At present, buyers of securities are not allowed to re-sell them without securities being actually transferred into their investment accounts.

In a notification issued today, the RBI said, "It has been decided to permit a buyer from an allottee in a primary auction to re-sell the security subject to compliance with the terms and conditions."

RBI's Technical Advisory Committee on monetary policy meets
Mumbai: The Reserve Bank of India's Technical Advisory Committee (TAC) on Monetary Policy held its first meeting here today. The meeting was chaired by the Governor, Dr Y V Reddy.

A press release said the committee reviewed the macroeconomic developments in the context of the forthcoming first quarterly review of the Annual Policy Statement for the year 2005-06, scheduled for July 26, 2005.

The RBI had set up the advisory panel with external experts to strengthen the consultative process in monetary policy.

91 and 364 day T-bill auctions fully subscribed
Mumbai: The auctions of the 91-day and the 364 -day Treasury bills on Wednesday were fully subscribed, said a Reserve Bank of India press release.

The notified amount for the 91-day Treasury bill was Rs2,000 crore.

The RBI received 46 competitive bids, amounting to Rs3,238.70 crore. Of these, it accepted 21 bids. The cut-off price was Rs98.65. The partial allotment percentage amounted to 46.91 per cent from 15 bids. The weighted average price was Rs98.66.

The RBI did not receive any non-competitive bids for this auction.
In case of the 364-day Treasury bill, the notified amount was Rs2,000 crore. The RBI received and accepted 57 competitive bids, amounting to Rs2,676 crore. It accepted 46 bids. The cut-off price was Rs 94.45.

The partial allotment percentage amounted to 95.29 per cent from six bids. The weighted average price was Rs94.50. The RBI received one competitive bid amounting to Rs30.33 crore. The partial allotment percentage was 100 per cent.

The devolvement of RBI was nil in both the auctions.

RBI's technology vision document asks banks to focus on rural areas
Chennai: The Reserve Bank of India has released its Financial Sector Technology Vision Document for the period 2005-08, which aims to provide inputs for banks on the RBI's medium term policy perspectives in this area.

The Vision document acknowledges that the risk management systems, and the preparedness for implementation of anti-money laundering and Basel-II norms, in terms of technology, is still in its infancy.

The document underlines the challenges posed by the presence of varied types of banks and the different reporting requirements that make the adoption of a generic architecture for all banks difficult.

The document says, "The major challenge staring at bankers in India relates to the need to introduce innovative, customer friendly products and services for which newer technologies have to be brought in multiple areas to reduce the overall transaction costs."
It draws attention to the fact that IT implementation has traditionally targeted metros and urban customers.

It says, "The time has now come to make the benefits of IT penetrate to the rural population as well. There may be also a need to provide for multi-lingual facilities, which is a migration from the existing English-only paradigm, in a manner akin to some of the other large countries such as China, Korea and Japan."

The document calls for the setting up of business continuity plans and disaster recovery systems, given the large-scale dependence on IT.

With regard to government-related transactions, the Vision document calls for computerisation of respective government departments. This would enable reduction in delay in providing service to customers as well as enable faster dissemination of information.

Listing some of the emerging challenges in this area (government transactions), it said, that procedural changes would be required and amendment to treasury rules would be needed for e-governance. It also pointed out that cross-certification of digital signatures would be required since the certification authority for the banking sector and Government were different.

The document, laying a roadmap for the above, said that the retail activities of the RBI were being hived off or entrusted to a separate set of banks as for example, in the case of the new MICR-based cheque-processing centres.

A time-bound plan would be formulated to ensure their complete IT-based functioning, the document said.

20 July 2005

Rupee unchanged - securities dip
Mumbai: The rupee remained almost unchanged against the dollar on Tuesday closing the day at 43.54, almost the same as Monday's 43.54/55.

Forwards market: The 6-month premium closed at 1.32 per cent and the 12-month at 1.50 per cent.

