 The VC fund, which had earlier picked up an 11 per cent in Mannapuram, sold the shares at Rs 740 each. It had bought them for Rs 142 a share, according to MGFL chairman VP Nandakumar. MGFLhas a loan outstanding of Rs 2,550 crore. |
Wednesday, April 28, 2010
Sequoia exits Mannapuram
RBI transfers 90 senior officers
In one of the biggest-ever portfolio re-allocation exercise of senior officers, the Reserve Bank of India (RBI) has changed the work allocation of about 90 chief general managers (CGMs) and general managers (GMs) at one go. |
While only six officers have been promoted from the level of GM to CGM, 34 CGMs have been identified for reallocation of portfolios. In addition, 31 officials have been promoted from the level of deputy general manager to GM, while 60 GMs have been identified for reallocation of departments.
RBI has around 70-80 officers at the level of CGM.
D Subbarao, who took over as RBI governor in September 2008, has been trying to rework the human resource practice of the central bank.
Sources familiar with the development said for the first time a transfer policy for CGMs was put in place which mandated transfer of officials with over 10-year stay in Mumbai. Regional directors, who are also of the rank of CGM and spent four-five years in a regional centre, have also been identified for transfer.
But, there are some officers who have been transferred despite spending lesser time (less than 10 years in Mumbai and five years in a regional centre).
For instance, S Karuppasamy, senior-most CGM working with the department of banking supervision, has been transferred to Kolkata as regional director. RBI sources said the move was a precursor to his elevation as executive director next year. Among others, FR Joseph and B Srinivas, regional directors in Kolkata and Bangalore, respectively, were also transferred.
What has, however, caused some heartburn is the transfer of some CGMs due for retirement in around a year.
While it is the first time that a transfer policy has been put in place for CGMs, some exceptions have been made in case of officers who have been in Mumbai for over 10 years.
RBI sources said the rotation exercise was not that easy, as it took nearly three months to finalise the list. Top RBI officials also differed on the various issues, sources said.
Unlike in the past, the central bank has also decided to provide more time to officers to relocate. Earlier, the orders were applicable with immediate effect, but this time they have been provided more time to move. Also, there are at least five CGMs identified for relocation, but have got a reprieve for a year.
Well-behaved borrowers may pay less for loans
 |
| Source:BS:Sudeep Jain / Mumbai April 28, 2010, 0:30 IST |
NEW NORMS
LENDING RATES ARE CURRENTLY LINKED TO:
# The prime lending rate
# Credit worthiness, which is determined by family income, other debt commitments and number of dependents
LENDING RATES WILL NOW BE LINKED TO:
# Customer’s record on timeliness of payments
# Performance on other loan commitments
# Record of dishonoured cheques
Banks consider dynamic lending rate system based on credit history.
For bank borrowers, it might soon pay to be well-behaved. Banks are considering the introduction of a behaviour-based dynamic lending system once the base rate mechanism is in place from July.
Once the proposal, at drawing board stage at a number of banks, is implemented, a customer’s record on timeliness of payments, performance on other loan commitments and frequency of cheque bounces would go into calculating a behaviour score.
Banks are already accessing the credit score from credit information companies while determining the worthiness of a prospective borrower. Now the data would be accessed more frequently to keep tabs on customers.
The base rate mechanism has given banks the flexibility to not only charge retail customers according to their risk profile, but also make changes to the risk weight during the term of the loan.
This means customers who are regular with their equated monthly installments (EMIs) can expect to have a few basis points shaved off the interest rate on an existing loan. In contrast, customers who are irregular with their repayments might see their interest charges bumped up.
At present, most banks charge retail customers a fixed rate of interest on loans or a floating rate, which moves in tandem with their prime lending rate (PLR). There is no provision to change the rate charged to a customer on an individual basis during the tenor of the loan.
In case of credit cards, some banks, especially the foreign players, review the interest rate on a quarterly or half-yearly basis, based on the repayment record for the card issued by them. The repayment record for other loans and cards from other banks is not factored in.
The base rate system requires banks to declare a floor rate below which they would be barred from granting loans. To arrive at the final rate charged to customers, banks are permitted to add other weight-risk premium and a tenor premium to the base rate. Bankers said they also have the flexibility to change the risk premium during the tenure of the loan as long as they are transparent about their pricing mechanism.
“The base rate will allow risk-rate pricing for retail customers. You create a behaviour score card for a particular customer and depending on his performance, you either increase or decrease the interest rate you charge him,” said Shyamal Saxena, General Manager, Retail Banking Products at Standard Chartered Bank.
