4 December 2004

Rise in rupee abates as securities rule steady
Mumbai: A rise in the US currency forced a pause in the rupee's upward movement after six consecutive sessions. The rupee ended at 44.12/14 per dollar, marginally lower than previous close at 44.11/12 against the greenback.

Forwards Market: The six-month annualised premia climbed to 1.58 per cent (1.07 per cent) while the twelve-month forward finished at 1.15 per cent (0.84 per cent).

G-secs: The benchmark 7.38 per cent 2015 paper closed at Rs104.60, with the yield on the paper ending higher at 6.77 per cent. Actively traded 7.55 per cent 2010 paper closed at Rs105.10.

Call Rates: in the inter-bank market were in a range of 4.50-4.80 per cent, but softened to 3-3.50 per cent towards the day's end.

CBLO: 135 trades amounting to Rs 5,302.90 crore were transacted in the rate range of 1.10-4.60 per cent.

`SEBI probe reveals no insider trading in GTB shares before merger'
New Delhi: The Finance Minister, P. Chidambaram, has said that a probe by the Securities Exchange Board of India has found that there was no insider trading in the shares of erstwhile Global Trust Bank during the process of its merger with Oriental Bank of Commerce.

In a written reply to the Lok Sabha, Chidambaram said the enquiry revealed that two overseas corporate bodies based in Mauritius - Far East Investment Corporation Ltd and European Investment Ltd - started selling their shares of GTB from June 17, five days after they became eligible to trade in the shares. A total of 95 lakh shares were sold by the two entities up to July 19.

"Analysis of data and information on GTB scrip does not suggest that the sales by the persons concerned were based on any information about the likely announcement of moratorium by Government and RBI or the likely swap ratio and there is no evidence to suggest that they were in possession of price-sensitive information," the Finance Minister said.

SEBI had found that during the pre-moratorium period, the purchasers of GTB shares were widespread and no concentrated purchases could be observed except by two clients - Mr Suman Goyal of Ludhiana and Mr Ramji Mehrotra of Kanpur. He further said that during the post-moratorium period, the purchasers and sellers were also widespread and no concentrated purchases could be observed with a few exceptions.

SBI staff federation drops strike plan
Kolkata: The nationwide strike called jointly by the All-India State Bank of India Staff Federation and All-India State Bank Officers' Federation on December 6 and 7, has been withdrawn following an understanding between the bank management and the two federations, according to a statement by the General Secretary of State Bank of India Staff Federation.

In another statement, the federation demanded a probe by a joint parliamentary committee into the alleged irregularities in Global Trust Bank. The statement said that steps taken by the Union Finance Minister in this regard were inadequate, as the investigation proposed by the Government would be limited to the acts of directors, managers and employees of the bank, keeping the monetary authorities including RBI and SEBI out of its purview.

2 December 2004

Rupee continues its surge
Mumbai: A weak dollar overseas and steady dollar inflows into the domestic markets aided the rupee to close 18 paise stronger on Wednesday at 44.45/46 against the greenback, as against its previous close at 44.63/64.

In the bond market, securities staged a smart recovery of nearly Rs 2 across some maturities.

Forwards Market: The annualised premia on the six-month forward closed at 1 per cent (0.93 per cent) while the 12-month forward ended at 0.81 per cent (0.77 per cent).

GE to retail home loans
New Delhi: GE Consumer Finance has announced its foray into the home loan and personal loan segment of the retail market. GE's personal loan foray would be under the brand GE Money Personal Loan.

The foray into the housing finance segment would be through a new company - GE Money Housing Finance Company. The new company has already been registered with the National Housing Bank (NHB).

Loans are to be disbursed at a floating rate of 7.5-8.5 per cent.

SIDBI to get $120 million from World Bank
Mumbai: To strengthen the country's small and medium enterprises (SMEs) sector, the World Bank has approved a $120-million (around Rs540 crore) loan to Small Industries Development Bank of India.

The loan, guaranteed by the Government of India, is aimed at improving SME access to finance and business development services thereby fostering growth, competitiveness and employment creation, the Bank has said in a release.

Although the potential of SMEs in India to drive growth and create jobs is well known, they have failed to be the engines of growth because of problems in accessing adequate and timely finance and business development services.

Banks are not too keen to lend to SMEs because of high transaction costs and perceived risks of SME lending in the face of insufficient credit information, inadequate credit appraisal and risk management skills, poor repayment records and low market credibility of SMEs, the Bank remarked.

GOI cancels sale of Rs.8,000 crore dated papers
Mumbai: The Government of India cancelled the Rs8,000 crore auction of dated securities to be held during December 1-8. The securities scheduled for auction were 10-14 year security for Rs6,000 crore and 20-years and above security for Rs2,000 crore, during the period December 1-8, as per the auction calendar.

