11 September 2004

Bond prices surge - Rupee firms up
Mumbai: The rupee closed marginally stronger at 46.2650/2750 as against its close at 46.29/30 on Thursday.

Forwards Market: The six-month closed at 1.81 per cent (1.88 per cent) and the twelve-month at 1.56 per cent (1.68 per cent).

G-Secs: Surged by about Rs 2 in some long-tenor papers on Friday. The 8.35 per cent 2022 Government stock surged by over Rs 2 to close at Rs 114.10. The 10-year benchmark 7.37 per cent 2014 paper moved up by about 20 paise to close at Rs.110.35 at the YTM (yield to maturity) of 5.94 per cent. The closing yield for 8.07 per cent 2017 paper was at 6.3 per cent whereas it was 7 per cent for the 8.35 per cent 2022 paper. The yield difference was also about 60 basis points between the 8.35 per cent 2022 paper and the 11-year benchmark 7.38 per cent 2015 paper.

Call rates: In the range of 4.4-4.5 per cent in the inter-bank market

CBLO Market: 108 trades were transacted worth about Rs.3,300 crore.

RBI: Asks for scrutiny of Demand and Time Liabilities
Mumbai: The Reserve Bank of India has asked all banks to immediately undertake a special scrutiny of the computation of their demand and time liabilities (DTL) to ensure that these are worked out strictly in tune with the extant instructions on the subject.

The RBI directive follows detection of deficiencies in the computation of DTL by some banks. Correct computation of DTL is important as maintenance of CRR (cash reserve ratio) and SLR (statutory liquidity ratio) by banks were calculated on the basis of DTL.

The Central bank, in a circular to all scheduled commercial banks said that internal or external auditors might be engaged for scrutiny. The banks must arrange to submit revised forms detailing deficiencies observed in the computation of DTL/NDTL based on the outcome of the scrutiny.

RBI to go for ISO 9000
Mumbai: The central bank is going in for an improvement in its counter-related services and currency management services. The regulator for the banking sector also wants to streamline its process of regulation and supervision and accordingly the apex bank will go in for an ISO 9000 certification for its currency management system.

The currency management function of the RBI aims at ensuring adequate availability of notes and coins and improving the quality of notes in circulation. RBI performs currency operations through 19 regional offices and a wide network of currency chests and small coin depots spread across the country.

The central bank is currently putting in place integrated computerised currency operations and management system in the issue departments of regional offices and the department of currency management at the Central office.

Bank deposit insurance scheme to be reviewed
Mumbai: The RBI plans to review the 'deposit insurance scheme' and issues relating to its coverage and premium shortly as revision in the rates are due next year. The review would also examine the international experience and practices, which could be introduced in the country.

As per the scheme, every depositor of an insured bank is entitled to repayment of deposits subject to a ceiling of Rs.1 lakh when the banking entity is liquidated or amalgamated.

In the wake of the failure of many co-operative banks in the recent past, coupled with other crises in the banking sector, there has been a demand to hike the ceiling on the insurance, sources said.

Most banks feel that they are taking on the burden of co-operative banks and want to pay the premia on a risk-related basis, as was recommended in the Jagdish Kapur report.

10 September 2004

Rupee steady; bonds subdued
Mumbai: The domestic currency closed four paise stronger at 46.29/30 against the dollar on Thursday.

Forwards Market: The six-month premium ended at 1.88 per cent (2.05 per cent), while the one-year premium ended at 1.68 per cent (1.88 per cent).

G-Secs: The 7.37 per cent 2014 got dealt up to Rs.110.40 - 5.95 per cent yield-to-maturity (Rs 110.50), while the 7.38 per cent 2015 got dealt at Rs.110.60.

Call Rates: remained at around 4.50 per cent in the inter-bank market.

CBLO Market: 124 trades were conducted amounting to Rs.4,141.10 crore in the rate range of 4.05-4.40 per cent.

Govt to amend laws to facilitate merger of PSBs
New Delhi: The Finance Minister, P. Chidambaram, has said that the Government would encourage consolidation within public sector banks and would help bring about a favourable legislative framework that would facilitate mergers.

"We are not going to push for consolidation. However, if banks want to consolidate we will not come in the way," Mr Chidambaram said after a daylong meeting with chief executives of public sector banks here.

He said that legal amendments, including minor ones required in the Income-Tax Act, would be brought about to remove any hurdles in consolidation. "We need a small amendment in the I-T Act which would be carried out in February next," Chidambaram said.

