12 June 2004

Rupee down 9 paise
Mumbai: The rupee closed at 45.1550/1650 against the dollar on Friday, nine paise weaker than Thursday's close of 45.0650/0750.

Forwards Market: The six-month forward closed higher by 12.50/14.50 paise at 0.60 per cent (0.46 per cent). The 12-month forward closed at 22/23 paise (0.52 per cent as against 0.45 per cent).

G-Secs: The 8.07 per cent 2017 paper closed lower at Rs 121.08/10 at YTM 5.70 per cent.

Call rates: during the day touched 4.40-4.50 per cent and closed at 4 - 4.25 per cent.

RBI allows banks to raise long-term bonds
Mumbai: The Reserve Bank of India has allowed banks to raise long-term bonds with a minimum maturity of five years to finance infrastructure projects. As per the guidelines issued, banks will be allowed to raise funds to the extent of their exposure of residual maturity of more than five years to the infrastructure sector.

It is intended that banks should have first provided assistance to such infrastructure projects before raising resources through bonds. The bonds may be issued through a public issue or private placement as per SEBI norms. The bonds should be issued in plain vanilla form without call or put option and with a fixed or floating rate of interest.

Federal Bank: NRI deposit rates revised
Kochi: Federal Bank has revised its interest rates for NRI fixed deposit accounts. According to a press release from the bank, FCNR pound sterling accounts with a three-year maturity will now command an interest rate of 5.34 per cent per annum.

US dollar accounts of the same maturity will carry an interest rate of 3.43 per cent, while the interest rate for the Euro account has been pegged at 2.97 per cent. For a three-year fixed deposit NRI rupee account, the bank offers an interest rate of 3.5 per cent. For two-year deposits it is 2.90 per cent and for one year 2.10 per cent.

ECGC: Special credit cover plan for software sector
Chennai: Export Credit Guarantee Corporation (ECGC) plans to shortly introduce a special credit insurance package for software exports. In addition to software, ECGC would also ask for the Central Government's support to underwrite overseas projects executed by Indian companies. In view of the large sums involved in overseas projects, ECGC would need the Government's help to underwrite the related risk.

ECGC had also taken note of the growing importance of healthcare exports. The pharmaceutical industry's export to Latin America had grown, and exporters' had drawn attention to the challenges in insuring healthcare exports such as medical transcription. ECGC had registered a premium income of Rs 444 crore and claims of Rs 455 crore in 2003-04. The move to increase ECGC's equity to Rs 800 crore from the current level of Rs 500 crore had been delayed on account of the recently concluded general elections.

11 June 2004

Rupee weakens further
Mumbai: The rupee closed at 45.0650/0750 on Thursday, over nine paise lower than Wednesday's close of 44.97/99 against the dollar.

Forwards Market: The six-month forward closed at 0.46 per cent (0.23 per cent) and the one-year forward closed at 0.45 per cent (0.25 per cent).

G-Secs: The benchmark 8.07 per cent 2017 paper closed at Rs 120.90 with YTM 5.71 per cent.

Call Rates: They were easy at 3.90 - 4.10 per cent on account of selling pressure in the market and also heavy buying in the forex market.

Securitisation Act - IBA to press for pre-appeal deposit
Kolkata: Indian Banks' Association plans to move Supreme Court to prevent defaulting borrowers from exploiting a stance taken by the judiciary with respect to a key provision of the Securitisation Act. IBA's proposal is specifically directed against an action taken by the apex court in early April, which resulted in the striking down of Section 17(2) of the Act. This Section provided for pre-appeal deposit of 75 per cent of the liabilities, if a defaulting company wanted to appeal against the order of attachment of its assets.

RBI restricts HSBC buyout in UTI Bank
Mumbai: The Reserve Bank of India has turned down HSBC's attempts to purchase a second tranche of 5.46 per cent in UTI Bank. HSBC had applied for acquiring 20.08 per cent in UTI Bank, of which only the first tranche of 14.62 per cent of the deal aggregating Rs 304.2 crore has been cleared. With RBI's ruling the HSBC investment in UTI Bank is now curtailed at 14.62 per cent.

According to HSBC RBI did not cite any reasons for their decision. HSBC has also been asked not to pursue the matter any further.

TCS to implement HR solution for PNB
New Delhi: Software major Tata Conultancy Services has been mandated by Punjab National Bank to implement PeopleSoft's HR and payroll solutions for the bank. According to PNB, the implementation of the PeopleSoft human capital management (HCM) solutions across PNB's 4,000 branches, covering 54,000 employees and 10,000 retirees, would be one of the largest HCM implementations in Asia for the banking sector. The project will go live in next three months.

UTI Bank to raise $50 million
Mumbai: UTI Bank is to raise $50 million through a 1-year syndicated foreign currency loan shortly. The coupon rate of the loan is yet to be fixed, but is expected to be at 0.40-0.50 per cent six months LIBOR (1.79 per cent).

