Rate cuts on savings schemes
New Delhi: The government, in a bold step, has reduced the interest rates on small savings and public provident fund deposits by one per cent. This is likely to enable banks to adopt a low-interest regime and give a boost to industrial activity.

The decision will affect the public provident fund scheme, post office savings bank scheme, post office term deposits, post office recurring deposit scheme, National Savings Certificate, Kisan Vikas Patra and post office monthly income scheme. The move is expected to result in an annual savings of Rs 1,000 crore in interest payments and pave the way for more investments in the capital market. The government has also lowered the interest rate on loans to state government given against small savings. It has now been fixed at 12.5 per cent against the earlier 13.5 per cent.

The revised rates of interest will be (old rates in brackets): public provident fund 11 per cent (12), NSC-VII 11 per cent (12), NSS 1992 10.5 per cent (11.5), Post office deposits – one year 8 per cent (9), two years nine per cent (10), three years 10 per cent (11) and five years 10.5 per cent (11.5) and monthly income account 11 per cent (12). The Kisan Vikas Patra will now double in six years.
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More World Bank loan for Indian banks
Calcutta: The World Bank is expected to issue new loans to help Indian banks to undertake modernisation.  The quantum and the interest rate are not known, according to sources in the banking industry.

The Bank is also planning to extend the tenure of utilisation of credit given earlier to select public sector banks. In 1995-96 the World Bank had sanctioned fixed-rate loans of a total of $150 million to six banks  – Indian Bank, Syndicate Bank, Allahabad Bank, Bank of India, Dena Bank and Indian Overseas bank -- to bring in technology and improve capital adequacy standards.
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UTI Bank eyes Centurion Bank
Mumbai: UTI Bank has set its sights high. It is planning to take advantage of the fissures that have developed in the proposed ICICI Bank-Centurion Bank merger. In case the deal fizzles out, UTI Bank will step in to acquire the Davendra Ahuja-promoted Centurion Bank, thus paving the way for further consolidation in private sector banking.

A combined UTI Bank-Centurion Bank will create the third largest private bank in India, in terms of size and market capitalisation. At present, the HDFC Bank-Times Bank combine is ranked first, followed by ICICI Bank. The ICICI Bank-Centurion Bank merger plan seems to have met with obstacles over the share swap ratio.
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IDBI plans 3 subsidiaries
Mumbai: The Industrial Development Bank of India is planning to set up three new subsidiaries in addition to the proposed insurance sector subsidiary. The three subsidiaries will be an information technology company, a venture capital fund, and a housing finance company. IDBI’s board meeting on 28 January will take up these proposals as part of its restructuring plan. IDBI sources said the organisation is open to the idea of collaboration with domestic or international partners in these ventures.
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MTNL cell foray in June
New Delhi: Mahanagar Telephone Nigam Ltd is launching its cellular telephone services in New Delhi and Mumbai in June 2000. The public sector company has placed orders for equipment worth Rs 82 crore with Indian Telephone Industries. MTNL plans to have a network capacity of one lakh lines each in the two metros to start with. This will go up to four lakh lines by 2003. It has projected an expenditure of Rs 1,000 crore to set up the infrastructure.

ITI will be the main supplier of equipment and it will also design and install the network. The company has tied up with US telecom company Lucent for the equipment.
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