20 November 2004

Banks can extend finance to purchase second-hand assets
Mumbai: The Reserve Bank of India has said that banks can extend finance to non banking finance companies against second-hand assets financed by them.

It has also said that banks will be allowed to extend financial assistance to customers directly for purchase of second-hand assets.

United Bank half yearly operating profit up at Rs336 crore
Kolkata: United Bank of India has posted an operating profit of Rs336 crore in the first half of the current fiscal as compared with Rs276 crore in the same period of 2003-04, registering 22 per cent growth.

However, the pre-tax net profit during the period declined to Rs156 crore (Rs238 crore). The bank management attributed the dip to higher provision for depreciation on investment.

While the interest income from advances at Rs383 crore (Rs328 crore) showed an 18 per cent growth in the first half, the income from investment at Rs643 crore (Rs650 crore) showed a marginal dip. The trading profit from investment at Rs131 crore (Rs116 crore) however showed a small growth.

ICICI Bank-HPCL credit card a success
Mumbai: ICICI Bank and Hindustan Petroleum Corporation (HPCL) has announced that their co-branded credit card launched in September 2001 had crossed the one-million mark.

Both companies will facilitate the millionth cardholder by gifting Rs50,000 worth of free fuel.

IndusInd Bank repeats deposit rates interest hike
Mumbai: IndusInd Bank has announced a 10 to 25 basis points hike in deposit rates across various maturities for the second time this month.

This upward revision has been done for deposits amounting to Rs15 lakh and deposits above Rs15 lakh to below Rs1 crore, according to a press release from the bank.

In the band between Rs15 lakh to Rs1 crore, revision has been across both short term and long-term maturities except for deposits of maturity period between three and five years.

In the case of deposits of up to Rs15 lakh, the revision is in select tenors of 15-30 days, 31-60 days, 61-90 days, one year to below 18 months, 18 months to below 3 years and 5 years and above.

Domestic deposits for `15 days and above' for senior citizens will be eligible for 50 basis points per annum additional rate of interest over the prevailing card rates, said the release.

19 November 2004

Rupee down to 45.17 per dollar
Mumbai: The spot rupee hit an intra-day high of 44.96 per dollar and then slipped to a low of 45.17 per dollar on buying by PSU banks finally closing at 45.09 per dollar as against yesterday's close of 45.06 per dollar.

Bond prices rallied after the RBI cancelled a planned auction of securities worth Rs 5,000 crore.

Citibank follows other banks in hiking home loan rates
Mumbai: Citibank India is hiking interest rates on certain loan categories, including home loans, citing rise in cost of funds and new risk weight norms.

Citigroup India chief executive Sanjay Nayar said the bank was relooking at lending rates, including prime rate, but was not in a hurry to raise them immediately.

A number of private and PSU banks have recently raised interest rates on home loans by 0.50-0.75 per cent while HDFC was planning a 0.50 per cent hike in housing advances.

Nayar said that the rate hike would not be steep since Citibank did not reduce rates drastically in the past when there was a major decline in rates in the system.

HDFC Bank to raise $300 m to increase capital base
Kolkata: HDFC Bank is planning to raise upto $300 million through issue of equity securities in the form of American Depository Shares. The bank said the proceeds of the issue would be utilised to augment the capital base to meet future requirements arising out of growth in asset portfolio and also to enhance its ability to provide loans and other financial products to its customers.

A portion of the issue will also be used to fund infrastructure growth through expansion of branch network and other distribution channels, officials said.

HDFC's Capital Adequacy Ratio was 10.9 per cent as on September 30, 2004, of which Tier I CAR was 7.8 per cent, and additional capital was required to support future growth and expansion of business.

RBI to issue new Rs. 20 bank notes
Thiruvananthapuram: RBI is issuing bank notes of Rs20 denomination with the letter `R' inset in the numbering panel, according to an official spokesman.

