RBI permits rupee derivative trading
Mumbai: The Reserve Bank of India has permitted rupee derivative trading. It has formally given the go-ahead to banks and companies to hedge against interest rate risks through the use of interest rate swaps and forward rate agreements.

According to the guidelines notified by the central bank in this regard, there will be no curb on the tenure and size of the interest rate swaps and forward rate agreements entered into by banks.

The interest rate swaps will allow companies to hedge their interest rate risks and provide an opportunity to swap their old high cost loans with cheaper ones.

ICICI and Deutsche Bank will be the first to strike deals under domestic interest rate swap.
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IDBI to borrow short and lend long
Mumbai: The Industrial Development Bank of India is evolving a strategy that seems simple -- borrow short and lend long on a floating rate basis. The financial institution's management feels this will reduce its overall borrowing cost so that it can earn better in difficult times.

In 1999-2000, the institution will raise around Rs 3,000 crore in short-term funds -- maturity periods of one to three years -- through a combination of certificates and deposits, term money bonds and unsecured fixed deposits.

"IDBI will advance term funds at cheaper rates and include reset clauses in its loan assets to pass through any increase in its short-term borrowing costs," Vishwanath Pratap Singh, executive director, said.

IDBI cites the case of housing finance companies in the UK following this approach.
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Kerala plans to make use of NRI funds
Thiruvanathapuram: The Kerala government, faced with a problem of plenty in terms of NRI deposits, is turning towards I-Kin, a joint venture between ICICI and the Kerala Infrastructure Development Corporation, for help. It has asked I-Kin to explore how the ever-growing NRI funds -- now estimated to be over Rs 14,000 crore -- can be deployed for productive purposes.

I-Kin is working on developing a suitable fund that could channel the NRI earnings for beneficial use.
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Bangalore airport project has prospective investors
New Delhi: Reliance Industries, Ashok Leyland, Hochtief, a German construction company, and the Airport Authority of the UK are among the prospective investors in the Bangalore airport project.

Civil aviation authorities said the deadline for expression of interest has been extended to 28 July. These groups had discussed the matter with the Karnataka State Industrial Development Corporation and the Karnataka government.

The total cost of the project is estimated to be around Rs 1,000 crore. The Airport Authority of India will have an equity contribution of Rs 50 crore.
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New products from Corporation Bank
Mumbai: Corporation Bank is planning to introduce five new branded products for individual customers.

N.N. Pal, deputy general manger of the bank, said the bank has lined up Corp Home, a housing loan product, Corp Mobile, a car finance scheme, Corp Medic, a product for doctors, Corp Plus, an overdraft facility, and Corp Cash, a loan scheme against investments. The bank will also finance purchase of consumer goods under its Corp Customer.
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Citicorp, BankAm, largest banks
London: Citicorp and Bank of America are today the world's largest banks, thanks to mergers in the financial services industry.

In its annual listing of the 1,000 largest banks in the world, The Banker magazine said Citicorp's merger with insurance group Travelers has pushed it into first place with a capital base of $41.9 billion. Bank of America, after the merger of NationsBank with it, comes second from a seventh rank last year.

Ten years ago, the two top banks were National Westminster and Barclays of the UK. They have now dropped to 23^rd and 22^nd place.

Ranked by total assets, Deutsche Bank is the largest, with 732.5 billion in assets. Deutsche Bank has recently acquired Bankers Trust, which will strengthen its position next year. Only a three-way combination of Societe Generale, Banque Nationale de Paris and Paribas, if BNPs bid for this succeeds, will hamper Deutsche's ambitions. 
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LTCM to repay debt
Greenwich: Long-Term Capital Management, the large US hedge fund which was saved by a group of 14 banks from a financial crisis, says it will return $1.3 billion of capital to the banks and investors.

LTCM will return $1 billion to the consortium of banks that last year rescued it with an equity infusion of $3.625 billion. Another $300 million will be returned to investors other than LTCM insiders and affiliates.

LTCM had suffered massive losses from investments in stock and bonds made with borrowed money, and the bank consortium had come to its help. 
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