11 December 2004

Industrial growth at 10 percent for October
New Delhi: The official Index of Industrial Production (IIP) has registered a year-on-year increase of 10.1 per cent in October.

The index for `manufacturing' has gone up by 11.3 per cent year-on-year during October 2004 (against 7.1 per cent in October 2003), with the corresponding growth rates being 4.7 per cent (2.4 per cent) for `mining' and 3.8 per cent (2.6 per cent) in the case of `electricity'.

For the April-October 2004 period as a whole, the overall growth rate for industry has been 8.4 per cent (6.2 per cent during April-October 2003), making the current fiscal the best since 1995-96, when industry grew by a heady 13 per cent.

While manufacturing growth during the first seven months of 2004-05 stood at 8.8 per cent (against 6.8 per cent in April-October 2003), the corresponding cumulative numbers for mining and electricity were 5 per cent (3.9 per cent) and 7.1 per cent (2.9 per cent), respectively.

As per the `use-based' classification of the IIP, the bulk of the growth is being driven by capital and consumer goods. The index for capital goods has soared by 19.2 per cent in October and 15.1 per cent during April-October 2004, as against the corresponding year-on-year growth rates of 4.9 per cent and 9.2 per cent for October 2003 and April-October 2003, respectively.

During October, the annual growth rate for consumer durables was estimated at 15.5 per cent (against 13 per cent in October 2003), while corresponding being 13.4 per cent (7.2 per cent) for consumer non-durables, 6.8 per cent (4.3 per cent) for basic goods and 6.7 per cent (6.3 per cent) for intermediate goods.

For April-October 2004, the cumulative year-on-year growth amounted to 15.9 per cent (7.7 per cent during April-October 2003) for consumer durables, 8.1 per cent (8.6 per cent) for consumer non-durables, 5.4 per cent (4.3 per cent) for basic goods and 7.6 per cent (5.2 per cent) for intermediate goods.

Inflation down to 7.3 percent
New Delhi: A sharp 12 per cent fall in the prices of vegetables could pull down inflation only marginally to 7.3 per cent for the week ended November 27.

Manufactured products have become costlier due to higher prices of diesel that forms the bulk of transportation costs.

The Wholesale Price Index (WPI) inflation fell marginally by 0.04 per cent from the previous week's level of 7.34 per cent, prompting Finance Minister P Chidambaram to say "worst is over" on price line, which was 5.49 per cent a year ago.

However, the latest reported inflation figures have not factored in the increased freight tariffs effected by Indian Railways from November 27 mainly due to rising fuel costs and in accordance with the decision, many steel giants deciding to hike output prices.

The WPI was down by 0.3 per cent to 189.6 points even as fuel prices remained unchanged notwithstanding nervousness in the global crude prices. Government again revised downwards the point-to-point WPI inflation to 7.15 per cent during the week ended October two as compared to the provisional level of 7.20 per cent.

The final WPI stood corrected at 188.9 points during the first week of October as against the provisional 189 points.

Indo-UK bilateral trade to touch $12 billion for 2004-05
Kolkata: Indo-UK bilateral trade is expected to register a growth of 20 per cent in 2004-05 over 2003-04. From a level of around $ 10 billion in 2003-04, the Indo-UK bilateral trade is expected to touch $ 12 billion in 2004-05, according to Stephen Lillie, Counsellor (Economic) & Director of Trade and Investment, British High Commission, New Delhi.

Lillie said the number of Indian businesses investing in the UK had gone up by 47 per cent in 2003-04 over 2002-03. In 2003-04, 28 new investments from India were established in the UK creating 646 new jobs. That took the total number of Indian companies in the UK to 480. Of this, over 350 companies belonged to the IT and software sector.

According to him, in the current fiscal too an increasing number of Indian companies were either expanding or setting up operations in the UK. The UK had emerged as the top European investment destination for Indian companies targeting the European market and beyond. About 60 per cent of India's foreign direct investment into Europe goes to the UK. In fact, India is the second-largest source of FDI into the UK from Asia in terms of projects and jobs generated and ranks among the UK's top-ten foreign direct investment markets.

