21 October 2004

Rupee firm; gilts move up
Mumbai: The rupee rose ended stronger against the dollar at 45.76/77 on Wednesday. The currency had closed at 45.80/81 per dollar in the previous closing session.

Forwards Market: The six-month forward closed at 2.67 per cent (2.55 per cent) and the twelve-month forward finished at 2.12 per cent (2.09 per cent).

Call Rates: The inter-bank market rates rose as high as 5.00 per cent before settling to close at 4.70-4.75 per cent.

G-Secs: The 7.38 per cent 2015 paper closed at Rs104.65 at a yield of 6.76 per cent. The 6.65 per cent 2009 paper ended at Rs101.50 as compared to previous closing level of Rs101.45.

CBLO Market: 144 trades worth Rs4,554.35 crore were transacted in the rate range of 4.55-5.00 per cent.

Higher cut-off at 5.20 per cent for 91-day sale
Mumbai: Higher cut-off at 5.20 per cent was set at the 91-day Treasury bill auction worth Rs2,000 crore, conducted by the Reserve Bank of India.The cut-off yield has risen four basis points since the previous auction. The cut-off price was set at Rs98.72, lower than the previous cut-off at Rs98.73.

Ninety competitive bids worth Rs4,403.50 crore were received, of which 48 bids were accepted amounting to Rs2,000 crore. Partial allotment percentage of competitive bids was at 88.67 per cent. A sole non-competitive bid was received and accepted amounting to Rs17.70. crore.

RBI to disclose penalties levied against banks
Mumbai: As per a new directive the Reserve Bank of India has decided to disclose the details of penalty and other actions taken by it against banks. The directive, which comes into effect from November 1, also asks banks to disclose details of such penalties in the `Notes on Accounts' to the balance sheets in their annual reports.

Though RBI often levies penalties based on inspection reports on banks, this information is not always published. Recently, the central bank slapped a fine of Rs5 lakh on Citibank for flouting know-your-customer norms. In a circular issued to commercial banks, RBI said it would issue press releases giving details of the circumstances under which the penalty was imposed on a bank.

It would also give details regarding the strictures or directions issued to the banks on the basis of their inspection reports.

In the case of foreign banks, the penalty has to be disclosed in the `Notes on Accounts' to the next balance sheet for their Indian operations.

Asset reconstruction company from ING Vysya, Corporation Bank and CDC Group
New Delhi: The UK-based CDC Group Plc is planning to set up an asset reconstruction company (ARC) in partnership with Corporation Bank and ING Vysya Bank. The Foreign Investment Promotion Board (FIPB) will study the proposal next week.

According to the proposal, CDC would hold a 48 per cent stake in the proposed company - Actis Asset Reconstruction Company Pvt Ltd - and the two Indian banks would hold a 26 per cent stake each.

However, CDC proposes to increase its stake in the ARC to 74 per cent, once it becomes permissible with future changes in the Government's policy framework. The company has sought permission to bring in foreign direct investment of Rs74 crore for this purpose.

The proposed ARC would have a capital base of Rs100 crore and would carry out asset reconstruction and management in all forms, securitisation of non-performing assets acquired and all other related activities.

SBI adopts Core Banking System
Mumbai: The State Bank of India, which is targeting a 15 per cent reduction in transaction costs by March 2006, saw over 250 of its branches going live on Wednesday, with the centralised core-banking system (CBS). The system has been implemented by the Tata Consultancy Services, SBI's prime systems integrator for the core-banking and trade finance technology solutions.

By March 2005, 2,000 branches across the country will be brought under the CBS, covering 60 per cent of the bank's business. By 2006, the bank expects to cover 90 per cent of the business under the CBS.

The bank said that one of the biggest benefits from moving to the core-banking system was that the transaction costs would be considerably reduced, by around 15 per cent to begin with, but much more eventually.

The CBS solution set being implemented includes BANCs from Financial Network Solutions, Eximbills from China Systems interfaced to each other and the existing legacy solution.

After the full implementation, the CBS will be capable of handling 100 million customers, 1,00,000 users and 25 million transactions a day, officials said.

ICICI Bank to deploy TBMS-F software
Mumbai: ICICI Bank has signed a deal with SunTec Business Solutions Private Ltd to deploy the Transaction Business Management System - Finance (TBMS-F) software.

