6 september 2003

rupee should be a strong international currency: jalan
mumbai: reserve bank of india (rbi) governor bimal jalan, who will step down on saturday, said the rupee should become a strong global currency and india should be the strongest in the external sector. "the rupee should become as good a currency as the dollar or the yen or the pound sterling or the euro," dr jalan said on thursday in mumbai, in his last public appearance as the governor of the rbi. he makes way for dr yaga venugopal reddy as the new rbi governor on saturday.
dr jalan said central banks, especially in emerging markets, should be in harmony with the government of the day for economic policy making. "it is important to have shared objectives between the central bank and the government though the instrumentalities of achieving those objectives may be different."

sbi seeks local loans for rib redemption
in preparation for the imminent redemption of resurgent india bonds (rib), the state bank of india has asked various banks to return the rupee resources they had borrowed from it. although the amount is due on 1 october 2003, sbi has sent formal letters to banks as reminders to return around rs 6,000 crore. most of these are foreign banks, which had borrowed rupee resources for day-to-day operations.
these banks had earlier tried to return the money, raised at a higher cost, as rupee resources at present are cheap and liquidity in the system is abundant. banking sources added that the reserve bank of india had also verbally asked these banks to pay back the rupee resources in time so as to avoid any volatility in the system on redemption of the ribs.

stanchart plan for 100% nbfc okayed
new delhi: the central government has allowed standard chartered bank to set up a 100-per cent wholly owned non-banking financial company (nbfc) in india. standard chartered's rs 250-crore fdi proposal was among the 11 cleared by finance minister jaswant singh at a meeting here on friday.
the foreign investment promotion board had earlier cleared all the 11 proposals, involving a total investment of rs 254.77 crore, at a meeting held on 23 august.

5 september 2003

max healthcare ties up ifc loan of rs 90 crore
new delhi:max healthcare institute ltd has inked an agreement to receive a project loan of rs 90 crore from the international finance corporation ,a member of the world bank group that promotes sustainable private sector investment in developing countries.

stci plans to enter funds management business
mumbai:securities trading corporation of india ltd (stci) plans to diversify its role by entering the portfolio advisory and portfolio management services space.
"we will be applying to the securities and exchange board of india for a licence and is expected to get permission to undertake the funds management business in a few weeks,'' said mr d basu, chairman, stci, at a press conference held to announce the annual results.

hdfc to focus on smaller cities for growth
bangalore:hdfc plans to increase focus on smaller cities - non-metros and b and c cities - to fuel its growth this year and in the near future. revenues from smaller cities now account for half of our annual revenues and these cities will be a focus area for hdfc, said mr r.v.s. rao, executive director. the average size of the loan may be smaller in these towns but there is untapped potential, said mr rao, adding that growth is happening in such areas.

metlife in pact with dhanalakshmi bank
kochi:metlife india insurance and dhanalakshmi bank announced the launch of dhanamlife, a term product specifically designed for account holders of the thrissur-based bank.

4 september 2003

rbi issues tax-free bonds for cpsus
mumbai: the reserve bank of india has issued tax-fee bonds of rs 20,395.036 crore under the central government's scheme of one-time settlement of dues of central public sector undertakings (cpsus) owed by state electricity boards (sebs). the first tranche of these bonds covering 17 states carry an interest rate of 8.5 per cent. these bonds were issued after almost two years since a high-level committee headed by the former union finance secretary montek singh ahluwalia had submitted its report to the centre in the middle of 2001.
ministry of power sources were quoted as saying that the securities have already been credited to the subsidiary constituent general ledger account of cpsus. the list of cpsus with the bonds worth the arrears owed by sebs are as follows national thermal power corporation: rs 11,503.246 crore, national hydro-electric power corporation: rs 1,751.15 crore, powergrid corporation: rs 1,274.82 crore, nipco: rs 709.366 crore, damodar valley corporation: rs 589.156 crore, coal india ltd: rs 680.35 crore, neyvelli lygnite corporation: rs 259.772 crore and nuclear power corporation ltd: rs 1,296.61 crore.

dhanalakshmi bank forays into life insurance with metlife
kochi: dhanalakshmi bank has ventured into life insurance, for which it has tied up with metlife india to launch a co-branded product. bank managing director and ceo b muthuswamy said the new product, dhanlife, is designed specially for its accountholders. with an annual premium of rs 365 which averages to re 1 a day, this yearly renewable group insurance plan provided a life cover of rs 1 lakh with an accidental death benefit cover of an additional rs 1 lakh.
the plan is for customers in the age group of 18-40. besides, the bank will market other products of metlife and will soon be entering non-life business, talks for which were at an advanced stage. metlife chief marketing officer suraj kelly said the company's tie up with the bank was the second in the state. kerala offered good business and it offered the highest revenue from premium this year.