Nepal seeks joint ventures with Indian firms
Kolkata: Citing a highly liberalised FDI policy with macro-economic stability to boost, Nepal has sought joint ventures in textiles with Indian companies for taking advantage of the duty-free EU access now available for Nepalese items, as an LDC (Least Developed Country).

Nepalese govt. officials have said in the post-quota regime, effective January 1, 2005, such joint ventures with Nepalese outfits would strongly benefit the Indian textile sector, which has inherent strengths in primary fabrics. Joint venture exports from Nepal, with value-addition, would be beneficial to both nations.

As part of the reforms initiatives being pursued for accelerated industrialisation and export promotion, a new industrial and FDI policy has been created. Nepal is also planning to set up export processing zones and SEZs (special economic zones) through enactment of an SEZ Act, for such exports, with built-in infrastructure and services, concessionary tax measures and flexible labour laws.

The operationalisation of the new Birganj Inland Container Depot is a major milestone for furthering Indo-Nepal trade through the transit corridor. The issue of Nepal serving as a transit route for Indian cargo on India-registered and Nepal-registered vehicles is being discussed and likely to be finalised soon. The 1999 Transit Treaty and the importance of the Kolkata-Haldia transit route are major achievements.

PAN and TAN to be mandatory from '05
New Delhi: Quoting of Permanent Account Number (PAN) and Tax Account Number (TAN) on challans will be mandatory from January one next. Accordingly, no payment of tax will be received in banks unless the challan carries PAN of the taxpayer or TAN of the deductor, as the case may be.

A statement from the govt. has said so far 3.6 crore people have been allotted PAN. All taxpayers who do not have PAN must get one immediately availing the 'Tatkal' allotment facility under which the applications could be submitted through the internet and payment made by credit card.

Usually PAN is allotted between 15 working days after UTI Investors and NSDL were appointed to issue PAN. The statement also denied media reports saying that due to non-quoting of PAN on challans or its incorrect capture by banks, tax payment transactions are going into suspense account.

Pranab: India and Pak can forge common market
New Delhi: Asserting that India and Pakistan can unite through a common market, Defence Minister Pranab Mukherjee invited Islamabad to work jointly for developing a trade and economic block.

"We have no other option but to undertake serious efforts to break the ice by developing a common approach towards trade and commerce," he said at the 99th Annual General Session of PHD Chamber of Commerce and Industry. Both the nations should work towards the success of South Asian Free Trade Area (SAFTA) "for making it a platform of pride and a matter of envy for other blocks like EU, NAFTA and ASEAN", he added.

Expressing confidence that both nations can unite through a common market, he said: "If the European nations can come under a common platform of European Union by forgetting over 300 years of conflict, why not India and Pakistan with a history of only 50 years".

Collective approach has become the only way to solve conflicts, he said adding Congress party entering coalition politics reflects this basic principle in the context of the Indian polity.

10 December 2004

Rupee falls sharply
Mumbai: The rupee closed at 44.21/22 against the dollar ending fourteen paise lower than its previous close at 44.07/08.

Forwards Market: The six month forward closed at 1.45 per cent (1.62 per cent) while the twelve-month finished at 1.12 per cent (1.22 per cent).

G-Secs: The benchmark 7.38 per cent 2015 paper closed at an yield of 6.70 per cent, at a price of Rs105.06. Actively traded 7.55 per cent 2010 paper finished at 6.42 per cent before ending at Rs105.08.

Call Rates: In the range of 4.50-4.75 per cent.

CBLO Market: 121 trades worth Rs4,264.50 crore were transacted in the rate range of 4.50-4.80 per cent.

RBI: Foreign banks to place priority-lending shortfall with SIDBI
Mumbai: The Reserve Bank of India has said that foreign banks operating in India should place the amount of shortfall in their priority sector-lending obligation with SIDBI for a tenure of three years. The funds placed with SIDBI will have a graded interest rate structure linked to the Bank Rate, the central bank has said in a notification to foreign banks here today.

The RBI has said the move is in keeping with the recommendations made by the Ganguly Working Group in regard to evaluation of methods of utilisation of deposits made by foreign banks with SIDBI for shortfall in their priority sector obligation.