This software is designed for the corporate banking division of the bank and will be used for providing personalised service to its corporate clients, said a release.

Discounts will be given to customers based on volume of transactions.

SBT H1 net up marginally at Rs.118 crore
Thiruvananthapuram: The State Bank of Travancore (SBT) has recorded a net profit of Rs118.10 crore in the first six months of the current financial year ended September 30, as against Rs115.45 crore posted during the same period last year.

The gross profit during the period went up to Rs467.40 crore from Rs433.82 crore in the first half of the previous year, according to a statement from the bank.

An increase of Rs101.14 crore was posted in net interest income, which touched Rs414.27 crore. It represents a rise of 32.30 per cent over the same period last year.

The capital adequacy ratio at 11.06 per cent was above the benchmark of nine per cent stipulated by the Reserve Bank.

The net non-performing assets of the bank, which stood at 1.39 per cent at the end of March 2004, declined to 1.06 per cent. The bank recorded a growth of Rs1,130 crore in aggregate deposits during the first six months ( Rs792 crore).

Corporation Bank lowers FCNR deposit rates
Mangalore: The Corporation Bank has reduced interest rates offered on FCNR (B) deposits with effect from October 20.

A bank release said that interest rate on the US dollar is 2.16 per cent per annum (previously 2.29 per cent) for a period of one year to less than two years, and 2.60 per cent (2.83 per cent) for two years to less than three years. The rate for three years is 2.93 per cent (3.20 per cent).

The interest rate on the euro is 2.05 per cent (2.11 per cent) for one year to less than two years, and 2.36 per cent (2.49 per cent) for two years to less than three years and for three years 2.62 per cent (2.76 per cent).

The respective rates for pound sterling are 4.79 per cent (4.84 per cent), 4.76 per cent (4.81 per cent) and4.77 per cent (4.85 per cent).

20 October 2004

Call rates zoom as rupee stays steady
Mumbai: The rupee closed the day at 45.80/81, a shade stronger than the previous close of 45.8425/8500 per dollar on Monday.

Forwards Market: The six-month forward closed at 2.55 per cent (2.52 per cent) and the 12-month forward finished at 2.09 per cent (2.13 per cent).

Call Rates: Touched highs of 4.95 per cent before settling to close in a range of 4.7-4.8 per cent.

G-Secs: The 7.38 per cent 2015 paper closed at Rs104.55 at a yield of 6.78 per cent. The 6.65 per cent 2009 paper settled at Rs101.45.

CBLO Market: 150 trades were transacted worth Rs4,337.80 crore in the range of 4.56-4.8 per cent.

Cheque Clearing System to close from Nov.1
Mumbai: Inter bank Cheque Clearing System in Mumbai will be closed from November 1 as it has become redundant with the introduction of the Real Time Gross Settlement system, the Reserve Bank of India said in a notification to banks today.
However, the banks, which are not eligible to become RTGS members due to their non-scheduled status or banks that do not wish to become a Type `A' member of RTGS would have a few options available to them.

The eligible banks can become an RTGS type `C' member and route their inter-bank transactions through a type `A' member. Banks can send their inter-bank transactions as a customer of a type `A' RTGS member; and banks may also use the High Value Cheque Clearing System for settling their inter-bank transactions, said the release.

Derivatives management award for ICICI Bank
Mumbai: ICICI Bank has been presented the 'India's Derivatives House of the Year, 2004' award by AsiaRisk, a HongKong-based financial journal.

The bank has been recognised for best practices and innovation in derivatives and risk management and for responding to clients needs.

UCO Bank Q2 net at Rs141 crore
Kolkata: UCO Bank has posted a net profit of Rs141 crore during the second quarter of the current fiscal. The bank recorded a 29-per cent increase in net interest income over the corresponding period of the previous year.

For the half year ended September 30, 2004, it recorded an operating profit of Rs512 crore compared with Rs490 crore posted during the corresponding previous half year, while its interest income went up from Rs1,521 crore posted during the corresponding previous half-year to Rs1,725 crore.

UCO Bank had a deposit base of Rs42,210 crore as on September 30, 15 per cent higher than the deposit one year ago. Its advances during the same period went up by 32 per cent to Rs28,803 crore. The total business increased by about 20 per cent to Rs65,013 crore.