koehler predicts 4% global growth in 2004
kuala lumpur: the world economy should grow by four per cent in 2004 with asian economies among the bright spots, horst koehler, the managing director of the international monetary fund (imf), said. "overall, the imf expects global growth to gather strength in the coming months and to reach about four per cent in 2004."
while uncertainties remain, prospects for a recovery in the global economy really have improved, he added. according to a revised draft report obtained by reuters in london last week, the imf is set to maintain its global growth forecast of 3.2 per cent for 2003. its forecasts are due to be published in the imf's world economic outlook this month.

bob focus on financing corporate sector continues
mumbai: bank of baroda will continue its thrust on financing industry and corporates. this is despite a 28-per cent rise in non-performing assets due to wilful defaults in the last fiscal. the bank's strategy to focus on corporates emanates from its perception that the quantum of lending to retail segment despite witnessing a significant increase in number of borrowers, may not be substantial enough, in terms of amount lent and the segment might in due course reach a point of saturation.
the bank has been focussing on retail lending due to large existing untapped potential in the segment and with a view to deploy available funds profitably in the face of low demand from large corporates. amid the current scenario, financing corporates and industry will be the bank's mainstay.

3 september 2003

boi cmd plans rate cuts across the board
mumbai: bank of india's new chairman-cum-managing director, m venugopalan, is planning to cut lending rates across the board. the bank has already cut its rates for retail products such as home and personal loans and will cut its prime lending rate (plr) for corporate loans as well. venugopalan said: "we have already cut rates for retail loans. the asset liability committee (alco) of the bank will soon decide on a cut in our plr."
at present, bank of india's plr is pegged at 11.5 per cent which is relatively high compared with other big public banks. state bank of india and bank of baroda have lower plr than boi. venugopalan, the first bank of india cmd to rise from the ranks, has chalked out a four-pronged growth strategy: building a technology platform, pushing retail loans, targeting small and medium sector for asset growth and over-all paring of lending rates.

rbi plans direct membership for primary dealers in rtgs
mumbai: the reserve bank of india (rbi) is considering a proposal to allow direct membership for primary dealers (pds) in the yet-to-be introduced real time gross settlement (rtgs) plan. at a meeting with pds yesterday, a proposal to include pds as rtgs members with limited access was considered. this essentially means pds can access rtgs for their own transactions and not for customer transactions, said market sources.
earlier, the rbi had worked out a two-tier system for rtgs-direct membership and indirect membership. while banks are included as direct members with accessibility to the rtgs both for their own transactions as well as for deals handled on behalf of their customers, primary dealers were proposed to be clubbed with other participants as indirect members. but pds requested the rbi to reconsider the move stating that over
30-40 per cent of the transactions get settled through them and hence barring them from direct membership will affect their transaction cost.

sbi starts online ticketing
bangalore: the state bank of india yesterday announced the launch of e-rail, its online reservation system, which allows its internet banking customers to make online booking of railway tickets. the bank has tied up with the india railways catering and tourism corporation ltd (irctc) to provide the service. sbi's internet banking customers will now be able to book tickets through the irctc site and pay for the tickets fy direct debit to their accounts on www.onlinesbi.com.
sbi chairman a k purwa said the bank would not hold roadshows in the us for its renewed resurgent india bonds scheme, which being offered from next month. "there will be no roadshows in the us for the time being as we have some issues to be sorted out with the us government. but nri investors in the us will be eligible to either renew the existing bonds or go for the new bonds being offered at the prevailing interest rates."

icici bank acquires 12.65% hfcl equity
mumbai: icici bank, the second largest commercial bank has acquired 3.6 crore shares aggregating 12.65 per cent of himachal futuristic communications ltd (hfcl) due to a default in loan payment by the latter. the acquisition by the bank is done on par. the date of acquisition of shares is 27 august 2003.
hfcl chairman mahendra nahata reportedly said that it is not a default from his side, but an act of restructuring the loan. "this is a misrepresentation and we will be talking to icici bank about this," he added. the original loan of hfcl from icici bank is to the extent of rs 200 crore, he pointed out. the mode of acquisition of hfcl equity by icici bank is through loan conversion (the loan agreement stipulated condition for conversion into equity shares on default in payment), icici bank informed the national stock exchange here on tuesday.

bob, boi explore jv possibilities in latin america
mumbai: bank of baroda (bob) and bank of india (boi) are exploring possibilities to set up joint ventures in latin american countries. the plan includes setting up offices in argentina and brazil. besides, both the banks are also planning to set up offices in trinidad and tobago in the west indies. bob is also examining the feasibility of expansion of its us operations to texas and california. bob, which has 38 overseas branches, is in the process of opening offices in malaysia. the bank, however, is yet to get the final nod from the reserve bank of india for its malaysian venture.
bob management shared its future plans on tuesday with the parliamentary standing committee on finance, which is on a two-day visit in mumbai to ascertain the working of public sector banks. it could also be noted that bob had recently got approvals from rbi for opening a fully-owned arm in tanzania and a representative office in china. the bank is currently in talks with regulatory authorities in the respective countries for the final approval.