These notes will be issued in the Mahatma Gandhi series and will bear the signature of the RBI Governor, Dr Y. V. Reddy. The design of these notes will be similar to that of the Rs20 bank notes issued earlier in the Mahatma Gandhi series.

LIC launches two new policies
Mumbai: The Life Insurance Corporation of India has launched two new policies Jeevan Anurag and Jeevan Nidhi.

According to a press release Jeevan Anurag is a money-back plan that takes care of the need for higher education of the policyholder's son or daughter. The premium can be paid in a single lump sum or in instalments. The payments start flowing back at the rate of 20 per cent of the sum assured during the last three years before maturity, the balance 40 per cent being payable on maturity along with bonuses if any.

Jeevan Nidhi is a pension product with endowment funding. The policy provides for life cover during the waiting period, along with guaranteed additions of Rs 50 per thousand for each of the first 5 years and bonuses if any, thereafter.

On survival of the policyholder beyond the term of the policy, the amount accumulated is used to generate a pension for the policyholder. Pension-called an annuity- will depend on the interest rates prevailing at that time.

IDBI Bank close to tie- up with four NBFCs
Chennai: IDBI Bank is close to announcing tie-ups with a few NBFCs (non-banking financial companies) for generating retail loans. The NBFCs would generate commercial vehicle and two-wheeler loans for IDBI Bank as both are new areas of business for the bank. The bank would not enter the passenger car financing business.

IDBI Bank has been mostly active on the home-loan front and of its Rs4,500-crore retail loan assets, over Rs4,000 crore are home loans. The bank sees its home loans growing to Rs5,000 crore by the end of this year.

Now, the bank believes it is ready for getting into the slightly riskier business of non-home retail loans - vehicle, consumer and personal loans and it's proposed tie-up with the NBFCs is in this regard.

The bank intends to offload about Rs500 crore of its home loans, by securitising them in the future. The bank prices its home loans between 7.25 per cent and 7.75 per cent. Investors (banks, insurance companies, mutual funds) are willing to buy the mortgage-backed securities at prices between 6 per cent and 6.25 per cent.

18 November 2004

Rupee eases off as bonds rally
Mumbai: After rising for four consecutive sessions, the rupee ended at 43.96/97 against the dollar, about five paise weaker than previous finish at 43.91/92.

Forwards Market: The six-month annualised premium ended at 2.11 per cent (2.15 per cent) while the one-year premium finished at 1.48 per cent (1.50 per cent).

Call Rates: in the range between 5.10 per cent and 6 per cent.
CBLO Market: Rates were in the range of 5.78 to 6 per cent for bids worth nearly Rs5,300 crore.

G-Secs: The yield on the benchmark 7.38 per cent 2015 paper ended at 6.73 per cent. In the 7.55 per cent 2010 paper, the yield went up to 6.47 per cent towards close.

RBI to issue new currency notes
Kolkata: The Reserve Bank of India proposes to introduce new currency notes with added security features in early 2005. Newly designed coins, too, will be brought out in the near future.

The apex bank has been examining the feasibility of printing notes bearing extra elements of security, trying to eliminate the possibility of counterfeiting. It is also attempting to dispose soiled notes in a manner that does not harm the environment.

Notes of different denominations have different economic lives and it has stopped printing notes of three denominations: one, two and five. It now prints notes in five other denominations: 10, 20, 50,100 and 1,000.

Some of the new security attributes will have to be compatible with machinery used by the banks, and therefore, new machinery will have to be introduced at the bank end as well.

ING Vysya Life to hike capital
Thiruvananthapuram: ING Vysya Life Insurance Company is set to increase its capital by Rs35 crore in the coming months.

According to Frank Koster, Managing Director and Chief Executive Officer of ING Vysya Life, the company's capital will be expanded from Rs290 crore currently to Rs325 crore, either by March 2005 or June. He indicated that talks are on with key shareholders - ING Insurance International BV, ING Vysya Bank and GMR group - to work out the modalities of the proposed capital expansion.

