17 September 2004

Gilts move up as rupee slips
Mumbai: The rupee ended at 45.86/88 against the US dollar. It had closed at 45.8550/8650 on Wednesday.

Forwards Market: The six-month forward finished at 1.70 per cent (1.52 per cent) while the twelve-month forward closed at 1.45 per cent (1.40 per cent).

G-Secs: The 11-year benchmark 7.38 per cent 2015 paper finished higher at Rs.109.65 with the yield at 6.16 per cent. The 10-year benchmark 7.37 per cent 2014 paper closed at Rs.109.

Call Rates: Easy in the range of 4.30-4.50 per cent.

CBLO Market: 109 trades worth Rs.3,951.55 crore were transacted in the range of 4.20-4.50 per cent.

RBI to deepen debt market
Bangalore: According to Dr Rakesh Mohan, the bank's Deputy Governor, the Reserve Bank of India is keeping a close vigil on inflation and would resort to monetary policy intervention when necessary. He also ruled out any changes in the foreign exchange policy with reference to intervention in the markets.

Earlier, speaking at the FICCI conference on banking, Dr Mohan said that the monetary policy would continue to focus on price stability as the inflationary expectations in the domestic market were down to about 7 per cent in line with the rest of the world.

He also said that the RBI was also focussing on deepening and broad basing the debt markets in the country, because at present, the players in the market were entirely banks, insurance companies and financial institutions. He said that the corporate debt market needed to be deepened to prevent any "cartelisation of banks" in a deregulated environment.

RBI fiat on coins
Mumbai: The Reserve Bank of India has advised all commercial banks to freely accept coins of all denominations for exchange into bank notes. The RBI said in a release that the Reserve Bank offices would also continue to freely accept all the coins for exchange into bank notes.

PNB agro initiative: Loans against warehouse receipts
Mumbai: Farmers and traders will now be able to obtain finance against warehouse receipts, thanks to a new scheme introduced by the Punjab National Bank (PNB) in collaboration with National Multi-Commodity Exchange of India Ltd (NMCE) and Central Warehousing Corporation (CWC).

PNB has authorised four branches at New Delhi, Kottayam, Kochi and Kozhikode, to extend demand loans to farmers and traders when they present CWC negotiable warehouse receipts, which certify the quantity, quality and location of the commodity stored in CWC warehouses, and the relevant forward sale contracts of the participants with the members/brokers of the exchange.

The commodities covered are cardamom, pepper, rubber, jute and jute products.

A farmer or a trader can get loans for non-perishable agricultural and other commodities from Rs.50,000 to Rs.1 crore, with margin of 20 per cent to 40 per cent, valuation of which to be arrived at on the basis of market value/invoice value/minimum support price fixed by the Government, whichever is lower.

According to the scheme, a farmer/trader shall deposit the agricultural and other commodities with CWC and obtain a warehouse receipt, which certifies the quantity and quality of the deposited commodity. The farmer/trader, thereafter, shall enter into a forward sale contract with exchange's member/broker who in turn will place the client order from his terminal in NMCE's computer system.

Under the scheme, the demand loan shall be sanctioned for a period not exceeding six months or for the validity of the pledged warehouse receipt, whichever is earlier.

NMCE, after verifying details of the client and the validity of warehouse receipt, will allocate a separate client identification no, for the said farmer/trader if he wants to avail finance from PNB.
Upon receiving the broker's order incorporating the client identification no, NMCE system will create an order ID with time stamp, and a trade will be executed on matching with the opposite order, which becomes a forward sale contract.

Printed from the member's computer, the forward sale contract will be given to the seller, who, along with the warehouse receipt can approach PNB Branch for the purpose of availing loan.

16 September 2004

Rupee up 5 paise
Mumbai: The rupee appreciated for the third straight day to close 5 paise stronger at 45.8550/8650, against 45.90/91 on Tuesday.

Forwards Market: The six-month forward closed at 1.52 per cent (1.20 per cent) while the twelve-month forward finished at 1.40 per cent (1.14 per cent).

G-Secs: The ten year benchmark 7.37 per cent 2014 paper closed at the yield of 6.11 per cent at Rs.109.00. The 11-year benchmark 7.38 per cent 2015 paper closed at the yield of 6.17 per cent at Rs 109.55.

Call Rates: At about 4.45- 4.50 per cent.

CBLO Market: 117 trades were transacted worth Rs.3,633.20 crore.

RBI rejects 58 bids in 91-day Treasury bill sale
Mumbai: In the 91-day Treasury bill auction 58 competitive bids were rejected as merely 12 bids worth Rs.705.00 crore were accepted from 70 bids worth Rs.3,588.25 crore received.