2 september 2003

s&p raises indian banks' outlook
mumbai: standard & poor's (s&p) ratings services has raised the outlook for indian banks from negative to stable. however, the rating agency said risks in the sector are higher than in developed banking markets.
s&p says key structural reforms in india have improved the asset quality, profitability and capital adequacy ratio of banks besides raising transparency and efficiency in the banking system. the asset quality of scheduled commercial banks in terms of gross non-performing assets to loans improved to around 9 per cent in march 2003 from 15.7 per cent in march 1997.

lic to invest rs 70,000 crore this fiscal
mumbai: life insurance corporation (lic) will invest around rs 70,000 crore during the current fiscal. apart from over 50 per cent investment in government securities, the other half of the massive kitty is scheduled to be deployed in equities, corporate sector bonds and infrastructure projects.
thus far, in direct competition with other players in the financial sector, particularly with the bankers who are finding it tough to deploy their funds, lic has already lined up infrastructure projects of ntpc, nhpc, pfc, the prime minister rural road project and the quadrilateral road project for a total investment of around rs 20,000 crore. in 2002-03, lic had invested over rs 63,391.18 crore.

rbi announces 20-year gilt auction
mumbai: the reserve bank of india (rbi) has announced an auction of a 20-year paper for rs 5,000 crore. this will be held on 3 september. rs 5,000 crore worth of open market operation (omo) will follow this on 8 september.
while the 20-year government security will be floated in the primary auction, the omo sale is through an auction of 16-year 6.05 per cent 2019 gilt.

1 september 2003

banks' earnings increase due to steel turnaround
mumbai: due to a turnaround in the steel industry, banks and financial institutions have upped their interest earnings as their non-performing assets (npas) have gone down. banks and fis have also improved the quality of their assets by converting a part of their debt into equity and have even booked profits by selling their equity in steel companies.
a portion of the lenders' debt exposure was recently converted into equity as part of the restructuring of some of the distressed assets. the collective impact on the bottomline of the financial intermediaries is going to be substantial this year. but none of the banks and institutions with large exposure to the steel industry is willing to quantify the gain at this point.

aviva no to 100% fdi in pension business
mumbai: aviva plc, a 11.5-billion pound sterling company, is keen to maintain its partnership with dabur and does not want to hold a 100-per cent stake even if it is given the option. according to aviva plc managing director international cees schrauwers, "it is like being colour blind and needing someone to give proper insight. even if we are allowed to hold 100 per cent, i would prefer to maintain our partnership with the burmans, but hold a majority stake."

banks do not want major changes in sarfaesi act
mumbai: banks want the basic character of the sarfaesi act 2002 to remain as it is and expect only minor procedural changes, which is supposed to be effected by the central government in response to the latest supreme court directive seeking redrafting of the law.
the apex court had asked banks, financial institutions and defaulting companies to come up with suggestions before 15 september, the next date of hearing in the mardia chemicals vs icici bank case, to fine-tune the securitisation and reconstruction of financial assets and enforcement of security interest (sarfaesi) act, 2002, as "it is heavily in favour of the lenders".

bank of baroda expects 35% profit growth
mumbai: bank of baroda expects to post a 35-per cent growth in its net profit in the current fiscal, according to bank chairman p s shenoy. "we expect operating profit to grow by 25 per cent in the current year over the last year while the net profit should grow by 35 per cent." the bank posted a 33-per cent year-on-year rise in net profit to rs 2.44 billion ($53.2 million), or rs 8.26 per share, for the last quarter ended 30 june.
banks have been grappling with reduced demand from traditional big business in recent years as top-rated borrowers have chosen to either borrow overseas or have raised funds by tapping the bond market directly as yields slumped, reports say. this has led many banks to increase focus on retail loans to the emerging middle class, estimated at 300 million people. shenoy said his bank will continue to focus on retail loans for growth while also targeting medium-sized businesses. "retail loans grew 40% last year and we think this rate can be sustained in the medium term."

idbi clears rejig package for stone india
kolkata: idbi has cleared a restructuring package for stone india ltd, a gp goenka group company, thanks to which the company will save about rs 20 lakh every year on interest outgo. the idbi package offers stone india the relief from paying any penal interest on unpaid interests.
according to a ray, managing director, stone india, after the company's annual general meeting on friday in kolkata, "perhaps the worst was over." i sen chaired the meeting in absence of stone india's chairman g p goenka. sen said the company is planning to de-list its scrip some of the regional stock exchanges.


list of reports on finance diary