SBT hikes NRE deposit, FCNR rates
Thiruvananthapuram: The State Bank of Travancore (SBT) has raised the interest rates for NRE term deposits as also FCNR deposits in dollars, pound sterling and euro for various periods with effect from December 1.

The revised rate for NRE deposits of one year to less than two years is 3.50 per cent, for two years to less than three years 3.90 per cent and for three years and above up to five years is 4.20 per cent, according to a statement from the bank.

The revised rate for US dollar FCNR deposits of one year to less than two years is 2.73 per cent, for two years to less than three years 3.12 per cent and for three years is 3.41 per cent.

The rates for pound sterling deposits for similar periods are 4.65 per cent, 4.58 per cent and 4.60 per cent, respectively. The corresponding rates for deposits in euro are 2.05 per cent, 2.28 per cent and 2.52 per cent, respectively.

1 December 2004

Rupee strengthens further
Mumbai: The domestic currency gained 17 paise on Tuesday to close at 44.63/64, against Monday's closing of 44.80/81.

Forwards Market: The six-month annualised forward premium closed at 0.93 per cent up 34 basis points from the previous close at 0.59 per cent. Twelve month annualised premia closed at 0.77 per cent (0.67 per cent).

G-Secs: The benchmark 7.38 per cent 2015 paper closed at Rs101.35 at a yield of 7.20 per cent, The 7.55 per cent 2010 paper closed at Rs103.26, 16 paise higher than previous finish.

Call Rates: Stable at 4.75-4.80 per cent levels.
CBLO Market: Rs6,322.80 crore worth of trades were transacted, in the rate range of 4.65-5 per cent, being 142 in number.

Kotak Life launches unit-linked Flexi Plan
Mumbai: Kotak Life Insurance has launched the Kotak Flexi Plan, a unit-linked insurance plan positioned as a flexible scheme where a customer can modify the cover, choose investment profile and add or withdraw money from investments. According to the company, Kotak's suite of unit-linked plans, which include Kotak Safe Investment Plan II and Kotak Easy Growth Plan, gets complete with the new offering.

Kotak Flexi Plan guarantees the maturity sum assured even where the customer opts for 80 per cent equity exposure. The insurer's expense charges in the first year range from 28 per cent for a three-year premium paying term to 65 per cent for a 15-year or more premium paying term.

The charges would be 4.37 per cent every year of operation from the second year. The expense charges are deducted upfront in the form of units.

RBI directive on `Know Your Customer' operations for banks
Mumbai: The Reserve Bank of India has asked banks to put in place a proper policy framework on the `Know Your Customer' guidelines and `Anti-Money Laundering' measures with the approval of their boards, within the next three months.

In a circular issued to the chiefs of all commercial banks, RBI has said, banks may ensure that information sought from the customer is relevant to the perceived risk, is not intrusive, and is in conformity with the guidelines issued in this regard.

Any other information from the customer should be sought separately with his or her consent and after opening the account.
Banks should continue to ensure that any remittance of funds by way of demand draft, mail telegraphic transfer or any other mode and issue of travellers cheques for value of Rs50,000 and above is effected by debit to the customer's account or against cheques and not against cash payment, the apex bank has said.

The RBI has emphasised that banks can effectively control and reduce their risks only if they have an understanding of the normal and reasonable activity of the customer so that they have the means of identifying transactions that fall outside the regular pattern of activity. However, the extent of monitoring will depend on the risk sensitivity of the account. Banks should pay special attention to all complex, unusually large transactions and all unusual patterns, which have no apparent economic or visible lawful purpose, the central bank has said.

Every bank should set key indicators for such accounts, taking note of the background of the customer, such as the country of origin, sources of funds, the type of transactions involved and other risk factors.

IOB to raise a further Rs.150 crore as Tier-II capital
Chennai: Indian Overseas Bank plans to raise Rs150 crore as Tier-II capital.

The bank had already raised Rs200 crore in July to augment its resources. The bank's capital adequacy was at 13.47 per cent as of September 2004.

The bank said, "Our credit expansion is better than expected. We expect to cross Rs4,000 crore in credit compared to the target of Rs3,100 crore. We have taken approval from the board to raise extra capital, as a measure of extra comfort. We may raise the money any time before March 31, 2005."

HSBC launches global net banking channel for CMS
Mumbai: The Hong Kong and Shanghai Banking Corporation Ltd has launched HSBCnet, a global Internet banking channel providing real time access to cash management solutions. This offering complements the Hexagon ABC, the bank's payment services platform.