The auction was for a notified amount of Rs.2,000 crore. The weighted average price came at Rs.98.83. For the 364-day Treasury bill auction 47 bids worth Rs.2,000 crore were accepted at the cut-off yield of 5.25 per cent. Bids received were 121 in number worth Rs.5,921 crore.

LIC bonus at Rs 80 for whole life plans
Mumbai: The Life Insurance Corporation has said that it would distribute Rs.10,388 crore or 95 per cent of its surplus as bonus to holders of 'with-profit' policies that were in force on March 31, 2004. It will pay 5 per cent of the surplus or Rs.547 crore to the Government as yearly dividend.

The number of in force policies has gone up from 14.11 crore to 15.62 crore as on March 31, a growth of 10.7 per cent, an LIC press release said.

The revisionary bonus rates announced by the corporation are: Rs 80 per thousand sum assured for whole life policies, Rs 51 per thousand to Rs 57 per thousand for endowment type policies, and Rs 46 (term 20 years) and Rs 51 (term 25 years) for money back and anticipated endowment policies.

The bonus ranges between Rs 52 and Rs 58 for Jeevan Mitra, Jeevan Sathi, and limited endowment policies. For Jeevan Surabhi policies, the bonus is Rs 48 for a 20-year term and Rs 57 for a 25-year term. The Jeevan Anand plan bonus ranges from Rs 49 to Rs 53 and for Jeevan Raksha, it ranges from Rs 39 to Rs 45.

LIC has also declared bonus ranging from Rs 18 to Rs 24 per thousand notional cash option for individual pension plans - New Jeevan Dhara-I and New Jeevan Suraksha-I, the release said.

ICICI Bank receives 'Best Bank in India' award
Mumbai: The ICICI Bank has won the Best Bank in India - 2004 award instituted under the "Euromoney Awards for Excellence" by Euromoney magazine.

The award spans over 80 countries across all areas of commercial and investment banking for high quality products and services, said a release

Union Bank has cushion against bond hits
Mumbai: The Union Bank of India may not be transferring a portion of its SLR securities to the Held to Maturity Portfolio in the immediate future, according to the Bank.

The bank says that it has a sufficient cushion of 'unrealised gains' which along with the investment fluctuation reserve, would help it withstand another 1 per cent to 2.5 per cent rise in interest rates.
Union Bank of India has achieved disbursements of close to Rs.600 crore in the second quarter of this fiscal.

As part of its ongoing retail initiatives, the bank has unveiled `multi-city cheque" facility for its customers whereby they can make payments in other cities through multi-city cheques without having to approach the branches. The facility is expected to expedite the bank's intra-city cheque clearings. These cheque books have been issued for the benefit of the bank's core-banking services branch customers and will enable them to make their payments in 17 cities and this will be gradually extended to other centres.

Canara Bank makes September a 'Teachers month'
Thiruvananthapuram: The Canara Bank is observing September as 'Teachers Month', according to an official spokesman.

In addition to honouring outstanding teachers, the bank will also provide loans at liberal terms to teachers during the month. They could avail themselves the equivalent of up to 10 months gross salary subject to a ceiling of Rs.2 lakh, whichever is lower, at an interest of 10.75 per cent for 60 months, the spokesman added.

Citibank sells Polaris shares
Chennai: The Citibank N.A has sold 3.21 per cent of Polaris Software Lab shares in the market between January 2004 and now. Following this, Citibank's shareholding in Polaris will reduce to 43.79 per cent from 47 per cent, said a Polaris official.

In January, Citibank sold 1.20 per cent of Polaris shares and the rest was sold in the last few days, he said.

RBI cancels licence of Samasta Nagar Co-op Bank
Mumbai: The Reserve Bank of India has cancelled the banking licence of the Mumbai-based Samasta Nagar Co-operative Bank on account of the bank's accumulated losses to the tune of Rs.9 crore.

The bank, which has four branches in Mumbai, has a deposit base of Rs.30 crore.

Lord Balaji Coop Bank licence cancelled
Mumbai: The Reserve Bank of India has said it has cancelled the licence of the Lord Balaji Cooperative Bank Ltd of Madhavnagar in Sangli district of Maharashtra on September 8.

The bank will not be allowed to accept deposits and allow withdrawals by cheque, draft, order or otherwise and also will be precluded from transacting the business of `banking' as defined in the Banking Regulation Act, 1949, said a news release.

The RBI has cancelled the licence under Section 22 of the Banking Regulation Act, 1949 (as applicable to Co-operative Societies).

15 September 2004

Rupee at 2 month high
Mumbai: The rupee touched a two-month high on Tuesday appreciating 27 paise to breach the 46 mark to close at 45.90/91.