“The base rate system has definitely set the foundation for dynamic pricing of retail loans. This is a fairly common practice abroad where all interest charges are linked to a customer’s behaviour score. It is still unknown in India,” said a senior Axis Bank executive. The executive, however, added that the system would not work if only a handful of banks shift to a dynamic pricing mechanism.
However, bankers say they would not be able to change to a dynamic pricing process mechanism overnight and it might take months before it is introduced.
“The consumer banking business in India has seen significant volumes only in the past five-six years and is still not mature. Customers would have to be convinced that such a mechanism is in their best interest,” said a senior executive of a public sector bank.
Besides, executives at private sector banks said the public sector players did not do data mining to the extent that is possible. The public sector players account for around 73 per cent of the banking business in the country.
“From a risk-evaluation point of view, a lot needs to be done in India. It will take time for sophisticated credit-scoring models to develop,” said Standard Chartered Bank’s Saxena.
A Mumbai-based financial planner said a move to dynamic pricing would require a change in the contractual agreement that customers sign before availing of a loan.
“Banks will have to clearly explain how they will change the interest rate. It will not be easy to convince customers to sign off on a dynamic pricing clause,” he added.
Some bankers are also skeptical about such a move. “Technically it is possible. Banks will have to make sure that they are transparent about how they are charging customers. It also remains to be seen how the Banking Codes and Standards Board will view such a move,” said a senior executive from public sector lender.
Make phone banking more secure or face penalty: RBI to banks
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| Press Trust of India / New Delhi April 25, 2010, 15:07 IST |
Taking forward its efforts to tackle identity frauds in non-branch banking transactions, the Reserve Bank has asked all the banks operating in the country to put in place by next year a system where credit and debit card customers would need to provide an additional password for IVR (interactive voice response) transactions.
IVR transactions are done over phone, wherein customers dial bank's customer care number and are prompted by a recorded voice to dial designated digits for different kinds of transactions such as balance enquiry, bill payment etc.
The customers would now need to key-in an additional password on their phone, besides the currently prevalent details like card number, date of birth, card issue or expiry date and in some cases a telephonic password.
As RBI has also noted, there has been a stupendous rise in recent past in the banking transactions through channels other than the traditional branch banking. Such non- traditional routes include Internet, mobile and phone banking.
However, these new-age banking transaction routes are considered to be relatively more prone to identity frauds and the credit or debit cards could be misused by those other than their bonafide owners.
To tackle this menace, RBI last year asked the banks to put in place April 2009 onwards "a system of providing for additional authentication/validation based on information not visible on the cards" for transactions where card was actually not presented.
While this directive covered online transactions, it did not apply to IVR transactions and RBI had said at that time that "separate instructions will follow" for the same.
In both online and IVR transactions, a card is not actually presented for conducting the transactions, unlike the transactions at ATMs or merchant establishment where a credit or debit card needs to be swapped for credit or debit to take place from the customer's account.
However, RBI has now decided to "extend this requirement of additional authentication/validation to all CNP (card not present) transactions including IVR transactions."
This additional security codes would need to be different than those visible on the cards, such as the card number, CVV (card verification value, which is printed on the back of the card), date of birth and date of issue and expiry.
As these are visible on a card, a non-bonafide customer, having seen the card at places LIKE merchant establishments, can use them to transact in the account over phone.
Besides, the banks would also need to put in place a system of 'Online Alerts' to the cardholder for all 'card not present' transactions of the value of Rs 5,000 and above.
RBI has asked the banks to implement these additional security measures for all CNP transactions by January 1, 2011.
"Banks are advised to strictly adhere to the instructions and time discipline indicated in this circular. Non-adherence to the directions shall attract penalties...," RBI said in a circular to the chiefs of all banks operating in the country.
These include Scheduled Commercial Banks, Regional Rural Banks, Urban Co-operative Banks, State Co-operative Banks and District Central Co-operative Banks.
StanChart is top taxpaying foreign bank in India
Press Trust of India / New Delhi April 26, 2010, 18:16 IST
UK-based Standard Chartered Bank has pipped Citi Bank and HSBC Bank to become the top taxpayer among foreign banks operating in India during fiscal 2009-10.
With advance tax payment of Rs 1,405 crore, up 14.2 per cent from previous fiscal, StanChart stood as the 16th highest taxpayer in India among all corporates, banking and otherwise, according to advance tax figures made available to PTI.
Standard Chartered Bank was followed by HSBC Bank, which paid an advance tax of Rs 835 crore for FY'10 and American lender Citi Bank that paid Rs 800 crore during the year.
While StanChart saw a rise of 14 per cent in its tax payment, Citi Bank and HSBC Bank saw fall of 53 per cent and 39 per cent (from Rs 1,710 crore and Rs 1,375 crore in the year-ago period), respectively, in tax payment.
