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Rupee firms up - securities fall
Mumbai: The rupee firmed up against the dollar on Friday closing at 43.53/54, higher than Thursday's close at 43.55/56.

Forwards market: The 12-month premium closed at 1.25 per cent (1.27) and the six-month closed at 1.35 per cent (1.44).

G-Secs: The prices of securities fell by 30-40 paise. The 8.07-12 year-2017 paper closed on Friday at Rs109.02 (6.92 per cent YTM). The 7.38-10 year-2015 benchmark paper closed at Rs103.75 (6.86 per cent YTM against Thursday's closing of Rs104.15 (6.8067 per cent YTM).

Call rates: The inter bank rates inched up to close at 5.10-5.15 per cent (4.95-5.05).

CBLO market: 182 trades, put through in the rate range of 1.50-5.25 per cent aggregating Rs6,170.85 crore, were realised.
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Corporation Bank to raise overseas loans of $98mn
Mangalore: The board of directors of Corporation Bank has given its approval to raise $98 million from overseas banks.

Addressing newspersons here bank officials said that the bank had been permitted to avail itself of loans or overdraft from overseas banks of up to 25 per cent of its unimpaired Tier-I capital. The bank, which recently raised $100 million at competitive rates from overseas correspondents, can further raise around $40 million. The board has given its approval for this proposal.

Apart from this, the board has also given its approval to raise $58 million through overseas borrowings for funding the export credit in foreign currency.

Officials said that it will give the bank more funds to lend and also bring down the cost of funds.

The board has also approved the opening of its representative offices in Dubai and Hong Kong. Stating that 15 per cent of the bank's deposits are from non-resident Indians, officials said most of these deposits are from the West Asian region.

The bank will also bring down the net NPA level to 0.5 per cent during the current fiscal. The bank has set a total business goal of Rs55,000 crore for this financial year. The bank plans to extend the core-banking solution to nearly all its branches this fiscal.

As for the implementation of real time gross settlement (RTGS) facility in the bank, officials said the bank provides this facility at 130 branches across the country. The facility will be extended to over 350 branches during the current financial year.

The bank has also signed an agreement with State Bank of India on sharing ATM network in the country and the arrangement is expected to become operational within the next fortnight. With this, the bank's customers will have access to more than 8,500 ATMs throughout the country.
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External debt up 7.2 per cent at $120.9bn
New Delhi: The country's external debt has climbed 7.2 per cent to $120.9 billion at the end of December 2004, as against $112.8 billion at end-December 2003.

A status report on the country's external debt released on Friday said that long-term debt at the end of December 2004 stood at $114.03 billion or 94.3 per cent of the total debt.

Under long-term debt, multilateral and bilateral debt, representing broadly the loans raised under the external assistance programme, accounted for 41 per cent of the total external debt at end-December 2004.

NRI deposits and commercial borrowings together with export credit contributed little more than one-half of total external debt.

The report highlighted that external debt indicators continued to improve over the years though the magnitude of debt had increased. For instance, the external debt-to-GDP ratio has gradually declined over the years to 17.8 per cent in 2003-04 and debt service payments as a proportion of gross current receipts (debt-service ratio) dropped to 16.2 per cent in 2003-2004 and further to 6.1 per cent during April-December 2004.

Similarly, the ratios of short-term debt to total debt and short-term debt to forex assets too have improved over the years. The country's ability to service external debt has been substantially enhanced, consequent to the improvement in the ratios of total debt service payments and interest payments to current receipts.
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RBI hauls up ING Vysya Bank - slaps Rs5 lakh fine
Mumbai: The Reserve Bank of India on Friday has imposed a Rs5 lakh penalty on ING Vysya Bank Ltd, for not deducting the full amount of unamortised Voluntary Retirement Scheme expenditure and violating RBI regulations, said a press release from RBI.

This resulted in overstating Tier I Capital and Capital to Risk Adjusted Ratio (CRAR) in disclosures in the bank's balance sheet for March 31, 2004.

The release also said the bank had not provided for outstanding debit entries in inter-branch accounts pending for more than six months, as required by RBI, which impacted the profits for the financial year 2003-04.

The bank had also flouted RBI guidelines by financing promoters, offering interest at lower rates to borrowers who availed themselves of insurance products floated by its group company, depriving its customers of choice in availing of insurance from any company and wrongly classifying advances under priority sector credit, the release said.
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RBI: Greater flexibility for corporates in currency exposure
Mumbai: The Reserve Bank of India panel on forex markets has suggested that all forward contracts booked by resident entities, regardless of tenor, may be allowed to be cancelled and rebooked freely. It has also recommended that Foreign currency-rupee swaps booked to hedge genuine foreign currency exposures may also be permitted to be rebooked/reinstated on cancellation. Currency swaps enabling a corporate to move from a rupee exposure to a foreign currency exposure, once cancelled, can be rebooked.

The apex bank's panel has made these recommendations in order to "provide greater flexibility to resident entities in dynamically managing their exposures, to further the development of the forward segment of the market and to bring about uniformity with respect to booking of such contracts.''

Amongst its other recommendations the panel has said that corporates, which have derived foreign exchange exposures arising from rupee-foreign currency swaps, may be permitted to hedge the interest rate risk and cross currency exposures (not involving the rupee). Corporates may also be permitted to sell/write covered call and put options subject to adequate accounting standards and risk management systems being in place.

As for banks, the panel has said that they may be permitted to provide capital on the actual overnight open exchange position maintained by them, rather than on their open position limits. Banks may be given the freedom to decide on the period of crystallisation of unpaid export bills. The exchange gain and loss on crystallisation may be passed on to exporters symmetrically.

The panel has also recommended that the closing time for inter-bank foreign exchange market in India may be extended by one hour from 4 p.m. to 5 p.m. Forex data, including traded volumes for derivatives such as foreign currency-rupee options, may be made available to the market on a regular basis.
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