Forwards Market: The Six-month forward closed at 1.20 per cent (1.72 per cent) while the twelve-month forward closed at 1.14 per cent (1.55 per cent).

G-Secs: The 10-year benchmark 7.37 per cent 2014 paper closed lower at Rs.109.15. The 11-year benchmark 7.38 per cent 2015 paper ended lower at Rs.109.65.

Call Rates: In the inter-bank market were in the range of 4.35-4.50 per cent.

CBLO Market: 128 trades worth Rs.4,547.15 crore were conducted in the rate range of 4.27-4.50 per cent.

CRR of urban co-ops raised by 50 basis points
Mumbai: The Reserve Bank of India has raised the cash reserve ratio of urban co-operative banks by 50 basis points from the current level of 4.50 per cent.

The hike in CRR will be implemented in two stages. From the fortnight beginning September 18, CRR of UCBs will be 4.75 per cent and to five per cent from the fortnight beginning October 2. However, the effective CRR maintained by scheduled primary UCBs on total demand and time liabilities shall not be less than three per cent, as stipulated under the Reserve Bank of India Act, 1934 the bank said.

The RBI also said that with effect from the fortnight beginning September 18, the scheduled primary UCBs will be paid interest at the rate of 3.5 per cent per annum on eligible cash balances maintained with the apex bank under CRR requirement.

Currently, these banks are paid interest at the bank rate on eligible cash balances.

PSBs: No to divestment - Yes to mergers and access to markets
Bangalore: The Centre has ruled out any divestment in the public sector banks and sought consolidation to make them internationally competitive.

Speaking at the FICCI conference on `Global Banking: Paradigm shift', Prithviraj Chavan, Minister of State in the Prime Minister's Office, said that there would be no divestment of Government equity to 33 per cent, and that the Public sector character of the banks will be retained. However, he added, that banks will be given freedom to tap the capital markets.

In addition, he said the PSU banks would be given full managerial autonomy to build a world class banking system. Some would also be permitted to operate in the international banking markets. This was in line with the guidelines of the World Trade Organisation when the banking sector would have to be opened up.

For operating in the global markets, Chavan said, banks would have to be merged to create large sized entities. He said for building a global brand for Indian banks, it was preferable to have a few large banks than a large number of small banks. Therefore, such mergers would be encouraged among the strong banks themselves. Further, only banks that become Basel II compliant would be allowed to enter global banking markets, he said.

Chavan also noted that the IDBI, despite its conversion into a universal bank, would continue its role as the lead domestic financial institution.

Barclays Capital picks up 4.3 percent stake in UTI Bank
Mumbai: Barclays Capital Mauritius on Tuesday bought 4.3 per cent stake in UTI Bank through the open market.

Barclays Capital, part of the UK's Barclays Bank, has purchased 1,00,56,000 shares at Rs.134.91 on the BSE. The total value of the transaction is Rs.135.58 crore. Of these shares, Citicorp Banking Corporation sold 88.30 lakh shares at Rs.135 on the BSE.

The UTI Bank scrip closed at Rs.136.80, up 13.67 per cent, with volumes of 1.049 crore shares; on the NSE, it closed at Rs.136.40, up 13.52 per cent, with volumes of 12.81 lakh shares.

14 September 2004

Rupee closes strongest in over a month
Mumbai: The rupee closed on Monday at its strongest levels, in over a month at 46.17 against the dollar

Forwards Market: The six-month premium ended at 1.72 per cent (1.81 per cent), while 1.55 per cent (1.56 per cent).

G-Secs: Prices fell by 30-50 paise across maturities on a net basis. In early trades, the 7.37 per cent 2014 closed at Rs.109.60. The ten-year yield setted at 6.09 per cent.

CBLO Market: 113 trades amounting to Rs.3,998.90 crore were conducted in the rate range of 4.25 per cent and 4.50 per cent.

RBI cancels registration of Girija Investments
Hyderabad: The Reserve Bank of India (RBI) has cancelled the certificate of registration granted to Girija Investments Pvt Ltd, the city-based company having its registered office in Dwarakapuri Colony, for carrying on the business of a non-banking financial institution.

In a press release, the RBI said the action was taken while invoking powers conferred to it under the RBI Act 1934. Following cancellation of registration, Girija Investments cannot transact the business of a non-banking financial institution.

Kisan credit cards to cover capital expenses as well
Ahmedabad: The National Bank for Agriculture and Rural Development (Nabard) has expanded the scope of the kisan credit card scheme to include capital and personal expenses of agriculturists.

According to the amended scheme notified last month, a farmer can now take loans not only for crops but also take term credit for purchasing capital equipment such as a tractor or implements. In addition, farmers can also take loans to meet their contingency expenses through the kisan card.