The overall shortfall target, which includes 32 per cent of net bank credit, 10 per cent SSI lending and 12 per cent export finances, will carry the rate of interest on the entire deposit to be made with SIDBI on an annualised basis. SIDBI will pass on the lower interest rates to the borrowers, RBI has said.

The scheme would be made effective from the financial year 2005-06 so that foreign banks have adequate time to plan deployment of their resources, according to the central bank.

RBI: On-tap sale for four States closed
Mumbai: The Reserve Bank of India has said that the 'on-tap' sale in respect of the remaining four State Governments - Bihar, Jammu & Kashmir, Orissa and Uttar Pradesh - has been closed.

The sale of 7.32 per cent State Development Loan, 2014 was closed in respect of 19 States on Wednesday. Payment will be made by the allotees on December 10.

RBI relaxes service area norms for banks and RRBs
Mumbai: Commercial banks and regional rural banks (RRBs) would, henceforth, be free to lend in any rural and semi-urban area and borrowers would have the choice of approaching any branch for their credit requirements.

In a bid to give easy access to rural borrowers for institutional credit from any bank of their choice at a competitive price and to provide banks, public and private, with a level-playing field, the Reserve Bank has relaxed the service area norms.

In a notification to commercial banks and RRBs here on Thursday, the central bank has said that the allocation of villages among rural and semi-urban branches of banks will, however, continue to be applicable for lending under Government-sponsored schemes.

Prudential Bank depositors to be reimbursed up to Rs1 lakh
Hyderabad: The Reserve Bank of India has announced that the depositors of the Prudential Bank would be paid for amounts of up to Rupees one lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

In a press release here on Thursday, the RBI has said that the apex bank has cancelled the licence of Prudential Bank and the State Government has appointed a liquidator. Further, the depositors were advised to approach the RBI Chief General Manager here, Dr Deepali Pant Joshi, for clarifications, if any, on 040-23234875 or 098490-22318.

ING Vysya Life unveils unit-linked plans
Bangalore: ING Vysya Life Insurance has announced the launch of two unit-linked insurance plans. The company said that strong economic fundamentals and maturity among customers to understand risk factors has created unprecedented interest in unit-linked insurance products.

The company said that the products had been designed to benefit all segments of customers and was not aimed at exploiting the high net worth younger generation with larger disposable incomes. The two products were designed to enroll customers from the age of eight to 65 years.

The two unit-linked insurance products - Freedom Plan and Future Perfect - have flexibility in payment of premium, planning investments and withdrawals with life protection over a policy period ranging from five to twenty five years.

ING Vysya Life Insurance, a joint venture between ING Insurance International BV of the Netherlands and Vysya Bank, had closed the last fiscal (2004) with a premium income of Rs100 crore.

09 December 2004

Rupee sheds 36 paise
Mumbai: The rupee ended at 44.07/08 against the dollar, 36 paise weaker than Tuesday's close at 43.71/73.

Forwards Market: The six month forward closed at 1.62 per cent (1.55 per cent) while the twelve-month forward closed at 1.22 per cent (1.10 per cent).

G-secs: Prices closed about 15 to 20 paise higher than previous levels. The benchmark 7.38 per cent 2015 paper ended at an yield of 6.71 per cent. The 7.55 per cent 2010 paper closed at 6.44 per cent.

Treasury bill auction: At the Rs2,000 crore 364-day, the cut-off yield was set at 5.65 per cent (5.65 per cent). At the Rs2,000-crore 91-day treasury bill auction, the cut-off yield was set at 5.15 per cent (5.15 per cent).

Call rates: In a range of 4.60-4.80 per cent.

CBLO market: 118 trades worth Rs4,781.55 crore were transacted in the rate range of 4.50-4.80 per cent.

RBI `on-tap' sale closed for 19 states
Mumbai: The Reserve Bank of India has said that the Rs4,000-crore 'on-tap' sale of 7.32 per cent 10-year State Development Loan, 2014, closed in nineteen States.

