Rupee dips lower — G-Secs dull
Mumbai: The rupee market was dull on Tuesday, with the rupee ending at 43.72/73, marginally lower than Monday's close of Rs43.71/7150.

Forwards market: Unchanged from Monday's levels, with the six-month premium closing at 1.71 per cent (1.71 per cent) and the 12-month premium closing at 1.44 per cent (1.47 per cent).

G-Secs: There was not much movement in the bond market as dealers were cautious ahead of a possible RBI auction next week. The 7.38 per cent 10-year benchmark 2015 government paper closed at Rs102.74/75 (6.99 per cent YTM) against Monday's close of Rs102.75/85 (7.01 per cent YTM). A new stock traded on Tuesday was the 6.85 per cent 7-year 2012 paper, which opened at Rs99.65 and closed at Rs99.80.

Call rates: The inter bank rates were in a narrow band between 4.70 and 4.80 per cent.

CBLO market: 155 trades aggregating Rs6,294.80 crore in the 4.46-4.80 per cent range were realised.
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RBI guidelines: Credit risk on banks purchasing NPAs
Mumbai: According to the Reserve Bank of India's draft guidelines on the purchase or sale of non-performing assets (NPAs) banks will now be allowed to buy or sell non-performing financial assets from, or to other banks, only on a `without recourse' basis. By implication the entire credit risk associated with NPAs would now be transferred to the purchasing bank.

According to the guidelines, after the sale of the financial assets, the selling bank should ensure that the asset is taken off the books of the bank and there should not be any known liability devolving on the selling bank. Further, post sale, the selling bank should no longer have any involvement with the assets sold and must not assume operational, legal or any other type of risks relating to the sold assets. Consequently, the specific financial asset should not enjoy the support of credit enhancements and liquidity facilities in any form or manner, the RBI has emphasised.

Each bank should make its own assessment of the value offered by the purchasing bank for the financial asset and decide whether to accept or reject the offer. It has stressed that under no circumstances can a sale to other banks be made at a contingent price, whereby in the event of shortfall in the realisation by the purchasing bank, the selling bank would have to bear a part of the shortfall.

A non-performing asset in the books of a bank shall be eligible for sale to other banks only if it has remained so for at least two years in the books of the selling bank. Banks may sell non-performing financial assets to other banks only on cash basis.
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ICAI wants cash transaction tax move dropped
New Delhi: The Institute of Chartered Accountants of India (ICAI) has expressed its doubts about the efficacy of the proposed banking cash transaction tax and has urged the Government to withdraw the proposal, stating that the proposed measure may not yield the desired result in checking tax evasion.
The institute, in its post-Budget memorandum, has said the objective of having an audit trail could be achieved by asking the bank to provide information on the withdrawal of money in cash in the annual information return, prescribed under Sec 285BA of the Act.

As a further anti-tax avoidance measure, ICAI suggested that taxpayers should submit details of all bank accounts in their names in the annual information return. The name and address of the branch as well as the branch code must be given so that the information may be cross-checked.

If this suggestion is not acceptable, the institute has alternatively suggested that the limit of Rs10,000 be increased to Rs50,000 and the limit per day should be with reference to each branch of a bank, and not with reference to each bank.
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OBC's recovery efforts of Global Trust's NPAs yielding results
Mumbai: The efforts of the Oriental Bank of Commerce Ltd (OBC) to recover bad debts of the erstwhile Global Trust Bank (GTB) is yielding results with the bank making cash recoveries of Rs200 crore. OBC had inherited bad loans worth Rs1,225 crore from its amalgamation with GTB last year.

The bank has initiated criminal action on thirty accounts for an amount involving Rs980 crore, OBC officials said at a press conference. Civil action suits had also been initiated on some accounts, where the amount involved is Rs57 crore and Rs445 crore had been recovered through compromise settlements. The bank has also upgraded accounts to the tune of Rs57 crore, he added.

Officials said that the amalgamation between OBC and GTB would be completed by June 2005. The National Institute of Bank Management had submitted a report on the integration of GTB employees and OBC would soon take a view on this issue.

On the bank's global expansion plans, officials indicated that OBC was looking to make a foray into Malaysia, along with a couple of other nationalised banks as there were a lot of remittances coming into India from Malaysia. According to the officials the bank is in talks with Bank of Baroda and Bank of Maharashtra for this joint venture. OBC is also looking at setting up representative offices in Dubai and South Africa.

On the performance for the financial year ended 2005, officials said that the bank had witnessed a credit growth of 35 per cent this fiscal. Excluding GTB's contribution, the growth was 16 per cent. Deposits, excluding GTB deposits, grew by 20 per cent.

OBC's public issue of 5.8 crore equity shares of Rs10 each will open on April 25 and close on April 29. The offer will be made through the book building process. The price-band will be decided on April 23.
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ICICI Prudential acquires market share of seven per cent
Mumbai: ICICI Prudential has registered a growth of 77 per cent in premiums and has acquired an overall market share of seven per cent. The company has declared an annualised premium of Rs1,256 crore for 2004-05 against Rs707 crore in the previous fiscal.

It had issued a total of 6.14 lakh policies, taking the total number of policies to 14 lakh and the total sum assured to over Rs30,000 crore. At the end of March 2005, the company had also settled 770 claims.

Renewal premiums at Rs780 crore has shown a growth of 226 per cent. This accounts for 49 per cent of ICICI Prudential's new business, while the expense ratio has slipped to 17 per cent compared to 26 per cent for 2003-04.

According to officials, increasing renewal business and reducing expense ratios were the two key drivers of profitability. In terms of group business, the company has acquired a market share of seven per cent at Rs111 crore from last year's 1.2 per cent. The share of bancassurance in the total business has remained unchanged at 18 per cent.

Of the company's total two lakh rural policies, one lakh were issued in 2004-05.

On the growth rate having reduced in the past three years, Ms Sharma said that this was bound to happen because the operating base had widened. "The focus for the next few years is to pursue profitability by continuing to build scale through a robust and healthy portfolio," she added.
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New Bajaj Allianz schemes for travellers to Asia
Mumbai: Bajaj Allianz General Insurance has introduced two new, low-cost travel insurance plans for travellers to Asian countries.

The plans — Travel Asia Flair and Travel Asia Supreme — are an extension of its basic plan Travel Companion. The plan is valid for all Asian countries except Japan. While Travel Asia Flair has a premium that varies from Rs250 to Rs 475 for 1-4 days of coverage and for an age up to 40 years. The coverage is for about $15,000. Travel Asia Supreme's premium ranges from Rs325 to Rs650 for 1-4 days of coverage and for an age up to 40 years. The coverage is for about $25,000.
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