The kisan credit card scheme had been introduced in 1998 as a credit delivery mechanism for crop loans and now boasts of nearly 4.14 crore beneficiaries. Till now, farmers could only take loans for purchase of seeds or fertiliser, which had to be repaid at the end of the crop cycle. To finance their capital needs, farmers still had to approach banks or private moneylenders separately.

Under the amended scheme, banks would determine the value of the farmer's land and set a total exposure limit for the individual. While the bank's overall exposure would not exceed 75-80 per cent of the farmer's asset value, the individual would have the liberty to decide the quantum of loan under term and crop loans.

RBI withdraws export facility to Latin American countries
Mumbai: The Reserve Bank of India has discontinued the facility for realisation and repatriation of full value of goods or software exported to Latin American countries within 360 days with retrospective effect from September 1, 2004.

This facility was extended up to August 31, 2004 for few Latin American countries, subject to review by RBI.

The exporters exporting to these countries are under obligation to realise full export proceeds within the prescribed six months from the date of export for exports made on or after September 1.

SBT launches gold card for exporters
Thiruvananthapuram: The State Bank of Travancore has introduced a gold card scheme for exporters to make available export credit on more attractive terms.

Exporters, including those in the small and medium sectors, with a proven track record of three years and above are eligible for finance under the scheme, according to a statement from the bank.

BoB and PNB to step into the equity market
Mumbai: The Bank of Baroda and the Punjab National Bank plan to tap the equity markets to raise funds by the end of this fiscal, as per their notifications to the Bombay Stock Exchange.

Bank of Baroda, the second largest government-owned bank in the country, has informed the BSE that its board of directors has considered a proposal to increase the paid-up capital of the bank through public issue subject to compliance of all regulatory and statutory requirements.

Currently, the Government holds 66.80 per cent equity in the bank and post-issue, its holding is expected to come down to 51 per cent, according to sources.

The Punjab National Bank, the third largest State-owned bank, is planning a `follow-on public offer' pending approvals from the Union Government and RBI, for a further issuance of up to 5 crore shares with pricing to be discovered through the book-building process.

The bank's board has approved the fresh equity issue and will seek shareholders' approval for the same in its extraordinary general meeting on October 11, PNB said in a notification to the BSE on Monday.

Currently, the Government holds 80 per cent stake in PNB.
PNB's initial public offer in 2002 was oversubscribed by over 300 per cent, with the total subscription touching about Rs.690 crore against the issue size of Rs.64.49 crore.

13 September 2004

Kanakamahalakshmi Co-op bank declares 15 per cent dividend
Visakhapatnam: Kanakamahalakshmi Co-operative Bank has earned Rs.1.79 crore gross profit during 2003-2004 and has declared 15 per cent dividend.

While the reserves amounted to Rs.19 crore, the bank had deposits of Rs.27.43 crore and advances of Rs.18.96 crore. The net profit amounted to Rs.65 lakh.

FICCI survey: 10-20 per cent growth in banking sector
New Delhi: A FICCI survey on the 'Status of the Indian Banking Industry' reveals that an overwhelming majority of 81 per cent of respondents expect the banking industry to grow at between 10 and 20 per cent this fiscal. The survey is based on the feedback from more than 75 respondents, including leading bankers, financial institutions, intermediaries and other market players.

According to the survey, public, private and foreign banks have reported higher advances over the previous year. Almost, 82 per cent of the banks (of those who have reported figures for both the years) have reported higher growth in advances this fiscal compared with the last year, the survey stated.

Further, 80 per cent of the respondents expect an upward shift in interest rates. While 48 per cent of the respondents see interest rates to rise within the next six months, 37 per cent perceive a rise in the next three months.

Rising inflation and global developments (hardening of interest rates worldwide and the rising oil prices et al) are cited as the primary reasons for the expected hike in interest rates with 72.4 per cent of the respondents attributing their expectations of interest rate increase to the former and 69 per cent to the latter. If interest rates rise, 62 per cent of PSBs aver that their balance sheets' will be adversely impacted because of the ensuing decline in treasury profits. Almost 73 per cent of private and foreign sector banks, however, will be able to accommodate this decline, the survey said.

The present risk management system of banks in the country does not compare favourably with the rest of the world with 76 per cent of the respondents claiming so and 55 per cent say that the present hedging mechanisms in India are not adequate. Further, 97 per cent of those surveyed favoured the introduction of interest rate derivatives.

Further, 55 per cent of the respondents claimed that banks are not prepared for shifting to Basel II norms by 2006. About 50 per cent of public sector banks have expressed their positive preparedness in meeting these guidelines.