The States, which received target amounts on Wednesday, are Andhra Pradesh, Arunachal Pradesh, Assam, Chhattisgarh, Goa, Gujarat, Haryana, Himachal Pradesh, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Mizoram, Nagaland, Rajasthan, Sikkim, Tripura, Uttaranchal and West Bengal.

In respect of loans for the remaining four States, Bihar, Jammu & Kashmir, Orissa and Uttar Pradesh, the sale will be open on Thursday to collect the balance target amount.

Canara Bank union criticizes merger proposal
Thiruvananthapuram: The Canara Bank Union has passed a resolution at its conference stating that internal mergers of public sector banks do not automatically add to strength beyond the total capital and reserve base of the merging entities.

The conference was concerned over the Union Finance Minister's suggestion that public sector banks should merge in order to bring about consolidation and help participating banks transform themselves into global entities.

The resolution states that mergers are just an excuse for initiating steps to contain the operating costs of the banks, which is being sought to be done through a drastic reduction in the workforce and through induction of technology.

HDFC Bank hikes rates
Mumbai: HDFC Bank has raised deposit rates by 25 basis points to 50 basis points across different tenors. The new rates will be effective from December 10. The bank has also introduced a new maturity bucket of 5 to 8 years in its domestic term deposits scheme.

Lending rates across all retail loan products has also been hiked by 25-75 basis points. The bank said that the increase in interest rates were in line with the trends in the banking industry, and the current interest rate environment.

08 December 2004

Rupee declines - securities weaken
Mumbai: The rupee closed lower at 43.71/73 against the dollar on Tuesday, nearly eight paise below its previous close at 43.6350/6450.

Forwards Market: The six-month forward closed at 1.55 per cent (1.53 per cent) and the twelve-month forward premium finished at 1.10 per cent (1.07 per cent).

G-Secs: Bond prices ended lower by nearly 10 to 15 paise. The benchmark 7.38 per cent 2015 paper ended 12 paise lower than previous close at Rs104.80 at an yield of 6.75 per cent. The 7.55 per cent 2010 paper closed 15 paise lower than previous levels at Rs104.90 at a yield of 6.47 per cent.

Call Rates: Traded in the range of 4-4.70 per cent.

CBLO Market: 125 trades worth Rs5,316.25 crore were transacted in the rate range of 3-4.75 per cent.

SBI to finance Tata vehicles
Mumbai: Tata Motors has signed an MoU with State Bank of India (SBI) making the latter its `preferred financier' for financing commercial vehicle sales.

An official statement said that as a preferred financier, SBI will work together with Tata Motors to promote and make available organised finance facility at competitive interest rates and concessions to Tata Motors customers all over the country, including those in semi urban and rural areas.

Tata Motors and SBI will also design and offer special promotional schemes for customers, from time-to-time.

07 December 2004

Rupee breaches 44-mark to touch 8-month high
Mumbai: The rupee breached the psychological 44-mark on Monday and touched an eight month closing high at 43.6350/6450 against the dollar. The domestic currency had last seen similar closing levels on April 12, when it had ended at 43.64/65 per dollar. A higher finish was seen on March 31 at 43.60/65, when the rupee had touched nearly a four-year closing high. Dealers said that in Monday's trade alone FIIs invested nearly $50 million to $1 billion across Indian markets.

Forwards Market: The six-month annualised premium finished at 1.53 per cent (1.58 per cent) while the twelve-month premium ended at 1.07 per cent (1.15 per cent).

G-secs: Bond prices fell by around 50 paise across maturities in the domestic debt market on selling pressure by bond traders, but staged a 30 paise recovery by the end of the day.

The benchmark 7.38 per cent 2015 paper recovered to Rs104.92 at an yield of 6.77 per cent. The 7.55 per cent 2010 recovered to close at Rs105.05.

Call Rates: In the range of 4.60-4.80 per cent.

CBLO market: 125 trades worth Rs4,960.30 crore were transacted.

Securitisation Act amendment Bill tabled in Lok Sabha
New Delhi: The Minister of State for Finance, S.S. Palanimanickam, has introduced two Bills in the Lok Sabha to replace the Enforcement of Security Interest and Recovery Debts Laws (Amendment) Ordinance, 2004 and the Securities Laws (Amendment) Ordinance, 2004.

