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Rupee gains
Mumbai:
The rupee gained by 25 paise against the dollar owing to strong inflows into market. The domestic currency opened at 40.83/85. Strong inflows coupled with the absence of Reserve Bank of India in the market helped appreciate the rupee which closed at 40.61 up from the previous day's close of 40.86. Market participants feel that the home currency would appreciate further to 40.50 this week.

In forwards, the six-month premia closed at 2.62 per cent (2.07 per cent) while the 12-month ended at 2.74 per cent (2.48 per cent).

Bonds: Bond prices rose by around 20 paise on reports of a possible drop in inflation. Total traded volumes on the order-matching system were Rs4,685 crore (Rs2,325 crore). Inflation for the week ended May 12 was at 5.27 per cent. The surplus cash in the system kept traders cautious.

G-secs: The 8.07 per cent-10 year-2017 paper opened at Rs99.80 (8.09 per cent YTM) and closed at Rs99.93 (8.08 per cent YTM), against the previous close of Rs99.78 (8.10 per cent YTM).

The 7.38 per cent- 7 year-2015 paper opened at Rs95.50 (8.13 per cent YTM) and closed at Rs95.79 (8.09 per cent YTM), against the previous close Rs95.55 (8.13 per cent YTM).

Call rates: The inter-bank call rates dipped to a 10-year low of 0.50 - 0.75 per cent on Thursday, on surplus liquidity lower than Wednesday's 1 - 1.25 per cent.

Reverse repo: In the first one - day reverse repo auction, RBI received 32 bids for Rs37,020 crore while it accepted Rs1,995 crore. In the second one - day reverse repo auction, the apex bank received 35 bids for Rs35,270 crore while it accepted Rs997 crore. There were no repo bids in the first and second one - day auctions.

The CBLO market saw 339 trades aggregating Rs29,992.10 crore in the 0.10 per cent - 0.50 per cent ran.
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PFRDA shortlists four players for managing pension funds
New Delhi:
Four players of Life Insurance Corporation of India, State Bank of India, UTI AMC and IDBI Capital have been shortlisted by the Pension Fund Regulatory and Development Authority (PFRDA) — to mange the pension funds under the new pension scheme (NPS). Originally, seven players submitted expressions of interest (EoI) for the role of pension fund managers (PFMs).

The PFRDA had stipulated that only financial service providers in which Government had at least 51 per cent stake and managed assets worth Rs10,000 crore were eligible to submit EoIs. Those shortlisted will now be issued Request for Proposals on June 11 and will have to respond within 2-3 weeks. Based on the evaluation, the PFRDA would finally identify 2-3 PFMs. The whole process is expected to be completed by July 20.

The fund managers will offer alternative products to employees, including risk-free options, under which all funds would be invested in government securities, and share-market linked products with variable returns as well.
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PTC in pact with IIFC
New Delhi:
PTC India has signed a five-year memorandum of understanding with India Infrastructure Finance Company Ltd (IIFC) to promote the development and construction of power projects, including thermal, hydro and other sources. As per the MoU, IIFC will undertake the due diligence process and appraisal for financing of power projects where PTC has signed power purchase agreement with project developers.
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ICICI Lombard at top place in premium growth
Bangalore:
ICICI Lombard General Insurance Corporation has grabbed the second spot in insurance premiums growth displacing three public sector companies. According to figures released by the Insurance Regulatory and Development Authority (IRDA) on Thursday, ICICI Lombard earned the second largest premium of Rs448.65 crore for April but was at top place in terms of premium growth of 35 per cent over the corresponding period of the last financial year. Public sector New India Assurance remained on top with a gross premium of Rs650.82 crore for the same period but grew by only 8.2 per cent over the corresponding period of the last financial year. Oriental Insurance Company Ltd remains at the third spot with gross premiums of Rs413.50 crore. Oriental's growth has remained flat during the period.

In the first month of financial year 2007-08, private sector insurers grew 37.34 per cent to Rs1,272.22 crore over April 2006. In the process, the market shares have further undergone a change. Private sector has grabbed a market share of 40 per cent in the non-life insurance business, from 34 per cent in the financial year 2006-07. Public sector market share is now only 60 per cent.
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BNP Paribas picks 50 pc stake in SREI Infra arm
Mumbai:
French bank BNP Paribas has bought a 50 pc stake in the equipment finance arm of SREI Infrastructure Finance for Rs775 crore. SREI will demerge its equipment finance business and BNP Paribas Lease Group (BPLG), the leasing arm of BNP, will pick up equity in the new entity, SREI Infrastructure Development Finance. The new company will also hold the share capital of SREI Insurance Services, and will undertake other asset-based financing.

The net worth of the new JV after the subscription by BPLG will be Rs800 crore.

Underlying the deal, there are call options for BPLG and put option for SREI which can be exercised by the JV partners at any time after April 1, 2030 under specific situations. These are a possible default by SREI or the promoters or BPLG, dilution below certain specified levels, change of control of SREI, and the promoters ceasing to be the MD of the JV company.

The transaction was done at three times the book value of SREI. The current book value of SREI is at Rs42 a share. The present market cap of SREI is Rs783 crore. The scrip rose 19.9 pc to Rs71.80 on Thursday.
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domain-B : Indian business : News Review : 1 June 2007 : banking and finance