icra doubts arc effectiveness in tackling npas
new delhi: icra on tuesday cautioned that asset reconstruction companies (arcs) might not be effective in tackling non-performing assets (npas) and said a bank-based bad debt mode was preferable as the arcs may have to deal with large amount of bad debts, which were difficult to restructure. "international experiences suggest that in dealing with old npas (non-performing assets), the success of arcs has been supported by special circumstances, which a developing country (including india) is unlikely to have," icra said in its latest review on money and finance. india should opt for decentralised creditor-led strategy and adopt policies to create an environment more conducive to such a strategy, it said, adding pre-conditions for successful bank-based restructuring were already there in the country. the recovery process was in for a drastic change with the securitisation act as banks were empowered to take stringent steps for fast and trouble-free recovery, icra said. expressing doubts on the efficiency of arcs, it said though such entities were owned and funded by some commercial banks and govt was not involved directly, "this does not ensure that the management will be efficient."

suspense over sbi lateral recruitments
chennai: state bank of india (sbi), country's largest commercial bank, has taken a roundabout route for lateral recruitment. the bank, through its subsidiary sbi capital markets ltd (sbi caps), has recruited scores of mba graduates from reputed management institutes like the indian institute of management (iim) and xlri, jamshedpur, to fill various key mid-management positions. interestingly, the new recruits are being paid market linked-salaries, which is way above the compensation package given to its middle level managers now. the move also assumes significance as the bank brass is under pressure from different quarters, including the central government, to come out with another 'exit option' to cut the flab further. the state bank of india had reduced its staff strength considerably by offering a voluntary retirement scheme (vrs) for its staff some time back. "sbi caps has selected 20 mbas from the institutes through campus interviews and deployed them at various branches across the country. the selected candidates, who are specialists in their respective fields, are undergoing training to understand the working of the bank," sources said.

bajaj allianz, bpl mobile tie up for handset insurance
pune: after banks, it is now the turn of mobile phone boutiques to sell insurance. bajaj allianz general insurance co ltd and bpl mobile have tied up to offer handset insurance against theft, loss or damage through the bpl mobile distribution network. a personal accident insurance and hospital cash is also bundled with the handset insurance product. deepak verma, senior vp and coo, bpl mobile, said this service would be available for bpl mobile subscribers in maharashtra and goa circle and then be rolled out in mumbai, kerala and tamil nadu. this offer could also be made available to the other mobilefirst alliance members.
kamesh goyal, coo, bajaj allianz said he was looking at a five per cent penetration of the market. bpl has a base of two lakh subscribers in this circle. for bajaj allianz, this is also seen as a cheaper customer acquisition route especially in a segment where the insurance awareness was low.

10 june 2003

lic turns to securitised papers
bangalore: life insurance corporation of india (lic) has begun picking up mortgage-backed securitised (mbs) papers in a bid to push up the average yield on investments in its portfolio. sources said here that lic had picked up at least rs 160 crore in a single transaction with its housing finance subsidiary, lic housing finance ltd (lichfl). s.c. jain, chief executive of the lichfl, confirmed the deal and added that more securtisations would be attempted during the coming months. the objective of this securitisation would be to reduce the dependence on borrowed resources for meeting its working fund requirements. during the last financial year alone, lichfl had placed about rs 430 crore worth of securitised papers. the takers for this paper included lic along with some public sector banks. during the last financial year, however, the discounting for these papers was in the region of 10 and 8 per cent. insurance companies, including lic, have begun seriously picking up securitised instruments in view of the high interest offered.

no special treatment for smaller banks
new delhi: the ministry of finance has decided on a level playing field for all banks in the government securities buyback exercise with no special treatment to be set aside for the smaller entities among the pack of public sector banks. some of the smaller public sector banks had sought the government's help in keeping them in a separate section in the auction process since they felt that they would not be able to bid competitively against the larger banks. it had been pointed out that the larger banks with much larger portfolio of government securities would be able to outbid the smaller banks since the latter would not afford to offer discounts that the larger banks might be willing to offer. however, after debating over the issue, the government has now decided that there would be no separate treatment to any segment of the psu banks. "everyone would have to play by the same rules during the auction. there would be no special treatment of any banks," senior finance ministry officials said.

ifc ooays $20 mn loan for alok inds
mumbai: the international finance corporation (ifc washington) has approved a loan of $20 million to alok industries, a mumbai-based textile company. this loan will be disbursed through a consortium of banks, of which the lead bank is the state bank of india (sbi), sources said. the approved loan is part of a large-scale $86.9 million project that alok industries is undertaking. the project will aim to strengthen alok's position as a cost competitive one-stop sourcing center for the indian garment export sector. it will also allow the company to increase its direct exports. the specific components of the $86.9 million project includes the following: capital expenditure and incremental working capital ($66.2 million). with this, alok industries is investing $49.8 million in order to set up of a dye-print-finish unit, establishing a small made-ups unit, expanding its weaving capacity, expanding its texturising capacity and expanding its knit processing capacity. in addition, $14.6 million would be used to cover the company's incremental working capital requirement. there would also be a $1.8 million provision for contingencies.

icici bank ptcs get top icra ratings
mumbai: icra has assigned a conditional 'maaa (so)' rating to the rs 21.43 crore pass through certificates (ptcs) issued by indian retail abs trust series 4. the ptcs are backed by car, commercial vehicles (cv) and construction equipment loan receivables originated by icici bank. this is the fourth retail loan receivables-backed issuance by icici bank to be rated by icra. this rating, which indicates highest safety, is based on the strength of cahs flows from the selected loans and the credit enhancement mechanisms designed to ensure payment of the debt obligation and the integrity of the legal structure. under the current transaction, icici bank will assign the receivables arising from the selected pool of contracts to a trust, while continuing to act as servicer.

