28 june 2003

nhb tier ii bonds for rs 400 cr
mumbai: the national housing bank has said that it has privately placed tier ii bonds of rs 400 crore. the bonds carry a coupon rate of 5.77 per cent per annum and have a maturity of five years and three months. the bank refinanced primary lending institutions in the housing finance sector. during the period july 2002-june 2003, it released refinance of rs 2,700 crore, an nhb release said. it added that the tier-ii issue would help leverage refinance operations and increase lending limits to housing finance institutions.

state co-op bank plans rs 400-cr loan disbursal
thiruvanathapuram: the kerala state co-operative agricultural and rural development bank has programmed to extend loans to the tune of rs 400 crore for various schemes in the current year. of this, rs 164 crore will be made available for new agricultural development projects and land development schemes, while rs 100 crore has been earmarked for starting industrial ventures and for buying of vehicles under the non-agriculture head. k. sivadasan nair, president, told newspersons here on saturday that the bank, which had become one of the frontline housing finance agencies in the state, would disburse rs 146 crore in this sector during the current year. the bank will introduce a gold loan scheme this year for the benefit of the farmers who are members of the primary agricultural and rural development banks in the state. with a ceiling of rs 50,000, the loan will be available for periods of three and six months and one year and depending on the duration of the period, the interest rates will vary between 10 and 11 per cent. nair said the interest on interest levied on the arrears due to the agricultural and rural development banks would be fully waived from july 1.

27 june 2003

indusind bank net up 41 per cent
kolkata: the indusind bank posted a net profit of rs 71.35 crore during the fiscal ended march 31, 2003, a 41 per cent growth over the previous fiscal's figure of rs 50.75 crore. it has also selected credit rating information services of india ltd (crisil) for implementing credit risk assessment models. crisil will be implementing five of its risk assessment models for different borrower types namely large corporate, small & medium enterprises, non-banking finance companies, traders and brokers, a press release issued by indusind bank here on wednesday stated. during the fiscal 2002-03, the bank posted an operating profit of rs 308.51 crore, a 22.19 per cent growth over the previous fiscal's figure of rs 252.48 crore. during the fiscal under review, it was also able to bring down its net non-performing assets as a percentage of net advances to 4.52 per cent from 6.59 per cent. its profit per employee as of the fiscal under review stands at rs 7.58 lakh as against the industry average of rs 3.74 lakh, the press release stated, adding "the bank's business per employee for the fiscal to march 31, 2003 stands at rs 13.03 crore as against the industry average of rs 4.67 crore." the bank's capital adequacy ratio of 2002-03 stands at 12.0 per cent.

lic plans to meet solvency margin needs by march next
new delhi: life insurance corporation (lic) has prepared a roadmap to meet its solvency margin requirements by march 31, 2004.

speaking to newspersons on the sidelines of a ficci seminar on `natural disasters - fiscal and financial risk management', c.s. rao, chairman, insurance regulatory and development authority (irda), said, "lic has given us a plan to meet solvency margins by march 2004. we are satisfied with it." he however, did not give details on how the insurer plans to meet solvency regulations.
lic's requirement to meet the solvency margin stands at rs 10,000 crore, of which it has already met rs 3,500 crore last year. the insurance company requires about rs 6,500 crore more to meet regulatory requirements to stay in business, rao also added that the government would have to amend the lic act in order to increase its equity capital from the present rs 5 crore to the prescribed rs 100 crore.

dfc chief for more thrust to city governance
mumbai: housing finance has established itself as a healthy industry, but issues such as city governance and services relating to the supply side of the housing market are yet to be addressed, according to hdfc chairman, deepak parekh. "while india has taken great strides in a number of areas in recent years the one area that still suffers from unchanged practices over decades resulting in ever deteriorating services is that of urban development,'' parekh said in his statement to hdfc shareholders' in the company's annual report of 2002/2003. according to him, city governance - the issue of how cities are financed and managed - has not been addressed adequately. "unless there is true leadership that cares to make those changes our cities and their citizens are condemned to suffer appalling standards of management and waste in the delivery of even the most basic of services such as water and water disposal,'' he said.

