Housing finance major, HDFC, may merge bank with itself
Mumbai: In a report appearing in the Economic Times, it is understood that housing finance major, Housing Development Finance Corporation (HDFC), is considering a possible merger with associate company HDFC Bank.

The report quotes the chairman of HDFC as saying that the financial institution is seriously looking at the option, given the synergies between the two entitites. The impetus for this consideration seems to have come from the revision in the policy by the Reserve Bank of India, which allows the universal banking concept, that allowed financial institutions the option to transform into a bank provided they meet prudential norms.

An added advantage of a merger would be that lending rates on housing finance would drop since the company would be in a position to prune its cost of funds. HDFC’s costs of funds in 1998-99 stood at 13.65 per cent, almost twice that of the bank’s 7.1 per cent.
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StanChart to set up software arm in India
New Delhi: Following the trend by major multinational organisations, Standard Chartered Bank is said to be setting up a subsidiary for providing back office transaction and data processing, software development and maintenance services to the bank’s operations in India and abroad.

The bank also proposes to undertake processing activities for its global operations through this subsidiary, which would act as an independent company. Initially, it would provide high quality value added services to the Standard Chartered Bank operations in India, South and Middle East. The new subsidiary would not undertake any banking or fund-based activities.

The bank believes that, with the convergence of technology and finance, knowledge-oriented processes had become key drivers for determining success, especially as financial products had increased in their sophistication and complexity. In order to manage such sophistication, the transaction systems should be robust, according to the bank sources.

Several other companies are also eyeing India as an IT hub for setting up their global processing units and administrative centres for their parent companies. This will enable foreign companies to cut down their total costs by 20 to 30 per cent.
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IBA gets new chief in Mr. K C Chowdhary
Mumbai: The appointment of Mr. K. C. Chowdhary as the new chief executive of the Indian Banks Association in place of Mr M N Dandekar, who completes his term next month, has ended the long search for a person to head the organisation. Mr. Chowdhary is the former chairman of Central Bank of India.

The exercise, which began six months ago, included efforts by a search committee, a head-hunter agency and advertisements in domestic and international publications. The association has also been trying to recruit people at general manager levels, but the absence of lateral mobility in the banking industry makes it difficult for an executive to rejoin the industry at the end of his term.

To meet the recommendations of the Arthur Andersen report, IBA is working on a voluntary retirement scheme package for its employees. However, since it is only a non-profit organisation there is no tax exemption on the package. IBA is, therefore, structuring a package where part of the ex-gratia payment compensation can be offered in the form of annuity payments for which annuities would be purchased from the Life Insurance Corporation of India.

An advisory committee has been constituted to discuss what needs to be done toward bank restructuring in India. The committee is headed by Mr. G V Ramakrisha, head of the former disinvestment commission and ex-chairman of Sebi.

The IBA is also representing to the government on the new Maharashtra Rent Act which does not mention banks. The IBA is also planning to make representations on the imposition of stamp duty on lease agreements as banks are also tenants under leave and licence agreements.
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Major media shake-up in Singapore
Singapore: In what is considered a significant break from the past, Singapore announced that its tightly controlled media market is being thrown open to competition, with a newspaper company being granted broadcast licenses and a broadcaster given permission to print newspapers.

Newspaper publisher Singapore Press Holdings, which loses its newspaper monopoly with the announcement, will instead get as many as two television licenses and two radio channels. At the same time, government owned broadcaster Media Corporation of Singapore will be offered a license to publish newspapers. Despite this minor change, foreign companies will not, however, be allowed direct access to the local newspaper market, except in cooperation with one of the two local companies. This is because the government feels that regular reporting on Singaporean affairs must always remain under local control.

The concerned minister also said that the government will review its ban on satellite dishes in 2002, when Singapore Cable Visions’ exclusive pay-television license ends.
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Draft civil aviation policy to be ready by end-June
New Delhi: The final draft of the civil aviation policy, which is likely to stress on private participation in the aviation sector, is expected to be ready by the month-end. The minister for civil aviation, Mr. Sharad Yadav, is said to be planning a broad-based internal ministry meeting to prepare the final draft that will be sent to the Cabinet. However, the issue of foreign equity participation in the domestic sector will not be touched.
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