Syndicate Bank public issue soon
Coimbatore: Syndicate Bank is aiming at a total business volume of Rs75,000 crore this fiscal and Rs 1-lakh crore by March 2006, its Chairman and Managing Director, K.M. Shet, said here on Friday.

The bank is gearing up for a second public offering. Shet said that the bank is planning a public offering of Rs50 crore equity shares. It will be at an appropriate premium. The issue is slated for January 2005. Consequent to this offer, the Government holding will come down from the present level of 73.62 per cent by about 6 per cent, Shet said.

16 November 2004

ICICI Bank raises interest rates by 25 to 75 bps
Mumbai: ICICI Bank, India's second-largest commercial bank has announced that it is increasing interest rates on its loans and deposits by between 25 and 75 basis points.

The floating reference rate (FRR) for ICICI Bank, used for determining the rate of interest for adjustable (floating) rate home loans, has been increased by 50 bps. The bank's interest rates on fixed rate home loans have been increased by 75 bps to 8.5 per cent from the current level of 7.75 per cent with immediate effect.

The increase in FRR will be applicable to new customers from November 17, 2004. For existing customers, the increase in FRR by 50 bps will be effective from January 1, 2005, in line with the bank's policy of resetting rates on a quarterly basis.

The existing fixed rate home loan customers will not be impacted by this increase and their contracted rates will remain unchanged, ICICI Bank said in a statement.

Financial markets have been waiting for interest rate increases by banks since the RBI raised its benchmark short-term repo rate by 25 basis points to 4.75 per cent at a mid-year review of monetary policy in October.

Rivals Housing Development Finance Corporation (HDFC) and State Bank of India are also expected to follow the ICICI Bank hike with their own, though the extent of the hikes are yet to be finalised.

Govt considering merger of PSU general insurance cos
New Dehi: The ministry of finance is now said to be considering the consolidation of the four public sector non-life insurance companies.

The options for restructuring the state-owned companies are being thrashed out by the ministry with the General Insurance Public Sector Association, a body representing the managements of the four insurance companies. The government-owned non-life insurance companies are Oriental Insurance, New India Assurance, National Insurance and United India Insurance, having headquarters in New Delhi, Mumbai, Kolkata and Chennai respectively.

The options under consideration range between merging all four companies into a single new entity creating the non-life version of the Life Insurance Corporation (LIC) or to have two mergers, thereby reducing the number of companies from four to two.

IBA offers 12.5 percent hike in pay to bank employees
New Delhi: The Indian Banks' Association (IBA) has offered a hike of 12.5 per cent on the basic salary of bank employees to resolve the mess caused by the employees' demand for a major wage hike.

Earlier, the association offered a hike of 11.5 per cent, which the bank unions rejected.

An increase of 12.5 per cent would mean an additional outflow of between Rs150 and Rs350 crore for the public sector banks, (PSBs) depending on the size of the workforce. The hit could obviously be of a larger denomination for banks like State Bank of India and Punjab National Bank.

According to a senior trade union member, the unions had demanded a 20 per cent hike in wages.

LIC loses markets in first half
Kolkata: Life Insurance Corporation of India (LIC) has lost a six per cent marketshare to private insurance companies in India in the first six months of the current fiscal against a seven per cent share loss in 2002-03.

From March 2004, when it held an 87 per cent share in terms of premium income, LIC saw its share steadily falling to 81 per cent by September 2004, according to data released by the Insurance Regulatory Development Authority (IRDA).

With respect to the number of polices sold in the first six months, the fall was at three per cent.

LIC recorded a 91.16 per cent share in September 2004 against 94.21 per cent at March end.

LIC has lost marketshare this year at a comparatively faster pace than it did in the previous fiscal.

In 2002-03 LIC's share in terms of premium income was around 94 per cent.