pvt banks eye building tools for deploying flush funds
mumbai: after commercial vehicle finance, private sector banks are venturing into finance for construction equipment, to deploy their excess funds. hdfc bank and uti bank, the latest entrants in this market are capitalising on the infrastructure development in the country, especially through the construction of the golden quadrilateral and the proposed river linkage project. the annual sales of construction equipment in the country is estimated to be rs 4,500 crore, most of which is financed by non-banking finance companies and banks. loans in this sector are typically term loans with tenors ranging between 3-5 years and the deal size vary from as little as rs 7 lakh to rs 2 crore. these loans are used to purchase equipment such as dumpers, excavators, motor graders, compactors, pavers, cranes, dozers and several more depending on the requirements of the project.

bankers discuss ways to boost credit flow
hyderabad: andhra bank, the convenor of the state level bankers committee (slbc) of andhra pradesh, has held the lead district managers conference here on wednesday at its headquarters to evolve strategies to increase the bank credit flow.
in a press release here, the bank said the lead district managers of 23 districts and officials of the controlling offices of the lead banks and the officials of the state government, reserve bank of india (rbi), national bank for agriculture and rural development (nabard) and insurance have attended the day-long meet. according to the slbc convener and the andhra bank general manager, a.l. nageswara rao, the meet discussed strategies for the implementation of the annual action plan for 2003-04, drought relief measures, kharif crop loans, implementation of the government-sponsored schemes and strategies to increase the bank credit flow. rao informed the gathering that the slbc was taking all the required measures to effectively implement the annual action plan for 2003-04 with an outlay of rs 20,000 crore.

stanchart plans private equity deals in healthcare
bangalore: standard chartered bank plans to pick up equity in healthcare institutions and is conducting due diligence on two such enterprises. the bank had three proposals for private equity deals in the healthcare segment and planned to lend the same to business process outsourcing firms, the regional head for corporate, institutional and wholesale banking, ashok sud, said. the bank plans to cap its equity exposures in the healthcare segment to 20-25 per cent in each enterprise. moreover, it plans to lend as much as rs 50-75 crore to new or existing business process outsourcing operators. "the health sector has healthy growth", sud said. "we would be interested in medical colleges also for debt exposure... perhaps to fund for expansion or funding new equipments", he added. "we are looking at financing healthcare, infrastructure, it and ites projects", the ceo-india region, christopher low, said. "the exposure could be in forms of both debt and equity", low added. the bank had earlier arranged for a $100-million preferential private equity deal for idea cellular and retained "significant amount of shares", low said.

psb investments in gilts up 22 pc
chennai: public sector banks' investment in securities, mostly in government securities, has risen by about 22 per cent during 2002-03, compared to 2001-02. the rise in the outlay on investments is despite strong growth in advances of about 14.5 per cent and is mainly due to a robust growth in deposits of about 12 per cent. investments in securities have risen by nearly rs 53,150 crore for a set of 17 public sector banks, which exclude state bank of india. for some banks such as corporation bank and bank of baroda, which reported single digit growth in advances, the outlay on investments have risen by more than 30 per cent. banks such as punjab national bank and canara bank, on the other hand, have managed large growth of about between 15 and 20 per cent in both advances and investments in securities. incidentally, apart from the higher growth in deposits, the reduction in the size of the call money market has also had an effect on growth in investments in securities. though a one-to-one correlation cannot be drawn, moneys' previously invested in the call money market are now being partly invested in government securities and `repos'. according to k.v. hegde, general manager, treasury, canara bank: "the size of the call money market has declined because there is no demand for funds. the yields on call money investments have also declined sharply and the rbi has also imposed limits on the participation of each bank in the call money market."

uti bank plans rs 100-cr bonds
mumbai: the board of directors of uti bank ltd has decided to issue non-convertible unsecured redeemable debentures up to rs 100 crore in one or more tranches as tier-ii capital. it also added that the bank's members had approved the payment of 22 per cent dividend at its annual general meeting. uti bank also announced that a.t. pannir selvam and jayanth varma were appointed additional directors with immediate effect. selvam will be the nominee director of the administrator of the specified undertaking of the uti and varma will be an independent director. also, the bank today allotted 95,005 equity shares of rs 10 each under esop to its employees. the paid-up share capital of uti bank will accordingly increase to 23,02,93,894 equity shares from 23,01,98,890 previously.

