IDBI may offload 50 per cent in new infotech company to shareholders
Mumbai: The country’s leading development bank, Industrial Development Bank of India (IDBI), is planning to spin off nearly 50 per cent of its shareholding in IDBI Intech (Itech), its newly formed infotech subsidiary, to the shareholders of IDBI and divest the balance to a strategic partner after about three months of commercial operations.

This is being done to help IDBI realise better value from its holding in Itech which was incorporated as a 100 per cent subsidiary of IDBI. Simultaneously, IDBI shareholders will benefit from a larger holding in the IT company.

IDBI has already inducted three IDBI officials -- Mr. S K Chakrabarti, deputy managing director, Mr. T M Nagarajan its executive director and Mr. B D Ushir, legal advisor -- into the board of the IT company. Apart from these three independent directors, Mr Sadagopan, director of Indian Institute of Information Technology, Bangalore, Mr. S Swaminathan, chief executive officer of Iris, and a management expert from Chennai are to be inducted at the next board meeting of the company in May, 2000. Ultimately the board of the company is expected to have a total strength of 10 members.

IDBI has also decided to appoint S S Godbole, advisor in its information technology department, as the chief executive officer of the company. Key officials in different vertical segments are to be hired in addition to 25-30 outside staff to enable the company to start off with a base of 100 employees.

While six to seven companies including domestic software majors and global IT giants have evinced interest in picking up IDBI’s stake in Itech which has a paid-up equity capital of Rs 50 crore, IDBI officials feel that roping in a partner after the company gets going, will fetch a better valuation.

The company has already begun to start rendering services to other IDBI group companies like the mutual fund and the capital markets company and has received enquiries with respect to Informix services from USA and Australia.
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HDFC cuts housing loan rate to 13 per cent
Mumbai: Housing finance major, HDFC, today announced that it has reduced its retail prime lending rate by 0.25 per cent to 12.50 per cent and as a result housing loans up to Rs 1 crore are now available at a floating rate of 12.5 per cent and at a fixed rate of 13 per cent. These rates will become applicable for all loans disbursed from May 8.

This rate cut comes close on the heels of the government increasing the tax exemption for interest on housing loans to Rs 1 lakh. The lower rates coupled with higher exemption level means that a borrower who avails of a Rs 750,000 15-year loan will get the full benefit of the exemption. Earlier, a loan of Rs 600,000 was enough for a borrower to exhaust the tax exemption limit. While the higher exemptions increase the borrower’s annual income by Rs 8,000 (assuming a tax liability at 33 per cent), the lower interest rates reduce the equated monthly instalment. Taken together both these would increase the eligibility limits for borrowers.

Interest on loans for non-resident Indians have also been reduced with loans up to five years available at 11.5 per cent and loans between 6-10 years at 12.5 per cent. Floating rate loans for the same tenors are available at 11 per cent and 12 per cent, respectively.
The financial institutions however feels that going by what one can see in the horizon — the huge government borrowing programme and the drought — interest rates have bottomed out and are unlikely to go down further.
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Oil prices slip in Asia
Singapore: Even as Norway’s biggest labour dispute since 1986 threatened oil exports and US crude stocks fell, oil prices in Asia slipped on Thursday. The crude market, although not weakening by much, was consolidating after strong mid-week gains drew some profit-takers. Oil companies operating onshore terminals in Norway on Wednesday said that about 1.1 million barrels-per-day (bpd), or a third of national oil exports, might be suspended because of a workers’ strike.

At around 0740 GMT, front-month June crude was traded at $26.60 a barrel, down 15 cents from its New York close and near the Asian day’s low of $26.57. June crude had settled 14 cents lower in New York on Wednesday at $26.75 per barrel, after prices had pushed as high as $27.39 earlier in the day.

Crude prices rallied a dollar a barrel on Tuesday, on the back of Opec comments and sharp gains in the gasoline market. Now in the absence of fresh bullish factors, traders said prices might continue to correct downwards.

The latest data from the US Department of Energy (DOE) on Wednesday showed US crude stocks fell 3.3 million barrels in the week ended April 28 – painting a less bullish picture than the American Petroleum Institute (API).

The oil cartel Organisation of Petroleum Exporting Countries (Opec) had also lent some support earlier in the week by saying it was likely to cap its current oil supply when it next meets in June.

Oil ministers from three leading Opec producers have indicated that this was the best course of action given current market conditions, despite expectations that oil demand would start to rise in the third quarter.

Opec members raised the cartel’s production ceiling in late March, sparking a downturn in prices. Prices are now 20-25 percent lower than the nine-year peak of more than $34.00 a barrel in early March.
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