G-Secs: In the bond market, the 7.27 8-year 2013 paper, closed at Rs101.10 (7.09 per cent YTM), down from Monday's Rs101.38 (7.04 per cent). The 10.25 - 16-year 2021 paper, which was auctioned yesterday opened at Rs123.30 (7.68 per cent YTM) and closed at Rs122.85 (7.72 per cent YTM). The 7.38 - 10-year 2015 benchmark paper was dealt at Rs101.44 (7.18 per cent YTM).

Call rate: The inter bank rates were at 4.75-5 per cent (4.75).

CBLO market: 195 trades in the 4.81-5.05 per cent range, amounting to Rs7,029.50 crore, were realised.

SBI issues floating rate notes for 5 billion yen
New Delhi: State Bank of India has issued floating rate notes for 5 billion yen last month under its medium term notes programme for one billion dollars.

The floating rate notes, issued by the bank's London branch, carried a coupon of libor+57 basis points in yen, SBI told BSE today. The notes were issued for a tenure of 5 years.

This is the second issue under the programme.

Its inaugural issue for USD400 million, carrying a coupon rate of 4.75% and for a tenure of 5 years, was completed in December, 2004.

Govt. clears Bank of Baroda's public offer - slated for September
New Delhi: The Bank of Baroda (BoB) has received a clearance from the finance ministry to tap the capital markets in September towards funding its expansion plans.

BoB is likely to sell 7.1 crore shares to the public, which will dilute government holding in the bank from 66% to 53%, a bank official said. At the current market price of Rs207-209, the bank may be expected to raise close to Rs1,500 crore from such an issue.

BoB will be the sixth PSU bank to tap the capital market in the last two years. Since January 2004, five banks - Punjab National Bank, Allahabad Bank, Dena Bank, Oriental Bank of Commerce and Syndicate Bank - have come out with public issues.

BoB is planning to expand presence in the US, UK, UAE, Singapore, Thailand, Malaysia, Sri Lanka, Male, Bangladesh and West Indies.

Bharat Overseas Bank IPO to raise Rs100 crore - slated for October
Mumbai: Chennai-based Bharat Overseas Bank Ltd is tapping the capital markets with a Rs100-crore initial public offer, slated for issue in October.

Bank officials said that the proceeds from the IPO would go towards expanding the business of the bank as well as to meet capital requirements of the Basel II requirements. By 2006 the bank hopes to increase its net worth to Rs300 crore, in order to meet RBI guidelines.

The bank is targeting to grow its business to Rs12,000 crore by 2010. Its branch network, currently at 95, would also be expanded to 200, officials said. The bank also intends to bring down the corporate loan book, which is currently at 55 per cent of total assets, to around 40 per cent by 2010.

Accordingly, the SME and retail portfolio, which is now at 45 per cent, would increase to 60 per cent. The bank also hopes to increase the non-fund income from the current level of 6 per cent to 14 per cent, through tie-ups to distribute retail products such as insurance and mutual funds.

In the meanwhile the bank has announced a distribution tie-up between itself and Franklin Templeton. BOBL would now be distributing the mutual fund products of Franklin Templeton to its customers across its various branches.

The partnership is expected to net Franklin Templeton assets under management of Rs100 crore in the next six months, bank officials said. Franklin Templeton India officials said that the tie-up with BOBL would help Franklin Templeton expand its market as well as ensure higher penetration in its existing markets.

19 July 2005

16 year 2021 Govt. paper oversubscribed
Mumbai: The auction of the 10.25-Government stock 2021 was oversubscribed on Monday.

Dealers said that the cut-off price at Rs122 was higher than market expectation, which was Rs121.50. Prices of securities rose by 30 paise to Rs1.50 during the day as a result of this.

The notified amount for the paper was Rs5,000 crore. The Reserve Bank of India received 408 competitive bids amounting to Rs12,914.25 crore. The cut-off price was Rs122 (7.78 per cent YTM). The RBI accepted 31 bids, amounting to Rs4,977.85 crore.

The partial allotment percentage amounted to 90.55 per cent from 8 bids. The amount of underwriting accepted from primary dealers was Rs3,900 crore.