9 june 2003

line of credit only via exim bank: govt
new delhi: as part of its export initiative, the government has taken a decision to route all line of credit (lc) through the export-import bank. "the exim bank has played a major role in promoting exports which have crossed the $50 billion mark during 2002-03. the government has now taken a decision to route all lcs through our bank", the general manager and regional resident representative sunil trikha said. he said the exim bank was currently negotiating a 15 million line of credit with the afro exim bank and already had a $200 million lc for import into iran. besides a 10 million lc is also functional with a bank in algeria, he said adding a $5 million lc was also operational with the eastern and southern african trade and development bank (pta bank). the pta bank member countries include burundi, comoros, djibouti, egypt, eritrea, ethiopia, kenya, malawi, mauritius, rwanda, somalia, sudan, tanzania, uganda, zambia and zimbabwe and trikha.

reinsurance outlook negative: s&p
new delhi: global rating agency standard & poor's has indicated a negative outlook for reinsurers for the sixth year in a row."continued rate increases in the global reinsurance market have failed to stem the downward pressure on ratings and market outlook remains negative for the sixth successive year," it said in a recent report. there may, therefore, be more rating downgrades than upgrades over the short-to-medium term, it cautioned. "despite further price increases during the january 2003, renewal season, the market continues to suffer from a diminished quality of capital, reduced financial flexibility (defined as the ability to source capital relative to requirements), prior-year liabilities, the overhang of reinsurance recoverables, and the likelihood that many companies' operating performance will fall short of expectations," s&p credit analyst stephen searby said. the report, entitled "global reinsurance 2003 mid-year outlook: negative outlook masks divergent fortunes," states that pressure on ratings continues despite the hard market conditions. a number of reinsurers have been finding it difficult to take advantage of the situation "to rebuild and restructure their capital bases and put in place foundations to reduce future loss volatility." s&p cited the "ease of entry for new players and increased competition in the market" as limiting the "ability of existing players to recover."

idbi rules out credit sops to hfcl
new delhi: industrial development bank of india (idbi) has refused to entertain a request for concessions on the line of credit granted to telecom equipment major, himachal futuristic communications ltd, amounting to rs 230 crore plus interest, asking it to honour the repayment commitments. as per the terms of the line of credit, the company had to repay the outstanding amount in 12 quarterly instalments commencing march 1, subject to the condition that it maintains two quarterly interest balance on the amount. it was also stipulated that the proceeds of the gdr, issued by hfcl in september 2002, would be utilised for prepayment of the credit facility.

bob aims at 18.2 pc credit offtake growth
kolkata: bank of baroda (bob) is looking at an 18.2 per cent growth in credit off-take nationwide during the current fiscal. m.m. gadgil, deputy general manager, told newspersons here that the eastern zone, however, was expected to show better credit off-take than the national average. "it is projected to move up by around 20 per cent,'' he added. bob's advances went up by 5.01 per cent in 2002-03 despite the lending rate cut. off-take, particularly in the retail and housing finance areas, was expected to witness significant growth, according to him. the bank has targeted reduction of non-performing assets by about 50 per cent during 2003-04. during 2002-03, the bank's net npa fell to 3.72 per cent from 4.98 per cent of the total advance in the previous fiscal.

sbi life offers cover for ssi loans
hyderabad: sbi life insurance company ltd has designed an insurance cover , which would be accepted by all bankers as collateral against loans to the ssi sector. if something were to go wrong either with the ssi unit or with the promoter, bankers can now stay cool. they can recover their money from the insurance company. the product of sbi life, titled `swadhan', offers

nmgb records 24.86 pc rise in net profit
thiruvanathapuram: the kannur-based north malabar gramin bank (nmgb) has recorded 24.86 per cent increase in net profit for 2002-03. the net profit of the bank moved up to rs.11.30 crore from rs. 9.05 crore in the previous year. the deposits rose by 24 per cent and reached rs. 519.67 crore. out of this, the non-resident external deposit amounted to rs. 69 crore, according to the chairman, v. nadanasabapathy. the advances were to the tune of rs. 449.85 crore, of which the priority sector accounted for 91 per cent. the credit-deposit ratio of the bank was at a healthy level of 86.56 per cent. the non-performing assets were at rs. 65.84 crore with a recovery rate of 76 per cent. the reserves stood at rs. 86.6 crore and the chairman pointed out that nmgb was one of the two regional rural banks, out of a total of 196 at the national level, which had not been recapitalised by the government. during the year, the bank opened five branches in ernakulam district, taking the total number of branches to 152. the area of operation of the bank covered kannur, kasaragod, wayanad, ernakulam and kottayam districts. the per branch business increased to rs. 637.84 lakh, while the per employee productivity was at rs. 97.64 lakh.

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