The Web-enabled delivery channels offer solutions for receivables, payables and liquidity management. The service is secure and available anytime, anywhere in the world, according to the bank.
HSBC has also widened its product suite and delivery channels for payments and cash management services (CMS) to corporates in India.

The bank has also strengthened its `integrated payments solutions' (IPS), its offering in the Asia-Pacific region allowing the seamless execution of electronic and paper-based payments, by the introduction of cheque outsourcing service.

HSBC India has around 450 corporates, who avail of CMS from the bank. In fact, the Indian CMS business is one of major contributors to the revenue and business of the bank's Asian operations, officials said.

HSBC has a presence in 21 countries in the Asia Pacific. Of these, India and China make substantial contributions to the banks revenue and business form CMS.

NHB: Rates hiked on capital gains bonds
New Delhi: The National Housing Bank has increased the rates of interest on its Capital Gains Bonds issued in 2002. The new rates would come into effect from December 1.

Accordingly, for a five-year tenor with put/call option at the end of three years for amounts up to Rs 1crore, the revised rate of interest stands at 5.35 per cent against the existing 5.10 per cent, while in the case of amounts of Rs1 crore and above, the new rate is 5.45 per cent against 5.10 per cent.

For seven-year tenor with put/call option at the end of five years, the revised rate is 5.50 per cent against 5.25 per cent.
The bonds are rated `AAA' with stable outlook from Crisil, a NHB release said.

AIBEA to oppose Govt. initiatives for banking reforms
Hyderabad: The All-India Bank Employees Association (AIBEA) has resolved to strongly oppose the banking sector reforms currently being initiated by the Government.

At the concluding session of its five-day national conference here, AIBEA has resolved to fight against the Government's move towards dilution of its holdings in public sector banks (PSBs), merger of banks, and takeover of Indian private banks by foreign entities, and continued neglect of regional rural banks (RRBs) and co-operative banks.

In a press release here, AIBEA said the conference has decided to go in for "intensive and extensive struggles including strike actions" if necessary.

30 November 2004

Rupee at seven month high
Mumbai: The rupee strengthened to a seven-month high on Monday riding on the back of large foreign investment inflows and a weakening dollar. The rupee closed at 44.80/81 against the dollar, stronger by 23 paise over the previous close at 45.0300/0350.

Forwards Market: The six-month annualised forward premium closed at 0.59 per cent (0.40 per cent) while the 12-month forward premium ended at 0.67 per cent (0.45 per cent).

G Secs: Up by about 20 paise, with the benchmark 7.38 per cent 2015 paper closing at Rs101.25 per cent at a yield of 7.22 per cent. The 7.55 per cent 2010 paper closed at Rs103.15 at a yield of 6.86 per cent.

Call Rates: The rates were in the range of 4.75-4.85 per cent.
CBLO Market: 137 trades worth Rs5,851.40 crore were transacted in the rate range of 4.70-5.25 per cent.

RBI report: Interest rates unlikely to decline further
Mumbai: The Reserve Bank of India has alerted banks that interest rates may have bottomed out and are unlikely to decline any further during the financial year 2004-05.

In its report on the `Trend and Progress of Banking in India, 2003-04', it said, "Over the past few years there has been a steady decline in interest rates largely reflecting sustained reduction in inflation rates and expectations. Such reductions in interest rates occurred in an environment where the credit growth remained sluggish. Consequently, there was a favourable impact on banks' balance sheets in terms of increased operating profits from treasury operations."

The enhanced treasury incomes enabled banks to make larger loan loss provisions due to which the net NPA ratios declined from 5.5 per cent in 2001-02 to 2.9 per cent by 2003-04.

However, there does not appear to be any further scope for similar trends to be observed during 2004-05, and in future, an increasing portion of banks' incomes would emanate from the traditional business of lending, the RBI said.

RBI report: NPAs of Scheduled Commercial Banks on the decline
Mumbai: The asset quality of scheduled commercial banks (SCBs) has shown a remarkable improvement in 2003-04, according to the RBI report on `Trends and Progress of Banking in India' released on Monday.

The central bank has noted that the gross non-performing assets (NPAs) of SCBs has declined in absolute terms for a second year in succession, despite the switchover to the 90-day delinquency norm, effective March 2004.

Gross NPAs of scheduled commercial banks declined by 5.6 per cent in 2003-04, against a decline of 3 per cent in 2002-03. Due to significant provisioning, the net NPAs declined substantially by 24.7 per cent during 2003-04 against a decline of 8 per cent in 2002-03, the report said.

The decline in NPAs is evident across bank groups. During 2003-04, reductions outpaced additions in the NPAs account. For SCBs, the decline in NPAs was accompanied by the decline in doubtful and loss assets by 8.8 per cent and 15 per cent respectively, the central bank has observed.