film industry yet to warm up to insurance
mumbai: big gains for an insurer, but miniscule given the film industry's size. united india insurance co ltd nearly doubled the size of its film insurance portfolio over the last one year, to 43 films. the indian film industry churns out more than 1,000 films annually. reported in april 2002, the insurer's portfolio was 22 films-strong since starting the business in 1998 with taal. "compared to last year, premia collection has grown by 50 per cent," ajit g. gupta, development officer overseeing the business, said. on the average straddling 1-1.5 per cent of a film's budget, premia collection's overall growth rate trails the increase in number of insured films because of the variation in budget sizes. additions to united india's kitty include titles such as saathiya, joggers park, asambhav, ek aur ek gyaarah, chalte chalte, main hoon na, taj mahal, khel, ganga jal, kal ho na ho, lakshya and deewar. claims continue to be few and resolve at the insurer is to stay on in the business provided profitability is maintained.

aviva launches `lifeshield'
hyderabad: aviva life insurance, the joint venture between dabur and aviva plc, launched its pure term insurance policy - lifeshield - here on wednesday. the company said lifeshield guaranteed a lumpsum amount in the unfortunate event of the death of the life insured during the term of the policy. however, according to the company, a key feature of the policy is the offering of preferred rates to aviva's pensionplus policyholders. while pensionplus provides financial security to the policyholder post-retirement, lifeshield offers financial security to the family members in the event of the death of the individual during his working life. "hence, a combination of lifeshield and pensionplus is an ideal investment combining savings post-retirement and protection in the eventuality of death," the company said.

25 june 2003

hdfc bank goes retail with wholesale banking
mumbai: hdfc bank is expecting an exponential growth in its wholesale banking segment, with the emerging opportunity in the business of providing short-term and working capital finance to vendors and distributors of its large corporate customers.

called "supply chain financing", this high-margin business has huge potential - as large as retail banking itself - as it provides bank access to a huge customer base comprising small and medium scale enterprises with low levels of non-performing assets. this also facilitates vendors and distributors to get short-term funds at competitive rates of interest. within a year and a half of the launch of this financing avenue, hdfc bank has signed up over 50 top companies from industries like petrochemicals, pharmaceuticals, automobiles and other agro-based industries. the bank has created an asset portfolio of rs 15 billion and gained access to as many as 1,300 vendor accounts and 200 dealer relationship, samir bhatia, the bank's country head, corporate banking, said. hdfc bank has the required technology, efficient delivery capability and right market positioning to expect an accelerated growth in the segment, bhatia said.

states debt level may touch rs 12,00,000 crore by 2007'
mumbai: the state finances are in a dismal shape. fiscal pressure is likely to mount as the debt level is expected to grow to rs 12,00,000 crore by 2007, according to a study conducted by the crisil. the debt levels of state governments in 2002 were as high at over 26 per cent of the gross domestic product (gdp). together with their guaranteed off-balance sheet borrowings, the states' aggregate debt burden was over a third of the gdp. "this is very unlikely that the scenario will improve," said crisil's director (infrastructure rating) anil kumar. the pressure on the states' fiscal position has come from large and growing revenue and fiscal deficits in recent years. rising state revenue deficit levels have been the largest contributor at about 60 per cent of the states gross fiscal deficit (gfd), primarily because of interest charges on funds borrowed to meet revenue expenditure. "now, as the debt burden doubles, it would heighten the states' debt-servicing obligations and put further pressure on the already fragile state governments," said kumar.