The bank's net NPA ratio has also come down to 3.09 per cent.
UCO Bank, is also considering a possible merger with another institution and has engaged consultants for the purpose.

Union Bank Q2 net up 24 per cent
Mumbai: The Union Bank of India has achieved a 24.12 per cent growth in net profit at Rs210.68 crore for the second quarter ended September 30, 2004, as against Rs169.87 crore in the corresponding period of the previous year.

Total income of the bank grew to Rs1,354 crore during the second quarter as against Rs1,285 crore. Interest income grew to Rs1,193 crore (Rs1,082 crore) while other income fell to Rs161 crore (Rs202 crore).

For the half-year ended September 2004, the bank recorded a net profit of Rs421 crore (Rs325 crore). Provisions and contingencies aggregated at Rs166.46 crore (Rs131.59 crore).

The ratio of net NPA to net advances was at 2.06 per cent (4.39 per cent). Gross NPAs were at Rs2,167.67 crore (Rs2,333.65 crore) and net NPAs were at Rs703.11 crore (Rs1161.61 crore).

Total deposits were at Rs 55,653 crore (Rs 46,761 crore) and total advances at Rs 35,591 crore (Rs 27,653 crore). The bank's loans to the infrastructure sector has also doubled to Rs2,712 crore (Rs 1,359 crore).

State Bank of Mysore Q2 profits dip in Q2
Bangalore: State Bank of Mysore profits dipped 19.11 per cent during the quarter ended September 30, on lower income of Rs343.37 crore compared to Rs365.79 crore in the first quarter of the fiscal.

The lower income and profits arise mainly from a substantial drop in `other income' due to reduced profitability of securities transactions.

The bank recorded an increase in the second quarter income to Rs 343.37 crore (Rs 338.86 crore). Profits fell to Rs 42.89 crore (Rs 44.98 crore). Operating expenses went up to Rs 97.92 crore (Rs 88.11 crore).

Toptal deposits stood at Rs 11,593 crore, and personal deposits at Rs 6,108 crore, accounting for 53 per cent of aggregate deposits. Cost of deposits declined from 5.71 per cent in March `04 to 5.13 per cent in September '04.

LIC Housing Finance launches optional rate loan
Mumbai: LIC Housing Finance Ltd has introduced a new product that starts as a fixed rate loan but contains an option to convert it to a floating rate loan at the end of five years, at the then prevailing rate.

Under this scheme LIC Housing Finance is offering loans to individuals at a fixed rate of 8 per cent for a 20-year-loan. Corporate clients can avail of a 20-year loan at a fixed rate of 7.75 per cent, said a news release from the company.
The current floating rate is 7.5 per cent for individuals and 7.25 per cent for corporates.

UTI MF ties up with HDFC Bank for its products
Mumbai: UTI Mutual Fund has announced a strategic tie-up with HDFC Bank whereby HDFC Bank will now offer the entire bouquet of UTI Mutual Fund's products to its high net worth individuals, corporate and retail clientele.

This is the seventh tie-up that UTI MF has signed with banks for distribution of products.

Citigroup to acquire ABN Amro's domestic custody businesses
Mumbai: Citigroup Inc will soon acquire ABN Amro's direct custody, securities clearing and fund services business in the European and Asian markets.

The transaction includes ABN Amro's domestic custody business in the Netherlands and its network domestic custody business in Russia, Greece, India, Indonesia, South Korea, Poland and Taiwan, servicing approximately 550 financial institutions and corporate accounts, according to a press release.

`Domestic custody' provides a range of securities-related services including safekeeping and settlement, reporting, corporate actions, dividends collection and distribution, proxy voting, tax reclaim services, fund administration as well as providing market news and information.

With the acquisition, these ABN Amro businesses will join the Global Transaction Services unit (GTS) in Citigroup's Global Corporate and Investment Banking Group, it said.

GTS is one of Citigroup's publicly reported business units.
The deal, which is likely to be completed in the next three months, is expected to add around $240 billion worth of assets under custody to GTS's $7-trillion custody portfolio, the release said.

Over time, Citigroup will combine ABN Amro's domestic custody operations with its current GTS operations. ABN Amro's operational and servicing staff and management will become members of the Citigroup organisation.

