UTI agrees to pledge blue chips with banks
Mumbai--UTI has agreed to provide blue chip stocks of old economy stocks as collateral to avail of a loan from a large consortium of banks. SBI will operate as a nodal agency and arrange for loans amounting to Rs 3,000 crore against pledge of shares worth Rs 5,000 crore.

SBI has indicated a list of 13 companies whose shares will pledged at current market prices.

Surprisingly, no IT stocks would be accepted as collateral. The number of shares and price would be decided in the next few days, sources said.

A consortium of 15 banks has agreed to fund the country's largest mutual fund through a step up interest rate structure. Under the scheme, the banks will charge 10 per cent interest for the first six months, following which the loan can be extended for another six months at 10.5 per cent.

In case, UTI wants to extend the tenure of the loan further, banks would then charge the prevailing prime lending rate. It may be mentioned that a  new private sector bank has already extended Rs 250 crore for three months at 9.5 per cent.
Back to News Review index page  

JP Varma to head Sebi panel on individual stock futures
Mumbai-- The Securities and Exchange Board of India (Sebi) has set up a new advisory group on derivatives under the former Sebi board member Prof JP Varma to look into the possibility of introducing individual stock futures. The group will also look into various issues concerning the growth, development and regulations of the derivatives market.

With the setting up of new group, the technical group on derivatives now will cease to exist.

The technical group, which met here, allowed subsidiaries of stock exchanges to become trading and clearing members in the derivatives segment with immediate effect to enable members of smaller stock exchanges to participate in the derivatives markets. Risk parameters for these subsidiaries would be same as for other derivatives segment members.
Back to News Review index page  

RBI to issue guidelines soon for NBFC investments in equities
Mumbai--The Reserve Bank of India (RBI) will soon announce the guidelines to be imposed on investments by non-banking finance companies (NBFCs) in equities, similar to the one imposed on banks at five per cent of their outstanding deposits, and the attendant sub-ceilings.

A central bank official said that the issue had been on the cards for some time, and the Tata Finance imbroglio with regard to its erstwhile subsidiary, Niskalp, had given a new impetus to the issue.

The new norms will probably cover NBFCs' investments in primary as well as secondary markets; and in quasi-equity and private placements in a rigorous  manner. While the finer details of the move are being worked out, it was  expected that the said ceiling will be in many ways linked to an NBFCs' deposit-corpus or/and to their net-owned funds.

Deposit-taking NBFCs can leverage up to four times their net-owned funds and, unlike banks, do not enjoy a cover from the Deposit and Credit Guarantee Corporation of India (DICGC).
Back to News Review index page