iba hints at 0.5 per cent cut pn plr
new delhi: indicating a 0.5 per cent cut in prime lending rate (plr), the indian banks association (iba) on tuesday said it was dependent on cost of funds and that another round of voluntary retirement scheme (vrs) was in the offing. "the rate (plr) could be cut by another 0.5 per cent," iba chairman dalbir singh said here inaugurating a seminar organised by phd chamber of commerce and industry. he, however, said such a reduction would depend on the makets and cost of funds of banks. "if the cost of funds permit me, i will do it," singh, also central bank of india chairman, said, adding that it was dependent on individual banks to decide since they have now been empowered to determine the plr on their own. earlier, the banks had to wait for the reserve bank's credit policy to announce their plr, but at present, they need to weigh the costs before taking a decision. he said there had been considerable reduction in plr in the last six to seven years with an almost 10 per cent cut, to the present industry average of 11-11.5 per cent with only a few banks charging over that.

aviva life insurance targets 3 per cent market share by dec '03
kolkata: aviva life insurance co pvt ltd aims to achieve three per cent share in the indian insurance market by december 2003, according to aviva life managing director stuart purdy. "aviva life's market share as of june 2003, stands at 1.3 per cent and we have set a target to increase the figure to three per cent by december 2003," purdy said at a press conference here late on monday evening. aviva life is a joint venture between dabur of india and aviva plc of the uk. according to him, aviva life earned total premium income of rs 26 crore during the six-month period from january 2003 to june 2003. "we hope to end the year with a total premium income of around rs 70 crore," he said. purdy said that out of the rs 70 crore target around 50 per cent will come from direct sales agents' business and the remaining 50 pre cent from bancassurance. "currently 75 per cent of our premium comes from bancassurance and the remaining 25 per cent from the direct sales agents' business. but we are planning to increase the amount of our direct sales agents business and double it to 2,500 by december 2003," he added.

roce method should be extended to pvt terminals'
mumbai: the crisil infrastructure advisory has recommended that a return on capital employed (roce) approach for estimating the allowable returns be extended for private terminals to further attract them into the sector. at present, only major ports are under the purview of this. the recommendations are part of a study commissioned by the tariff authority for major ports (tamp), in a view of increasing importance of private sector investments in the sector. currently, the major ports are allowed a roce to the extent of the government's lending rate plus a three per cent contribution each to the two mandatory reserves maintained by these port trusts. this works out to 18.5 per cent.

dewan housing to get rs 60 cr from ifc
mumbai: the international finance coproration, the private sector arm of the world bank group, has signed an agreement to provide a loan of rs 60 crore to dewan housing finance corporation ltd, according to a press release.

forex dealers can offer rupee options from july 7
mumbai: authorised dealers in foreign exchange will now be able to offer their customers another product to hedge their currency exposures by way of `rupee options'', effective from july 7. the reserve bank of india has stated in a circular that authorised dealers having a minimum crar of 9 per cent, on a back-to-back basis, and continuous profitability for at least three years, and has a minimum net worth of not less than rs 200 crore, may offer the product. apart from this, they must have adequate internal control, risk monitoring and management systems, including a mark to market mechanism. upon fulfilment of the requisite criteria, authorised dealers will be allowed to run an option book after obtaining a one-time approval from the rbi. initially only plain vanilla european options will be offered, and customers will be allowed to purchase call or put options. customers can also enter into packaged products involving cost reduction structures provided the structure does not increase the underlying risk and does not involve customers receiving premium.

ucbs allowed to extend loans to their directors
mumbai: urban co-operative banks (ucbs) can now continue their existing advances to their directors, relatives, firms and companies in which they are interested, up to october 1. in april, the apex bank had prevented ucbs from extending any loans and advances (both secured and unsecured) these categories with immediate effect. the ucbs were advised then that the existing advances extended prior to april 29, 2003 might be allowed to continue up to the date when they were due and that the advances should not be renewed or extended further. an rbi circular said, the extension has been granted in view the representations received to provide some more time.