Among all bankers in the country, foreign as well as local, StanChart stands behind only three big names -- State Bank of India, Punjab National Bank and ICICI Bank.
While SBI with Rs 6,552 crore advance tax payment leads the corporate segment, PNB paid Rs 2,018 crore and ICICI Bank Rs 1,502 crore as advance tax.
Among other major lenders, HDFC Bank, Bank of Baroda and Union Bank of India paid Rs 1,375 crore, Rs 1,277 crore and Rs 767 crore, respectively as advance tax.
Among the foreign bankers, Deutsche Bank comes in at the fourth slot with an advance tax payment of Rs 413 crore. This, too, saw a decline of about 13 per cent over fiscal 2008-09.
Next in line is Bank of America with Rs 298 crore, up 23 per cent compared to last year, followed by Barclay's Bank (Rs 275 cr) and DBS Bank (Rs 220 cr)..
Yes Bank to raise Rs 1,500 cr capital this fiscal
Press Trust of India / Mumbai April 27, 2010, 17:20 IST
Private sector lender Yes Bank plans to raise Rs 1,500 crore of capital this financial year, a top bank official said.
"We are very well capital-endowed as at March 2010 but we do have a headroom to raise around Rs 1,500 crore of hybrid capital in both our Tier-II and Tier-I structure," Yes Bank Managing Director and CEO Rana Kapoor told reporters here today.
"We will be tapping this window definitely this fiscal because in a rising interest rate environment it is better to raise money sooner than later," he said.
As on March 31, the bank's total CRAR stood at 20.61 per cent.
The bank would be tapping the domestic market for this hybrid capital, he said.
Yes bank wants to increase its branches to 250 by June 2011, Kapoor said.
"We want to increase our branches from the present 150 to up to 250 by June 2011. We should incur a capex of around Rs 60-75 crore depending on the fund-mix on metro, rural and urban branches," he said.
Yes Bank is also looking at increasing its head count from 3,030 to 4,500 by end-this fiscal, Kapoor said.
"Presently, we have 3,030 people and our objective is to take the headcount in the first-half of this fiscal to 4,000 people. It is quite likely that we would end the year (FY 11) at a level not exceeding 4,500 people," he said.
By March 2015, the bank would have a staff strength of 12,000, he said
RBI declares 108 entities as vanishing companies in last 3 years
Source:27 Apr 2010, 1639 hrs IST,PTI
NEW DELHI: Reserve Bank had declared 108 Non Banking Financial Companies (NBFCs) as vanishing companies during the last three years, Rajya Sabha was informed today.
"Whenever a company is declared as vanishing the matter is referred to the Economic Offences Wing of the concerned state government," Minister of State for Finance Namo Narain Meena said in a written reply.
The onus is on the state police machinery to investigate the case and take legal action as deemed appropriate, including penal action as per Indian Penal Code or Criminal Procedure Code, he said.
It is mandatory that every NBFC should be registered with RBI to commence or carry on any business of non-banking financial institution, he said.
RBI has been empowered to impose penalty on NBFCs for violation of the provisions of the RBI Act 1934.
In order to protect the interest of investors, he said, RBI has strengthened market intelligence system for picking early warning signals about the health of a particular NBFC and take preemptive action.
In another reply, Meena said based on the recommendations of the Vaidyanathan Task Force II, the government had approved the Revival Package for Long Term Cooperative Credit Structures with a total outlay of Rs 3,070 crore.
Govt opens I-T units in S'pore, Mauritius; 8 more on the way
Source:Press Trust of India / New Delhi April 27, 2010, 16:28 IST
The government has set up two income tax overseas units at its missions in Singapore and Mauritius and will create such units in eight more countries to facilitate exchange of information on tax-related issues, Parliament was informed today.
"To facilitate exchange of information, two income tax overseas units within our missions have been created in Singapore and Mauritius and officers have been posted there," finance minister Pranab Mukherjee told the Rajya Sabha in a written reply.
Besides, it has also been decided to create eight more such units at the US, Britain, the Netherlands, Japan, Cyprus, Germany, France and the UAE missions, he added.
He said there is currently no proposal for legislative changes to arrest stashing away money out of the country. "At present, there is no proposal for any legislative changes in the matter," Mukherjee said in the reply to a query whether the government is contemplating to modify and strengthen the existing laws, or to bring in a comprehensive legislation for checking syphoning off black money from the country.
"There is no verifiable information available about the money allegedly parked in the foreign banks," the minister said, adding, however, the Central Board of Direct Taxes has asked its investigation directorates to collect information about Indian nationals suspected to have bank accounts in tax havens, and agents of foreign banks who are soliciting people for opening of foreign bank accounts.