The Finance Minister also said that the Government would encourage banks to raise further capital by way of public issues. "I have encouraged them to go to the capital market," he said.

RBI: Two NBFCs derecognised
Hyderabad: RBI has cancelled the certificates of registration granted to two Hyderabad-based NBFCs, Dalia Securities Ltd and Chillakuru Investments Pvt Ltd.

In two separate announcements, RBI said that following the cancellation of registrations, these entities should not

G-Secs: 9-year floaters receive lukewarm response
Mumbai: The Rs.4,000-crore auction of the nine-year floating rate bonds devolved on both the primary dealers (PDs) and the Reserve Bank of India on Thursday.

The cut-off spread was fixed at 0.45 per cent while the base rate for the first year was fixed at 5.02 per cent. The rate of interest for the first half-year was at 5.47 per cent, said an RBI press release.

The RBI received and accepted one non-competitive bid amounting to Rs.48 lakh , while it received a total of 96 competitive bids amounting to Rs.4,505 crore, of which 70 competitive bids amounting to Rs.2,755 crore were accepted.
Meanwhile, the Rs.3,000-crore auction of the 6.65 per cent 2009 paper was fully subscribed.

Shriram group to foray into insurance business
Chennai: The Chennai based Shriram group made three announcements on Thursday - its intention to get into life insurance business, association with Ceylinco Insurance Company of Sri Lanka to set up non-life insurance businesses in a number of countries and a possible takeover of a direct-cum-reinsurance broking firm in India.

The Shriram group has a stake in some of the Ceylinco group ventures in Sri Lanka. Ceylinco has a stake in Armour Consultants, the broking arm of the Shriram group and both have a joint venture running in Thailand.

Ceylinco intends to set up shop in Egypt, Madagascar, Zimbabwe and a few countries in South East Asia. The Shriram group could invest about Rs.10 crore in these overseas joint ventures with Ceylinco, over the next 2-3 years.

The group was also close to finalising a deal to takeover the management of an existing composite insurance broking company.
The Shriram group is predominantly into financial services - it has four NBFCs doing mainly truck finance - and has investments in other areas such as IT, property development and pharmaceuticals.

9 September 2004

Rupee up marginally - bonds firm
Mumbai: The rupee closed marginally stronger against the dollar on Wednesday, ending at 46.33, against its previous close of 46.35.

Forwards Market: The six-month premium ended at 2.05 per cent (2.10 per cent), while the one-year premium ended at 1.85 per cent (1.82 per cent).

G-Secs: Recorded gains of around 50 paise across maturities. The 7.37 percent 2014 was dealt up to Rs.110.50, while the 12.32 per cent 2011 was traded up to Rs.130.05.

Call rates: Below 4.50 per cent levels in the inter-bank market.
CBLO: 117 trades were conducted amounting to Rs.4, 342.8 crore at rates ranging between 4.06 per cent and 4.52 per cent.

RBI favours old pvt banks consolidation
Mumbai: According to Ms K.J. Udeshi, Deputy Governor, Reserve Bank of India, mergers and acquisitions in the banking sector are going to be the order of the day as demonstrated by the successful mergers of HDFC Bank and Times Bank, Standard Chartered and ANZ Grindlays.

"We are also looking for such signs in respect of a number of old private sector banks, many of which are not able to cushion their NPAs, expand their business and induct technology due to limited capital base," she said.

The banking sector is moving away from a regime of "large number of small banks" to "small number of large banks", the new era is going to be one of consolidation around identified core competencies, she added.

The Finance Minister, Mr P. Chidambaram, also recently said that the Government is in favour of consolidation in the banking industry to enable banks achieve 'world-class' status.

According to Ms Udeshi, the future may usher in large banking institutions, if the development financial institutions opt for conversion into commercial banking in line with the recommendation of the Second Report of the Narasimham Committee.

United India net up 122 per cent
Chennai: The United India Insurance company has recorded a profit after tax of Rs.380.45 crore in 2003-04, up 122 per cent over the previous year's profit of Rs.170.99 crore.

The company's directors have declared a dividend of 30 per cent. Income from investments amounted to Rs.904 crore (Rs.613 crore). The average yield on investment was 9.95 per cent (9.72 per cent).

Gross premium stood at Rs 3,063.47 crore (Rs.2, 969.63 crore). Net premium (after reducing premium shared with re-insurers and others) was Rs.2, 151.36 crore (Rs.2,092.42 crore).

