Re gains 16 paise
Mumbai: The rupee gained by 16 paise against the dollar by good supplies of the latter closed at 40.83 on Thursday up from the previous close of 40.99/41.

The rupee opened a bit weaker at 40.95 and saw an intra-day low of 41 before ending the day at 40.83. Market participants exp ect the rupee to trade in the 40.75-41.10 range this week.

In forwards, the six-month premia closed at 2.91 per cent (3.34 per cent) while the 12-month closed at 2.83 per cent (3.03 per cent).

Bonds: The bond prices rose by 35 paise and the yields fell by five basis points.

G-secs: The yield on the 10-year-paper closed at 8.18 per cent against the previous close of 8.23 per cent. The total traded volumes on the order matching system were Rs4,835 crore (Rs1,840 crore).

The 7.49 per cent 10-year-2017 paper opened at Rs95.05 (8.23 per cent YTM) and closed at Rs95.37 (8.18 per cent YTM) on Thursday against the previous close of Rs95.04 (8.23 per cent YTM).

The 8.07 per cent 10-year-2017 paper opened at Rs99.39 (8.16 per cent YTM) and closed at Rs99.50 (8.15 per cent YTM) against the previous close of Rs99.20 (8.19 per cent YTM).

Call rates: The inter-bank call rates closed at 7.5-8 per cent on Thursday higher than the previous close of 6.75-7 per cent.

Reverse repo: The Reserve Bank of India did not receive any bids through the first one-day reverse repo auction. In the first one-day reverse repo auction, the RBI received and accepted five bids for Rs2,500 crore. In the second one-day reverse repo auction, the central bank received and accepted two bids for Rs10 crore. In the second one-day repo auction, the central bank received and accepted twelve bids for Rs6,975 crore.

CBLO: The CBLO market saw 370 trades aggregating Rs23,082.55 crore in the 7.01-7.95 per cent range.
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SBI on transformation path
Mumbai: State Bank of India (SBI) has embarked on a transformation path to scale up its profile.

The country's largest bank now plan to cater to the affluent strata and also gain structural capabilities for a complete wholesale banking division. Currently, only 3 per cent of its individual customers are from the mass affluent segment, and it is also unable to provide sophisticated solutions to corporates.

The bank's strategy for winning market share includes getting back Indian middle-class consumers, "own" rural India, set-up a profitable wholesale banking division, a global treasury, chart out "smart" global expansion and enter new business areas that had bypassed the bank.

The bank is firming up plans to enter new business areas of financial planning and advisory services, custodial services, merchant acquisition, mobile banking, payments solutions, general insurance, pension funds this year.

The bank has created posts of 439 relationship managers in personal banking and will recruit 1000 RMs by October and cull out wealth managers from them.

A super circle of 762 branches, one from each region, is being planned. These branches will have greater share of resources at their disposal. O P Bhatt, chairman, SBI said.
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SBI to hike home loan EMIs
State Bank of India (SBI) has decided to increase the equated monthly instalments (EMIs) on floating rate home loans for the first time after it raised interest rates over the past one year. Even though the bank expects the decision to result in higher defaults, it is planning to increase the EMIs by around 10 per cent.

The bank had hitherto resorted to prolonging the repayment tenure by up to 25 years as the interest rates on housing loans went up by 2 per cent over the last year. The bank anticipates this move to add to the non-performing assets in its home loan portfolio. SBI had managed to bring down the level of gross NPAs in its mortgage portfolio to 3.76 per cent at the end of March 2007 from 3.96 per cent a year earlier.

The bank's housing loans portfolio stood at Rs37,975 crore at the end of March 2007, accounting for 51.6 per cent of its retail advances.
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SBI plans to set up a holding co for insurance, asset management
Mumbai: State Bank of India plans to set up a holding company to transfer its shareholding in its insurance and asset management subsidiaries. The holding company will hold SBI's stake in SBI Life (a joint venture between SBI and Cardiff SA of France) and SBI Funds Management Ltd (a joint venture with Societe Generale Asset Management) and subsequently its stake in a proposed non-life venture. The holding company, which will be an NBFC, will be set up in the next three to four months. SBI is also in talks with domestic and foreign partners for its proposed foray in non-life insurance, which is likely to be finalised in the next two to three months.
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RBI lays out norms for management of pension funds
Mumbai: The Reserve Bank of India has said that banks can undertake pension funds management only through subsidiaries (set up for the purpose) with which the banks will maintain an 'arm's-length' relationship and not departmentally.

RBI said that the eligibility criteria for banks include net worth of not less than Rs500 crore; capital-risk weighted assets ratio of at least 11 per cent for the last three years; return on assets of at least 0.6 per cent; net NPA level of less than three per cent; and "satisfactory" performance of subsidiaries.

In addition, the management of the bank's investment portfolio should be good as per the AFI report of the RBI and there should not be any adverse remark in it involving supervisory concerns.

An 'arm's-length' relationship between parent bank and subsidiary means that any transaction between the bank and the subsidiary should be at market rates. It also said that the banks can lend their names to the subsidiaries to leverage their brands.
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Citifinancial Consumer Finance reports higher net
Mumbai: Citifinancial Consumer Finance India Ltd (CCFIL) has reported a net profit of Rs218 crore for the fiscal ending March 2007, a growth of 27.4 per cent against Rs171 crore in the previous year, provisional numbers from ICRA said.

The company's asset base stood at Rs10,51 crore, against Rs6,871 crore in the year ago period.

As per provisional numbers, the profitability of the company declined to 2.56 per cent from 3.10 per cent in 2005-06.

According to ICRA, the decline in profitability can be attributed to rise in the cost of funds and write offs.
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Crisil begins bank loan ratings
Mumbai: Crisil, India's largest rating agency and a subsidiary of Standard & Poor's', has released the first bank loan ratings that will allow banks to allocate substantially lesser capital for A to AAA entities.

Crisil has rated the bank facilities of Hero Honda, Hero Honda Finlease, NTPC, Reliance Industries, and UltraTech.

The ratings will help banks determine risk weights for their loan exposures under Basel II norms. Foreign banks and Indian banks with international presence have to adopt capital norms under Basel II by March 2008. Banks are likely to insist on a rating for the loan to corporates, as under the Basel II norms they have to set aside more capital for unrated loans.

Till April 2009, fresh unrated loans above Rs50 crore attract a risk weight of 150 per cent. After April 1, 2009, this minimum size will be reduced to Rs10 crore, bringing many more loans within the 150 per cent risk weight bracket.

Banks can save capital on loans by getting loans rated in the A to AAA-rated categories as the risk weight for these higher rated categories would range between 50 and 20 per cent. For AAA rated borrowers this would mean capital saving of 80 per cent for the bank. The ratings could also be used to decide the terms of the loans.
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JP Morgan looks to double India investment
Mumbai: JP Morgan is looking at doubling proprietary investments in the country over the next 6-12 months. The bank currently has investments of around $500-750 million spread across a host of sectors. This is even as the bank is fast expanding its investment banking, corporate finance and capital market business in India.

JP Morgan has made proprietary investments in mostly unlisted companies across different sectors including cement, pulp, infrastructure, general manufacturing, healthcare and BPOs and is looking at doubling these investments in the next 6-12 months. The current proprietary book of JP Morgan is believed to be at around $500-750 million. It has made investments in a number of companies including Binani Cement, L&T-IDPL and Apollo Hospitals.
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