The ratio of net NPAs to net advances of SCBs declined from 4.4 per cent in 2002-03 to 2.9 per cent in 2003-04. All bank groups witnessed a decline in the ratio of net NPAs to net advances in 2003-04.

Among bank groups, the old private sector banks had the highest net NPAs ratio at 3.8 per cent, followed by public sector banks, new private banks and foreign banks.

RBI report: Retail exposures may impact asset quality of banks
Mumbai: The Reserve Bank of India has expressed concerns over the implications of the rapid rise in retail lending by banks. In its report on `Trends and Progresses in the banking sector', released here, RBI has cited several limitations to the surge in retail lending.

It said the increase in retail loans may impinge on bank credit for investment activities, thereby affecting economic growth. It will also increase indebtedness of households, which have implications for sustainability of private consumption and saving in the medium to longer horizon.

Retail lending, as a key profit driver for banks, has been behind the growing retail portfolio of banks, which constituted 21.5 per cent of total outstanding advances as on March 2004. The housing loans which form 48 per cent of total retail portfolio, had the least gross impairment at 1.9 per cent while consumer durables segment had the highest gross asset impairment at 6.3 per cent, said the report.

The RBI had put in place risk containment measures in its mid-term review of annual policy, 2004-05; and had increased the risk weight from 100 per cent to 125 per cent in the case of consumer credit, including personal loans and credit cards.

The retail thrust has become synonymous with mainstream banking for many banks over the last few years, said RBI in the report. While, new generation private sector banks have invested in creating and sustaining a retail brand, the public sector banks have also increasingly become active in retail loan area, the report added.

While ICICI Bank accounts for nearly 30 per cent of the domestic retail growth, State Bank of India's retail segment constitutes 20 per cent of its total advances. As per the report, in 2003-04 retail lending of SBI grew by Rs8,803 crore against an increase of Rs6,641 crore in 2002-03.

IFCI operating profit for H1 at Rs. 64-crore
New Delhi: IFCI Ltd has reported an operating profit of Rs64.18 crore for the first six months of the current fiscal, against an operating loss of Rs99 crore during the corresponding period in the previous fiscal. IFCI is presently in the midst of the restructuring exercise.

The operating profit for the quarter ended September 30, 2004, has been Rs90.42 crore against an operating loss of Rs62.93 crore in the second quarter of the last fiscal.

The institution has cut its net loss to Rs88.32 crore for the six months period as against Rs1,350 crore in the previous year. For the quarter ended September 30, the net loss has been Rs40 crore against Rs1263.78 crore.

New deposit rates from IOB
Thiruvananthapuram: The Indian Overseas Bank (IOB) has announced new interest rates on domestic and non-resident ordinary (NRO) deposits.

The new rates, to be effective from Monday, are as follows (in percentage figures): Seven days to 14 days - 3.50; 15 days to 179 days - 4.75; 180 days to 270 days - 5.00; 271 days to less than one year - 5.25; one year to less than three years - 5.75; and three years and above - 6.00.

29 November 2004

Left parties to oppose merger of Public Sector Banks
Hyderabad: The AITUC General Secretary and Member of Parliament, Gurudas Dasgupta, has said the Left parties would strongly oppose the Government's proposal to merge the public sector banks to evolve a few monopoly banks.

Addressing the annual conference of the All India Bank Employees' Association (AIBEA) here on Saturday, he called for unity among trade unions to fight against the new economic policies being dictated by the World Bank.

Lashing out at liberalisation, privatisation and globalisation policies practised by the erstwhile NDA Government, he said the existing Government seems to be reasonable so far. However, he said the Government was depended on support from Left parities and their support would continue as long as the Government does not resort to anti-people policies and implemented the Common Minimum Programme. "The Government cannot take our support for granted," he said.

Dasgupta called for the AIBEA's whole-hearted support and said its role should not be restricted to merely achieving the bi-partite agreements with the bank managements for securing wage increases.

Rs.500 crore, 91 day, T-bills auction on Dec 1
Mumbai: The Reserve Bank of India has announced that the auction of 91-day Government of India Treasury Bills for notified amount of Rs500 crore would be conducted on December 1, under the regular auction calendar. The auction of Rs1,500 crore under MSS will not be conducted.

The central bank said in a release, "Taking into account all relevant factors" auction of 91-day Treasury Bills for Rs1,500 crore scheduled for December 1, under quarterly indicative schedule for MSS (Market Stabilisation Scheme) would not be conducted.

The auction will be conducted using "Multiple Price Auction' method and payment by successful bidders will be on December 3.