The weighted average price was Rs122.14. The RBI also received 27 non-competitive bids, amounting to Rs22.15 crore.

Rupee dips -securities up
Mumbai: The rupee slightly weakened against the dollar on Monday ending the day at 43.54/55, lower than Friday's close at 43.51/52.

Forwards market: The 12-month premium closed at 1.32 per cent (1.32 per cent) and the six-month premium at 1.50 per cent (1.48 per cent).

G-Secs: The 7.55 five-year 2010-benchmark paper ended trade at Rs103.35/40 (6.72 per cent YTM) against the previous close of Rs103.14. The most active 7.27 per cent eight-year 2013 paper closed at Rs101.38 (7.04 per cent), up from Friday's close of Rs101.07 (7.09 per cent YTM). Yields on the 7.38 per cent 10-year benchmark eased from Friday's level of 7.21 per cent to 7.14 per cent on Monday.

The cut-off price on the 10.25 per cent 16-year 2021 paper was Rs122 (7.8 per cent), higher than the market expectations of Rs121.50.

Call rates: The inter bank rates opened at 5-5.1 per cent and closed at 4.75 per cent (5-5.10 per cent).

CBLO market: 225 trades, in the 4.65-5.00 per cent range, amounting to Rs 9,671.85 crore, were realised.

RBI clears FII buying in Reliance Capital -Grasim and Tata Tea are on hold
Mumbai: The RBI has issued a notification giving permission for the purchase of equity shares of Reliance Capital by foreign institutional investors under the portfolio investment scheme.

The press release states that since FII holdings have gone below 22 per cent of Reliance Capital's paid-up capital, equity shares of the company could now be bought.

The central bank has also notified that no further purchases of equity shares can be made by FIIs through the primary / secondary markets in Grasim Industries and Tata Tea without prior permission. The release states the companies have already reached the limit of 22 per cent of their paid-up capital.

SAT moots penalty on UBS
Mumbai: The Securities Appellate Tribunal (SAT) has suggested to the market regulator, Sebi, to consider plea-bargaining and a penalty of Rs50 crore on UBS Securities Asia Ltd, a foreign institutional investor (FII). Sebi had earlier banned UBS Securities from issuing participatory notes for one year.

While hearing UBS Asia's appeal against Sebi's order, SAT presiding officer Justice Kumar Rajaratnam said the regulator could consider process akin to plea-bargaining as a innovative step to put an end to endless litigation since there was no allegation of manipulation.

In May this year, as part of its crack down on those allegedly involved in May 17, 2004 market crash, Sebi had barred UBS Securities Asia from issuing participatory notes (offshore derivative instruments) for underlying Indian securities for one year.

UBS has totally failed to discharge its obligations to regulatory requirements, with a design to withhold critical information for stultifying the investigation, Sebi had said.

On May 17, 2004, there was a melt down in the Indian stock markets, with the Sensex falling by 567.74 points, ostensibly due to uncertainties over government formation.

Through plea-bargaining a defendant agrees to enter a plea of guilty to a lesser charge and the prosecutor agrees to drop a more serious charge. UBS Securities Asia had strongly pleaded ''not guilty'' in the Securities Appellate Tribunal (SAT) on Monday.

18 July 2005

FIIs must disclose PN holders identity: Sebi
Mumbai: The Securities and Exchange Board of India (Sebi) has told foreign institutional investors (FIIs) that their clients must be informed that information on their participatory note (PN) investments would be made available to the market regulator as and when it sought details from them.

PNs are derivative instruments whose underlying securities are Indian stocks and are issued by FIIs to overseas investors who want to invest in Indian stocks but are not allowed to do so. According to Sebi sources the regulator has already zeroed in on 4-5 FIIs that are aggressive PN investors.

In fact, 101 new FIIs registered themselves with Sebi in 2005, taking the total number of FIIs to 738. FII investments have grown rapidly, with as much as $5.44 billion pumped into India so far this calendar year.

The officials said the regulator would also seek information from FIIs at random about their issuance of PNs. Also, it has made clear to the major FIIs that they needed to be ready with information on PNs since the regulator could anytime seek information on sources of funds.

