NHAI to float second round of tax-free bonds
New Delhi: The National Highway Authority of India (NHAI) is finalising its proposal for issuing its second round of tax-free bonds. The proposal, which has already got the approval the finance ministry, is now awaiting final nod from the NHAI board.

Unlike its first bond float earlier in this fiscal year, the NHAI has decided to go in for the on-tap option for the second bond float and will not fix a time deadline as there are no limits on the corpus to be mobilised. NHAI feels that the early redemption of bonds defeats the purpose of raising monies for the over 10-year-long project cycles.

In its previous issue, NHAI closed the issue in a few weeks from its opening, as the Rs 500-crore was over-subscribed several times. The second series of bonds is now likely to carry a coupon rate in the range of 9-10 per cent and would also be privately placed with a minimum investment limit of Rs 1 lakh. The NHAI has also sought longer maturity tenure of the bonds to match the character of the highway sector. At present, the bond issue comes with a 7-year tenure with a call or put option after three years.
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Earthquake to increase pressure on budget deficit
Mumbai: The government will be hard-pressed to contain budget deficits for fiscal 2001-02, with the likely deficit expected to be much more on account of the devastating earthquake in Gujarat. The budget deficit for the current fiscal was earlier targeted at Rs 117,000 crore.

During fiscal 1999-2000, India had surpassed its deficit target of Rs 79,955 crore by nearly a third, partly due to a war with Pakistan and cyclone that devastated the state of Orissa.
Mr. Montek Singh Ahluwalia, member, Planning Commission has said that there will be a definite negative impact on the state domestic product. However, with three quarters of fiscal 2000-01 already over, the fiscal-end figures would not be severely hit as the impact will spill over to the next quarter and to the next fiscal, Mr Ahluwalia has said. India would however, face the twin problems of a drop in industrial revenues from Gujarat, one of the country's top industrial states and a massive reconstruction and rehabilitation bill.
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RBI report says competition has spurred bank efficiency
Mumbai: Reserve Bank of India (RBI) report on Currency and Finance 1999-2000, has noted that competition has helped to improve the overall efficiency in the banking system. The report which is making a positive case for greater competition has stated that ever since private banks came into operations and foreign banks were permitted to open more branches, there has been an overall improvement in efficiency, reflected in the decline in intermediation costs as percentage of total assets.
There has also been a gradual improvement in the capital level of the banking sector and on the asset quality. The wage bill as a percentage of total assets too has declined from 2.05 per cent in 1995-96 to 1.66 per cent in 1999-2000. Most of the efficiency has been achieved due to the financial sector reforms, the report points out. Though initially the prudential accounting norms did affect the bank profitability, most public sector banks have managed to improve efficiency by conforming to international best practices in various areas.
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