RBI asks NBFCs to submit quarterly returns
Mumbai: The Reserve Bank of India has ordered non-banking financial companies (NBFCs) to submit quarterly returns on important financial parameters as per the prescribed format.

This has been introduced for NBFCs not accepting or holding public deposits and having an asset size of Rs500 crore and above as on March 31, 2004, said the RBI notification.

Some of the parameters to be covered by in these returns include nature of the company's business, net owned funds, sources and applications of funds. Profit and loss account giving details of income and expenditure will also be required to be mentioned in the report.

Details relating to exposure of banks or financial institutions in the company and the NBFCs exposure to capital markets, foreign funds and associate or related parties are also required to be stated in the report.

According to the reporting arrangement, returns for the quarter ended September 2004 should be submitted to the concerned Regional Offices on or before November 30, and the subsequent returns should be submitted within 30 days of the month following the respective quarter end.

World Bank President coming to India
New Delhi: The president of the World Bank, James D Wolfensohn, is visiting India on November 17 and 18, in response to an invitation issued by the Union Finance Minister, P Chidambaram. This is his third visit to India since 1996.

On his two-day visit to the country, he will tour development projects focused on education, rural development and health in Delhi and Uttar Pradesh and will meet with government leaders, representatives of civil society, business people, youth groups and community leaders in New Delhi.

Wolfensohn will also deliver an address titled India: 'Opportunity and challenge in a globalised world' at the Teen Murti Auditorium in the capital on November 18, a World Bank release from its India office said.

His visit comes at a time when the Indian government has increased investment in infrastructure and rural development its key priorities. The World Bank's new country strategy for India reflects this commitment.

BoM to raise Rs 150 cr capital
New Delhi: The Bank of Maharashtra plans to raise Rs150 crore from the bond market by March 2005 to step up credit to agriculture and infrastructure sectors.

The bank aims to disburse Rs1,000 crore farm credit by the end of this fiscal and another Rs1,000 crore loan to the infrastructure sector in the next six months.

Bank of Maharashtra chairman S C Basu said, the bank would raise Rs150 crore for Tier II capital during next quarter. In its maiden IPO issued in February this year, it had raised Rs130 crore, which brought down the government's holding in the bank to 76.77 per cent from 100 per cent.

15 November 2004

Central bank ups deposit rates
Chandigarh: Central Bank of India has announced an upward revision of domestic term deposit rates by 25 to 75 basis points with immediate effect on new deposits and renewal of maturing deposits, a bank release said.

The bank has revised the 15-45 days rate from 4.25 to 4.50 per cent, 46-90 days from 4.50 to 4.75 per cent, 91-179 days from 4.5 to 5.25 per cent, 180 days to less than one year from 5 to 5.75 per cent, 1 to 3 years from 5.25 per cent to 6 per cent, over 3 years to 5 years from 5.25 per cent to 5.75 per cent and over five years from 5 to 5.50 per cent.

The bank also announced that bulk deposits of Rs 15 lakh and above at 4 per cent interest for 7 to 14 days would remain unchanged, the release said.

Canara Bank raises interest rates
Bangalore: Canara Bank is increasing interest rates on domestic term deposits by 25 basis points with effect from November 15.
A new slab of 7-14 days has also been introduced for single deposits of Rs5 lakh and above, a bank statement said.
The revised interest rates schedule for deposits for various maturities is:

• 7 to 14 days (only for single deposits of Rs5 lakh and above) 3.50 per cent;
  
• 15 to 45 days 4.25 per cent (from 4 pc);
  
• 46 to 90 days 4.50 per cent (4.25 pc);
  
• 91 to 179 days 4.75 pc (4.50 pc);
  
• 180 days to less than one year 5 pc (4.75 pc);
  
• from one year and above but less than two years 5.25 pc (5 pc);
  
• two years and above but less than three years 5.50 pc (5.25 pc),
  
• from three years and above 5.75 per cent (5.50 pc).