In an earlier interview, Sebi chairman M Damodaran had told FE, "the jury is still out" on the benefits or otherwise of excessive FII flows. "The basic idea also is to see whether Indian money itself is coming back through the PN route. The sources of such funds continue to be an issue," a Sebi official said.

PNs and offshore derivative instruments (ODIs) are essentially routes through which overseas investors can invest through FIIs in the Indian markets, but also have the benefit of remaining anonymous. The controversial PN route again came into sharp focus recently, when Sebi passed an order on UBS Securities for allegedly being one of the entities that caused the massive 565-point crash in the Sensex on May 17, 2004. UBS has challenged the Sebi order at the Securities Appellate Tribunal (SAT) and the case is to come up on Monday.

Interestingly, Section 20 of Sebi's FII rules clearly says every FII shall, as and when required by the market regulator or RBI, submit as the case may be, any information, record or documents in relation to its activities as a FII as may be required by the regulators.

Week ended July 15: FIIs net purchases in equities at Rs.15.914bn
Mumbai: Foreign Institutional Investors (FIIs) recorded net purchases in equities at Rs15.914bn ($365.6 million) for the trading week ended July 15, while mutual funds (MFs) were net sellers at Rs3.35bn.

The foreign funds were net sellers in the debt market at Rs460.5mn ($10.7 million) for the period under review, according to the data available with the Securities and Exchange Board of India (SEBI) here.

The mutual funds were net purchasers in the debt market at Rs4.419 bn.

The Stock Exchange, Mumbai, (BSE) during the week under review, saw the sensex gaining 59.46 points to close at 7271.54 points.

RBI to raise Rs.2500 crore under MSS
Mumbai: The Reserve Bank of India plans to raise Rs2,500 crore through the auction of 364-day and 91-day Treasury Bills, under the Market Stabilisation Scheme, said an RBI press release.
Of this Rs1,000 crore will be raised through the auction of 364-day T-bills, while Rs1,500 crore will be raised through the auction of 91-day T-bills.

RBI also proposes to raise Rs1,500 crore through the regular auction. Of this, Rs1,000 crore will be raised through the 364-day T-bills, while Rs500 crore will be raised through the auction of 91-day T-bills.

July 20, 2005 before 12 p.m. Successful bidders will have to make payment on July 22.

Abu Dhabi Bank's Indian operations post Rs.50.20 crore loss
Mumbai: Abu Dhabi Commercial Bank's Indian operations have reported a loss of Rs50.20 crore in 2004-05 against a net profit of Rs9.63 crore recorded in 2003-04.

A sharp rise in provisioning at Rs55.21 crore in 2004-05 (Rs 4.05 crore a year ago) has resulted in the loss. The provisioning for bad loans rose to Rs31.66 crore in 2004-05 (Rs5.85 crore).

Its net non-performing assets (NPA) are still high at 12.73 per cent, though it is down from 27.39 per cent in 2003-04. Its gross NPAs dropped to Rs 41.16 crore at March-end (Rs77.07 crore) after writing off NPAs aggregating Rs33.11 crore and recoveries of Rs5.70 crore.

Its net NPAs amounted to Rs11.43 crore as on March 31, 2005, down from Rs45.89 crore as on March 31, 2004. The bank's income from Indian operations was also down by 9.63 per cent to Rs149.80 crore (Rs165.76 crore).

The total outstanding advances of the bank's Indian operations came down to Rs89.85 crore in 2004-05 (Rs167.57 crore).

Its deposits too decreased to Rs1,662.54 crore in 2004-05 from Rs1,815.98 crore a year ago. The bank has a CAR of 14.38 per cent, up marginally from 14.22 per cent at the end of 2003-04.

The bank has exceeded prudential exposure limit for individual borrowers in the cases of Lloyds Steel, Larsen and Toubro, Jet Airways, Sun Earth Ceramics, Bhagwandas Bherumal & Co, Shree Precoated Steels and Tata Projects Ltd.