Corporation Bank takes on Boston Consulting Group
Mangalore: The Corporation Bank has approved the appointment of Boston Consulting Group (India) Private Ltd as the managing consultants for the bank. A bank release says that the consultant would assist the bank in the areas such as mapping the existing business and transaction processes. The group will also assist the bank in brand building, foraying into overseas operations and in re-orienting its training system. The assignment is to be completed in six months.

BoI to bring down NPAs to below 3 per cent
Hyderabad: Bank of India (BoI) has announced plans to bring down its net non-performing assets (NPAs) below three per cent from the existing level of 4.5 per cent. The bank, during the last fiscal, recovered Rs 763-crore, thereby, bringing down the net NPAs level to 4.5 per cent from 5.59 per cent in the previous fiscal. The bank expects global advances to reach Rs 55,000-crore during the current fiscal. The bank is making efforts to improve the low-cost deposits by adding branches and extension counters. It is also currently implementing core-banking solution in all its branches across the country. The bank has opted for Hewlett Packard as main system integrator. The major partner of HP in this project is Infosys with Finacle Core Banking Solution.

10 June 2004

Rupee breaks through 45 marker
Mumbai: The rupee breached the 45-mark on Wednesday to close at 44.97/99 in its value against the dollar.

Forward Markets: The six-month forward closed over 4.50 paise into premium at 0.23 per cent (0.06 per cent) and the 12-month forward closed over 9.50 paise into premium at 0.25 per cent (0.14 per cent).

G-Secs: The 8.07 per cent 2017 paper closed higher at Rs 121.45. The 7.37 per cent 2014 paper closed at Rs 115.80/85. The 7.49 per cent 2017 paper fell to Rs 115.95.

Call Rates: were in the range of 4.40-4.50 per cent.

RBI approval necessary for NBFC-bank mergers
Mumbai: The Reserve Bank of India has said that its approval should be obtained before initiating steps to merge a NBFC with a bank. In a circular addressed to all scheduled commercial banks, the RBI has said, "With regard to amalgamation/merger of a non-banking finance company (NBFC) with a bank, it has been decided that in order to ensure that the post-merger bank continues to be in compliance with the legal provisions contained in the Banking Regulation Act, 1949 and other relevant statutes and also the regulatory prescriptions of RBI, banks should obtain prior approval of Reserve Bank of India before initiating steps for amalgamation/merger of a NBFC with the bank.'

IRDA pulls the plug on bonus practices
Hyderabad: The Insurance Regulatory and Development Authority (IRDA) has warned life insurance companies against the practice of declaring bonus to policyholders except out of an actuarial surplus following valuation. The insurance regulator has said that it has observed that life insurance companies were taking recourse to shareholders' funds in different ways to enable declaration of bonus to participating policyholders.

In a circular to the life insurance companies, the regulator said the surplus should not be increased by contributions out of any reserve fund or otherwise unless they were brought in through the revenue account on or before the date of the valuation. According to the IRDA circular, the insurer should make good the accumulated deficit in the policyholders' account and transfer adequate assets to cover the cost of bonus prior to declaration of bonus to the participating policyholders. Further, IRDA has asked the insurers to appropriately increase the paid-up equity capital following the transfer of assets and investments.

IOB's net based remittance scheme
Chennai: The Indian Overseas Bank has launched an Internet based remittance scheme between India and the US. The scheme allows the recipient in India to get a demand draft within four working days. The demand draft can be presented at any bank the recipient has an account with. This product has been launched with the software and maintenance support of Times Online Money Ltd, a company that belongs to the Times of India group.

Indian Overseas Bank's Internet-based remittance product, e-Cash Home, will charge $3 for remittances up to $200, six dollars for remittances between $200 and $500 and nine dollars for remittances beyond $500 and up to the monthly limit of $5,000.
Last year, $143 billion got sent across borders and the inward remittances into India was $18 billion.

9 June 2004

ABN Amro looks at 30 percent growth
Mumbai: ABN Amro Bank is looking at a growth of 30 percent in net profit and assets in financial year 2005. With a book size of Rs10,000 crore, the bank disbursed loans worth Rs6,500 crore in FY 2003-2004 and expects loans to grow by 30 per cent in the current fiscal. In the last fiscal year, the banks retail business grew faster than the wholesale business.

Its net non-performing asset (NPA) dipped to 0.5 per cent as on March 2004 against 1.8 per cent in the previous year and the bank has received eight new branch licences from the Reserve Bank of India (RBI) and, by March 2005, it plans to increase its branch network to 24.

World Bank recommends reducing fiscal deficit to let economy grow
New Delhi: The World Bank has said that the Indian economy will grow only at six per cent over the next five years as against the target of seven to eight per cent unless the government reins in fiscal deficit and raises investment to improve the physical and social infrastructure in rural areas.

The World Bank has said in all likelihood India will continue to grow at six per cent over the next five years and though there is an in-built dynamism in services sector the key to India's growth lies in rural areas.

The World Bank said the other challenge is the fiscal deficit and the Central Government has to come up with innovative ideas for reallocating expenditure of not only the Centre but the States as well.