kisan cards use picking up
mumbai: kisan credit cards seems to be catching up with over 3 crore currently operational amongst farmers in the country as on march 31. the target is to touch 5 crore by march 31, 2004, as envisioned by the prime minister on independence day, which however looks a bit difficult. the aim is to fulfil the prime minister's announced plan of covering all `eligible farmers' - landowning farmers and tenant farmers who are close to 5 crore in number - under this card by march 31, 2004 in order to meet their credit needs for cultivation purposes. the target period may have to be extended considering that banks are expected to issue only another 75 in the current year. at present, 70-80 per cent of the total credit given by the banking system towards crop loans - rs 17,174 crore for the year 2001-02 - is now through kisan credit cards, according to nabard officials. there is also an effort to make all crop financing through kisan credit cards by march 31, 2004. through co-operative banks, scheduled commercial banks and rural regional banks 3.13 crore kisan credit cards have been issued in the country, according to the figures available with nabard, the nodal agency of this scheme. out of the 3.13 crore cards given out, 65 per cent has been issued by co-operative banks, since they are the traditional lenders towards crop loans, 25 per cent by scheduled commercial banks mainly, public sector banks and 10 per cent by regional rural banks, according to the data collected by nabard.

bajaj allianz opens office in kerala
thiruvanathapuram: bajaj allianz general insurance company (bagic), a leading private general insurance company, has opened its full-fledged office here, the first in kerala. announcing this here, sam ghosh, chief executive officer, said bajaj allianz would like to bring its products to "this highly literate state". thiruvananthapuram, the capital, offered a huge potential with several information technology and business process outsourcing companies having set up offices. according to ghosh, the company has already bagged several prestigious clients in the city. bajaj allianz was the first private general insurer to set up full-fledged offices in the state, which is known for its predominantly high percentage of middle class population who needs affordable general insurance products.

24 june 2003

kmbl to set up arc
mumbai: kotak mahindra bank is setting up an asset reconstruction company (arc), in partnership with other domestic companies, for purchasing stressed assets of other companies and restructuring them for commercially viable sell-out. the arc will commence its operations in the second quarter of the current fiscal and a decision on other domestic partners would be taken in the next two months, bank executive vice chairman and managing director uday kotak said on monday. "we are setting up the arc as the company has required expertise and skills to recover the stressed assets," kotak said, adding the bank would contribute upto 40 per cent of the total capital requirement for the arc. the size of the asset portfolio of the arc will be around rs 200-300 crore including the stressed assets of kotak mahindra bank.

kotak mahindra bank q4 net at rs 10 crore; to give 21 per cent
mumbai: kotak mahindra bank ltd has posted a net profit of rs 10.06 crore for the quarter ended march 2003 as compared to rs 19.30 crore for the quarter ended march 31, 2002 after taking into account an expenditure of rs 20.85 crore towards its conversion into bank. total income of the bank in the quarter has gone up by 53.26 per cent to rs 80.65 crore from rs 52.62 crore in the corresponding quarter of the previous fiscal. for the fiscal ended march 31, 2003, the company has posted a net profit of rs 44.96 crore for the year ended march 31, 2003 as compared to rs 54.52 crore. total income has increased to rs 254.68 crore in the fiscal 2003 from rs 187.24 crore in the previous fiscal. however, the previous year's figures are not strictly comparable with those of the current year as the bank has changed some of the accounting policies to ensure compliance with banking regulations and banking industry practices after its conversion into a bank with effect from march 22, 2003. the group has posted a consolidated net profit of rs 73.32 crore for the fiscal ended march 31, 2003 as compared to rs 84.09 crore for the year ended march 31, 2002 after taking into account the expenditure on the conversion into bank and losses made by its insurance subsidiary. total income has increased from rs 606.07 crore in the financial year 2001-02 to rs 714.84 crore in the year ended march 31, 2003

icici bank bags us magazine award
mumbai: icici bank has won dm review's world class solution award 2003 in the `business intelligence' category for its teradata enterprise data warehouse solution, according to a company release. teradata, a division of ncr corporation, on monday announced that icici bank was the first asia-pacific organisation to receive the award from the american business intelligence and analytics magazine. the bank uses the teradata platform to develop tailored marketing campaigns that have significantly boosted customer acquisition rates. it has serviced over 11 million customers country-wide. also, icici bank's credit cards and retail loans business units attributed 25 per cent and 20 per cent respectively of their new/incremental business in the past year to cross-selling activities facilitated by the data warehouse.