19 October 2004

Rupee firm - Securities up
Mumbai: The rupee closed marginally stronger at 45.8425/8500, against its previous closing at 45.86 per dollar.

Forwards Market: The six-month forward finished at 2.52 per cent (2.4 per cent), while the 12-month forward ended at 2.13 per cent (1.96 per cent).

G-Secs: The 7.38 per cent 2015 paper closed at Rs 104.50 at a yield of 6.78 per cent. The ten-year benchmark 7.37 per cent 2014 paper closed at Rs104.60.

Call Rates: In the range of 4.5-4.6 per cent.

CBLO: 129 trades worth Rs4,617.70 crore were transacted in the rate range of 4.5-4.7 per cent.

RBI cancels Rs.5, 000 crore gilts sale
Mumbai: The Reserve Bank of India has cancelled the Rs5,000-crore auction of dated security scheduled to be held during October 18-25.

As per the indicative calendar for issuance of Government securities issued on September 20, the Government had scheduled this auction to be held during this period.

In a press release, the central bank said that the auction had been cancelled "after taking into account all relevant factors".

Market sources indicate that liquidity pressure in the market was a key factor affecting the decision as indicated by the dwindling amounts placed in the repos.

Syndicate Bank Q2 net dips by Rs.50 crore
Bangalore: Syndicate Bank has reported Rs49.66-crore drop in net profits in the second quarter (Q2) this year due to fall in investment and treasury profits.

The bank said that net profits fell despite improved operating profits during the period. The net profit for Q2 was Rs75.58 crore as against Rs125.24 crore during Q1 of this fiscal year.

Depreciation and drop in investment income during Q2 was around Rs122 crore. Other income, including profits from treasury operations, dropped to Rs115.13 crore from Rs195.18 crore in the first quarter.

During the same period, provisions and contingencies, which included depreciation in investments, rose to Rs135.24 crore from Rs55.26 crore during Q1 this year.

Income from advances rose to Rs476.04 crore in Q2 as against Rs442.88 crore in Q1.

18 October 2004

RBI guidelines on subordinated debt raising by Primary Dealers
Mumbai: In its guidelines on capital adequacy standards - Guidelines on Issue of Subordinated Debt Instruments - Tier II and Tier III Capital, for primary dealers (PD) - the RBI has said that the amount of subordinated debt to be raised may be decided by the board of directors of the PD.

The instruments should be `plain vanilla' with no special features such as options, and the debt securities shall carry a credit rating from a credit rating agency registered with the Securities and Exchange Board of India, the RBI said.

In the case of issue of unlisted subordinated debt, the disclosure requirements prescribed by SEBI for listed companies in terms of the above guidelines should be complied with.

Necessary permission from the Foreign Exchange Department of the RBI should be obtained for issuing the instruments to NRIs and FIIs.

PDs should comply with the terms and conditions, if any, prescribed by SEBI or other regulatory authority with regard to the issue of instruments. Investments by PDs in subordinated debt of other PDs and banks will be assigned 100 per cent risk weight for capital adequacy purpose. Further, the PD's aggregate investments in Tiers II and III bonds issued by other PDs, banks and financial institutions shall be restricted to up to 5 per cent of the investing PD's total capital. The capital for this purpose will be the same as that reckoned for capital adequacy.

UCO Bank brings down FCNR (B) rates
Kolkata: UCO Bank has reduced the interest rates on Foreign Currency Non-Resident (Banks) deposits. The revised rates will come into force from Monday.

For deposits held in US dollars, the interest rates will now be 2.16 per cent as compared to 2.29 per cent for the period from one year to less than two years, and 2.55 per cent (2.77 per cent) for the period from two years to less than three years, according to a UCO Bank press release.

For deposits of three years, the rates have been revised to 2.89 per cent (3.14 per cent).

For deposits held in British pounds, the depositors will get 4.79 per cent (4.84 per cent) for the period from one year to less than two years, 4.71 per cent (4.81 per cent) for the period from two years to less than three years and 4.73 per cent (4.84 per cent) for three years.

For euro deposits, the corresponding rates will be 2.05 per cent (2.11 per cent), 2.33 per cent (2.45 per cent) and 2.59 per cent (2.73 per cent).