Amalgamation of RRBs demanded
Hyderabad: The All-India Regional Rural Bank (RRB) Employees' Association has urged the government to approve the recommendations of the Bankers Committee and amalgamate the RRBs to form six zonal rural banks in the country.

Addressing newspersons here, the Association Secretary, S. Venkateswar Reddy, said the Bankers Committee, comprising the Chiefs of commercial banks, representatives of RBI, Nabard and Central and State Governments, had submitted its report to the Government on May 1.

Rupee up 2 paise
Mumbai: The rupee closed two paise higher on Tuesday at 45.02/03 against the dollar, up from Monday's close of 45.0425/05.

Birla Sun Life launches Credit Guard plan
Mumbai: Birla Sun Life yesterday launched Credit Guard plan to capitalise on the growing retail-lending sector and the need to hedge risk factor of all parties involved including the lender and the borrower.

Peter Akers, coo, Birla Sun Life Insurance, said, "Credit Guard plan will help a leading institution manage the risk of lending, by insuring the borrower's life. It will eliminate the risk of the loan turning into non-performing asset on event of the death of the borrower.'

8 June 2004

Federal Bank board approves bonus issue
Mumbai: Federal Bank is giving its eligible shareholders a bonus issue in the ratio 2:1(two shares for every one held). The main shareholders in the Alwaye-based bank are banks, mutual funds, financial institutions, insurance companies. ICICI Bank is the single-largest shareholder in the bank with a stake of 20.44 per cent, UTI 10.39 per cent; foreign institutional investors 6.66 per cent; private corporate bodies 11.70 per cent; non-resident Indians (NRIs)/ overseas corporate bodies (OCBs) 1.17 per cent and public 46.86 per cent.

Citibank India net up 46 percent to Rs 572 crore
Mumbai: Citibank India has achieved a 46 per cent growth in net profit to Rs 572 crore for the year ended March 31, 2004, against Rs 391 crore the previous year. Going against of the practice of MNC with subsidiaries in India who are required to repatriate profits to the parent company, this year Citibank is not repatriating any profit to the head office and the entire earnings for 2003-2004 will be retained as capital in India to support its growth. The bank has a net worth of Rs.2, 695 crore.

IOB targets Rs 8,000 crore growth in 2004-05
Kolkata: Indian Overseas Bank (IOB) is targeting Rs 8,000-crore growth in business during the financial year 2004-05.
Briefing reporters, IOB chairman and managing director S C Gupta said that total volume of business, inclusive of deposits and advances, which the bank was looking at during the current financial year was Rs 70,000 crore.

7 June 2004

Exim Bank to go for euro bonds to raise funds
New Delhi: Exim Bank plans to raise over Rs1,300 crore through its euro bond issue as part of its Rs7,000 crore borrowing programme for this fiscal. Company sources said the bonds will be issued when markets are favourable. The Reserve Bank of India has already approved Exim Bank's proposal for raising external commercial borrowing worth $300 million from the overseas markets. This will be the first time when Exim Bank is tapping the international bond market. The proposed euro bonds also assume significance in the wake of weakening of dollar against the Indian rupee and all other major currencies. Exim Bank has so far raised $1.2 billion dollars in debt with maturity period ranging from 1-20 years.

Bond markets continue slide
Mumbai: Bond price continued on the downward path as traders, unnerved by contradictory statements from the Government, continued to sell bonds for the fourth consecutive week. In the light of the huge expenditure plans outlined by the government's CMP and no real articulation on the continuance of reforms and cutting back of subsidies, few traders accepted the FM's statements that the soft rate bias would continue. This has resulted in reserve money build-up substantially slowing during the week. The slowdown in reserve money accretions was partly on account of the deceleration in the foreign currency flows.

The presence of oil companies also contributed to driving down yields. Several oil companies have been sourcing forward covers for their import requirements, when prices dropped below $40 a barrel. Both private and public sector companies locked into low prices and simultaneously hedged in the foreign currency markets as well. With liquidity also tightening as was evident from high call rates. Call rates were closer to the bank rate and ranged between 6 and 6.5 per cent during most of the week. Moreover, the amount mopped up under the seven-day repos dropped to Rs8,500 crore.

This mop-up was mostly rollovers from the previous seven-day repos, traders said. Foreign banks and insurance companies sold bonds substantially to stop losses. This accelerated the slide. The undertone was weak and volumes remained thin. Average trading volumes were only about Rs3,500 crore. Spreads between one and 24 years remained high at 160 basis points. In addition to this inflation already at 5.02 percent is an additional worry.

Consequently, real yields were low compared to international levels, where it was in the region of about 1.5-2 per cent above the inflation rate.

Traders are expecting substantial increase in Government expenditure and a rise in the public sector borrowing requirements.
Foreign exchange flows also eased off considerably. Up to April, the average flows were in the region of about $250 million per day. These flows presently were barely $50 million. Exporters had deferred their inward remittances, hoping to cash in on a weakening rupee and larger forward premia. Foreign institutional investors were seen quietly exiting and also beginning to take forward cover for their exit.