The first Bill seeks to amend the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFESI), the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the Companies Act, 1956.

The amendment has been sought in the light of the Supreme Court's judgment with regard to Mardia Chemicals Ltd, where the requirement for a deposit of 75 per cent of the amount claimed, before entertaining an appeal by the Debt Recovery Tribunal (DRT) was declared to be violating Article 14 of the Constitution.

Following this, the Finance Minister, P. Chidambaram, in his 2004-05 Union Budget speech, promised to amend the relevant provisions of SARFESI "to appropriately address the Supreme Court's concerns regarding a fair deal to borrowers while, at the same time, ensuring that the recovery process is not delayed or hampered."

Accordingly, the new Bill provides for the borrower to make an application before the DRT without making any deposit, while, at the same time, making it necessary for the tribunal to "dispose of such application within 60 days from the date of such applications so that the total period of pendency of the application with such tribunal shall not exceed four months."

The Bill for carrying out these amendments was originally introduced by the previous National Democratic Alliance Government last year, but lapsed because of the dissolution of the 13th Lok Sabha.

SBI to go for second phase of overseas debt issue
Mumbai: The State Bank of India plans to come out with the second phase of its overseas debt offering in a couple of months. SBI is raising the funds to finance its overseas operations. The bank also plans to acquire a medium-sized bank abroad in a couple of months.

Earlier this month, SBI had raised $400 million as a debut offering, which was part of its $1 billion (around Rs4,500 crore) medium-term note programme, of bonds with tenure of five years listed in the Singapore stock exchange. The bonds were priced at 4.75 per cent, at a yield of 4.847 per cent to investors. The initial size of the offering this month was $300 million which was upsized to $400 million, following excellent customer response.

SBI plans acquisitions abroad
Mumbai: The State Bank of India is looking for acquisitions in Africa and Asia. The bank would open ten new overseas offices in the next six-nine months as part of plans to grow international business, Chairman of SBI A K Purwar has said.

On the bank's plans for acquisitions abroad, Purwar said SBI is looking for medium sized banking entities with quality assets in Asia and Africa. SBI expects to make announcements in next few months, he added.

ICICI Bank plans ADR
Mumbai: ICICI Bank proposes to go in for a sponsored ADR issue.

The board will meet on December 13 to "consider a proposal for sponsoring an issue of ADRs against existing shares held by its shareholders".

Syndicate Bank staff asks for debate on merger of PSBs
Kochi: The Syndicate Bank Staff Association (SBSA) has urged the Union Government to initiate a round table debate on merger of public sector banks with representatives of trades unions, banking industry, depositors association, experts from financial sector, RBI and the public.

The SBSA has said in a press release that the Government should come out with a White Paper which should be placed before Parliament.

06 December 2004

Chidambaram: Govt. to stand by roadmap for FDI in private banks
New Delhi: The Finance Minister, P. Chidambaram, has said the blueprint for acquisition of up to 74 per cent equity in Indian private banks by foreign banks will be announced by the month-end.

Speaking at the India Economic Summit 2004 here, Chidambaram said, "The Government stands by the March 5, 2004 notification. Foreign banks can acquire up to 74 per cent equity in Indian private banks. The roadmap for this will be uveiled by the end of this month."

On insurance, the Finance Minister said he hoped to place a Bill in Parliament during the Budget session, while a pension regulator would be in place by the end of the year.

RBI: Rs.2, 500-crore auctions for MSS on Dec 8
Mumbai: The Reserve Bank of India has announced auctions worth Rs2,500 crore of treasury bills to be held under the Market Stabilisation Scheme (MSS) on December 8.

Analysts ascribe comfortable liquidity conditions in the market as the reason for the latest announcement. Earlier the apex bank had cancelled scheduled auctions under the Market Stabilisation Scheme (MSS) for the past four consecutive weeks.

Dealers say that the continued spate of foreign fund inflows coupled with the expected external commercial borrowings worth $1-1.5 billion this year is likely to improve rupee liquidity further, added.