07 march 2007

rbi imposes cap on inter-bank liabilities from april 1
mumbai: the reserve bank of india (rbi) has put caps on inter-bank liabilities from april 1, 2007, as smaller banks have been borrowing heavily to tide over tight liquidity.

the rbi has also asked banks with high concentration of wholesale deposits to contain the liquidity risk arising out of excessive dependence on such deposits.

bulk deposits constituted nearly 20 per cent of term deposits of the banking sector, banking sources said.

the inter-bank liabilities were capped at 200 per cent of net worth on march 31, 2006.

the move is likely to affect smaller banks - private, public as well as foreign - as they have lower net worth compared to large banks like state bank of india, which has a net worth of rs28,000 crore.

meanwhile, the rbi has asked banks to convey in writing the reason for rejecting loan applications and also mandated that loan application forms across all categories of loans, irrespective of the amount, should be comprehensive.

p chidambaram to address rbi board
new delhi: finance minister, p. chidambaram, will address the central board of directors of the reserve bank of india here in a customary post-budget meeting.

indications are that `inflation,' the state of the economy and its growth prospects, the steps taken by the rbi and the union government would come in for elaborate discussion at the meeting.

the meeting may also discuss the proposed stake transfer in state bank of india between the rbi and the government.

in budget 2007-08, the finance minister had announced that the government proposes to acquire rbi's equity holding in sbi. he had said that a sum of rs40,000 crore has been provided for this purpose and that the transaction would be "deficit neutral" to the government.

05 march 2007

yen climbs to a 3-month high as investors unwind riskier stocks
mumbai: the japanese currency climbed to a three-month high against the us dollar as asian stocks extended a global slump, and investors unwound riskier investments funded by yen loans.

the yen rose to 115.63 against the dollar at 2:39 p.m. in tokyo after reaching 115.39, the strongest since december 8, from 116.75 in new york on march 2. it also advanced to 152.32 against the euro after touching 151.76, the highest since november 24.

the japanese yen has gained 4.3 per cent against the dollar over the past five days.

the yen also gained from a government report that showed companies invested at a faster pace than expected, adding to the bank of japan's case for raising interest rates. the yen gained nine per cent in five days against the south african rand and 7.7 per cent versus the new zealand dollar as traders bought yen to pay loans.

the yen rose 1.9 per cent against the pound, with the currency climbing to a three-month high of 222.52. the yen rose to 15.4580 to the rand from 15.7502, 78.88 against the new zealand dollar from 80.39 and 89.88 versus the australian dollar from 91.36

speaking to reporters in tokyo, japanese finance minister koji omi said foreign exchange rates should reflect economic fundamentals. he declined to comment on specific exchange rate levels.

investment in japan rose 16.8 per cent in the fourth-quarter from a year earlier, data given by the ministry of finance showed.

preliminary reports based on revised data say the government may revise its gross domestic product estimate on march 12 from a preliminary report that showed the economy grew at an annual 4.8 per cent, the fastest in more than two years.

investors can borrow money in japan at the lowest rate among major economies. the key overnight rate of 0.5 per cent compares with 9.0 per cent in south africa and 7.25 per cent in new zealand.

analysts expect the yen to climb further to 115 this week.

other reports on finance diary