hdfc to focus on secondary cities
kochi: having built up a strong bond with the retail customers of the metros and major cities of the country, housing development finance corporation (hdfc) has now begun to focus on the secondary cities. inaugurating the new hdfc office at palarivattom in kochi, r.v.s. rao, executive director, said at a press conference that over 80 per cent of the institutions loan portfolio is retained among the retail customer. only the remaining 20 per cent is held by the corporates, where again the loan is most often routed for building individual houses for the staff. despite building a loan corpus of rs 9,950.87 crore last year, the average size of borrowing remained a shade over rs 3 lakh, rao said. and with the real estate development gaining pace in the secondary cities and smaller towns, the company was focusing on these areas as well. the banks in the smaller cities have been focusing in high net worth individuals, while hdfc would be focusing on the middle-income group as the potential customer.

no plan to offload equity in non-life insurance cos
new delhi: the government has no immediate plans to include the four nationalised non-life insurance companies into the disinvestment list. at present, the four companies are 100 per cent owned by the centre. "there is no proposal before us to offload the government's holding in any of the four non-life insurance companies," a senior official of the ministry of finance said.
after the success of the government's disinvestment of its shares in maruti udyog ltd (mul), there had been speculations in some quarters that the non-life insurance companies may now be dragged into the disinvestment process. the four companies are new india assurance co ltd, oriental insurance co ltd, united india insurance co ltd and national insurance co ltd. however, the finance ministry officials did not completely rule out the possibility of going in for dilution of centre's equity in the four companies in future. "what proposals would come up in future is difficult to say since the economic environment is extremely dynamic. in view of this, it would not be proper to rule out any of the options before us," officials said.

lok adalat settles 390 bank cases in tn
coimbatore: lok adalat is emerging as the most successful platform in settlement of bank cases. hundreds of bank cases (in the pre-litigative stage) had been settled before the lok adalat between january and may 2003, compared to the corresponding period of the earlier year. the details furnished by the coimbatore district legal services authority reveal that a settlement had been reached in 390 cases and the amount settled had touched a high of rs 5.15 crore during the first five months of the current calendar year. but between january and december 2002, only 42 cases had been settled for rs 30.22 lakh. indian overseas bank topped the list with 111 cases, followed by bank of india at 85, bank of baroda 54, state bank of india 45, union bank of india 39, central bank of india 30, canara bank 25 and indian bank with just one case.

india's consolidated debt to surge: icra
new delhi: india's consolidated debt is likely to swell with many states accessing markets for pre-paying high cost loans, credit rating agency icra has cautioned. "the pre-payment of state government loans, mostly funded by the market, will show up as reduction in the centre's liabilities, although it will raise the consolidated debt of the centre and state governments," icra said in the latest issue of 'money and finance'. warning that the pre-payment of state government loans to the centre would have "sizeable" impact, icra said, "it is not known what the accounting treatment is going to be." according to market sources, during the fortnight ended june 13, rbi mopped up rs 7,000 crore through on-tap sale of state loans under centre-state debt swap scheme, which enables states to pre-pay high cost debt and substitute them by current low coupon-bearing small savings and the open market loans.

23 june 2003

indusind bank eyeing nbfcs for acquisition
mumbai: the hindujas-promoted indusind bank is looking at non-banking finance companies for acquisition.
"we are interested in acquiring nbfc business. we are looking at some of the potential candidates for acquisition. it is too early to talk about them'' said mr bhaskar ghose, managing director, indusind bank.

short-term securities evoke little interest
mumbai: bond markets surged during the week propelled by retreating inflation and buoyant foreign exchange inflows into the country.

but traders also said that the bond market stimulus was also provided by the poor credit demand in the market, as most banks saddled with deposits have been shifting to short-term and medium-term debt to part their funds.

rising rupee blunts exporters' edge
new delhi: although the extent of appreciation of the indian rupee vis-à-vis the us dollar is not high compared with other currencies, the fact that some of india's competitors' currencies such as that of china, malaysia, thailand, taiwan and the philippines have either not appreciated or appreciated slightly less than india or simply depreciated has impacted adversely on indian exporters, blunting their competitive edge.

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