The company also registered an underwriting loss of Rs.511 crore during the year under review.

8 September 2004

Bonds dip as rupee remains steady
Mumbai: The domestic currency closed at 46.35, almost unchanged from its previous closing levels. Bond prices declined by around 50 paise across maturities.

Forwards Market: The six-month premium ended at 2.10 per cent (1.99 per cent) while the one-year premium ended at 1.82 per cent (1.73 per cent).

G-Secs: The 7.37 per cent 2014 paper settled lower at Rs.110.35/40. The 11.83 per cent 2014 closed at Rs.137.25 and the 12.32 per cent 2011 at Rs.130.10.

Call rates: At 4.25 per cent levels in the inter-bank market.

CBLO: 122 trades were conducted amounting to Rs.3,639.15 crore in the rate range of 4.10-4.35 per cent.

Govt. borrowings down at Rs.55,000 crore
New Delhi: The Government has completed market borrowings of Rs.55, 000 crore till September 3, which amounts to 36.50 per cent of its gross budgeted borrowings of Rs.1,50,681 crore for the current fiscal.

A report prepared by PNB Gilts said that the gross borrowing during April-September last year was Rs.1,06,434 crore.
During the next fortnight, the Government aims to borrow Rs.6, 000 crore through 5- to 9-year papers and another Rs.4, 000 crore by way of 15- to 19-year papers.

The Centre's net borrowings have come down to Rs.17, 224 crore so far this fiscal, from Rs.77, 966 crore during the same period last fiscal.

PNB inaugurates its office in Shanghai
New Delhi: The Punjab National Bank (PNB) has opened a representative office in Shanghai. The Shanghai Office will act as single window for providing necessary guidance to the business community in China, a PNB release has said.

The office was inaugurated by the Chairman and Managing Director of PNB, S. S. Kohli. The Consul General of India in Shanghai, Sujan R. Chinoy, was also present at the inauguration ceremony.

PNB has recently opened a full-fledged branch in Kabul that was the first branch of an Indian bank in that country. The bank already has a representative office at London and has decided to upgrade its representative office at Almaty (Kazakhstan) into a banking subsidiary for providing a complete range of banking facilities.

Health cover for Andhra Bank credit cardholders
Hyderabad: The ANDHRA Bank has decided to offer health insurance facility to its credit cardholders in alliance with United India Insurance Company.

The facility, AB Arogyadaan, is intended at taking care of the medical bills consequent to hospitalisation including Accident Trauma Care. It is a group mediclaim policy that covers a family of four towards any hospitalisation expenses against payment of a nominal single premium equivalent to one person's mediclaim cost.

According to the Andhra Bank the new product is distinctly superior to the various hospitalisation insurance schemes sold by companies under mediclaim and the scheme has become immensely popular, evident from the fact that 35,000 families have patronised it within two months of its launch.

The premium remains uniform irrespective of age of the members. The age limit for the first time coverage is fixed at 65 years and for renewals it is extended up to 80 years.

6 September 2004

16 percent of RBI staff opts for early retirement scheme
Mumbai: In its annual report for 2003-04 the RBI has stated that a total of 4,468 employees, representing 15.8 per cent of the workforce as on June 30, 2004, availed of the Optional Early Retirement Scheme, which the apex bank had introduced on Aug.16, 2003. The bank said that it staggered the outgo of employees in order to keep the flow of work smooth.

Employees opting for the scheme were granted ex-gratia amount equal to pay plus two months for each year of service rendered or pay plus dearness allowance for the remaining for the remaining months of service, whichever was less. In addition, they were entitled to all other normal benefits, according to the report.

The scheme was opened to all full-time regular employees who had completed 25 years of service and attained 50 years of age as on August 1, 2003.

Gold, small loans: RBI extends time for urban co-ops
Mumbai: In a circular to the chiefs of all Urban co-operative banks (UCBs) the RBI has given them time up to March 31, 2007, to follow the 90-day loan impairment norms, for gold loans and small loans up to Rs.1 lakh. The RBI has said that until then, they will be governed by the 180-day norm as before.

Earlier, the banks were informed that the 90-day norm would be applicable to gold loans and small loans up to Rs.1 lakh with effect from the financial year ending March 31, 2005. The RBI's decision follows requests from banks and Federation and Association of UCBs for reconsideration of the applicability of the norms.