"They have also been asked to collect information as regards foreign visits of Indian nationals to tax havens," the minister said. Efforts are being made to collect evidence during search/survey operations pertaining to opening of foreign bank accounts or other assets abroad, Mukherjee said. Besides, whenever any specific case of suspected unauthorised maintenance of accounts abroad by Indians comes to the notice of department of enforcement, appropriate action is taken.
"No roving enquiries can be made by the directorate, though," Mukherjee added.
Besides,the ministry has requested the existing partner countries for renegotiation of the article concerning exchange of information in the tax treaties for specifically, including provisions for obtaining bank-related information. Responses from some of these countries,along with their counter proposals, were also received recently, he said.
Negotiations have already been completed in one case, the minister said, adding the treaty partner-countries, with whom pacts do not have provisions relating to assistance in tax collection, have been approached to include such a provision.
To another query, Mukherjee said there is no proposal to set up any new agency to conduct study on the quantum of black money in the country.
Insurance firms set to defy Sebi
Source:BS:Shilpy Sinha / Mumbai April 27, 2010, 0:21 IST
To approach Irda for new Ulips
Several life insurance companies in the country are
preparing to take on the markets regulator Securities and Exchange
Board of India (Sebi) over unit-linked insurance plans (Ulips).The insurers are working on new insurance-cum-investment schemes and they plan to approach their regulator, the Insurance Regulatory and Development Authority (Irda), for permission to launch these.
This would be in defiance of the Sebi directive issued on April 13, which asked insurance companies to register with it before launching new Ulips.
While companies that Business Standard spoke to were unwilling to come on record on the issue, they confirmed working on new Ulips.
“As of now, the roadmap is insurers will go to Irda. If the insurance regulator does not approve, we will then decide on what to do, whether to register with Sebi before the matter is resolved,” said Life Insurance Council Secretary General S B Mathur. Life Insurance Council is the representative body of all life insurance companies.
Under the current norms, insurance companies are required to give details of any new product they intend to launch to Irda, which then clears the scheme. A plan is deemed to be approved if no questions are raised over it by the regulator within 90 days of filing.
Ulips were being regulated by Irda until April 9, when Sebi barred 14 insurance companies from selling or renewing these products. The Sebi order said any market-related product needs to be cleared by it, since it is the market regulator.
Irda, however, asked the insurers to ignore Sebi’s directive, arguing that only Irda could regulate insurance companies.
The government then stepped in to avoid a showdown between the two regulators. It advised the regulators to seek a legal remedy on the question of jurisdiction.
Later, Sebi withdrew its April 9 order, but asked the insurers to register with it ahead of launching new Ulips. The regulators, however, are undecided on which court they should approach for legal opinion.
With the stock markets showing signs of stability and the investors’ risk appetite growing, demand for Ulips has picked up. Insurance companies want to encash on the improved sentiments, especially in the second half of the financial year, when sale of their products usually goes up.
“The second notice from Sebi is only a clarification and not an order. Our earlier order asking insurance companies to ignore Sebi’s letter takes care of the clarification issued by the market regulator. Finance Minister had restored status quo ante on these policies. This is sufficient to understand that business will be carried as usual,” a senior Irda official said.
Besides, insurers are drawing comfort from a statement given by Minister of State for Finance Namo Narain Meena in Parliament last week.
“The Insurance Regulatory and Development Authority has reported that every life insurance company registered under the IRDA Regulations, 2000, can transact life insurance business, which includes unit-linked business,” the minister had said in a written reply in the Rajya Sabha.
“We have comprehensive plans but want to launch some innovative plans by June. As per our requirement, we will approach the insurance regulator for approval,” said the chief executive officer of a large private sector insurance company, which is among the 14 companies covered by Sebi’s April 9 order.
“It will take three-four months for the matter to be resolved. This is the time when we work on our products. Irda takes around two months to approve a product. If it is innovative with completely new features, it takes more time. We train our workforce, agents and sales team during the first half of the year and try pushing these products during the second half. We are working on policies and will approach our regulator to get it approved,” added a senior executive of another large insurance company.
Though state-run Life Insurance Corporation was outside the ambit of Sebi’s order, a senior executive at the company said the insurer was working on two-three new Ulips.
“Irda will take its time to approve them. We will be launching another set of new products in the coming weeks,” the executive added.
LIC has neither been served any notice nor banned from launching any products.
Sebi Executive Director K N Vaidyanathan had, however, said the remaining nine insurance companies were being investigated.
In recent years, Ulips have accounted for a bulk of new business, generating nearly 90 per cent of the premium income for the private players. In case of LIC, the share of Ulips in new business was around 65 per cent last year.
During 2009-10, insurance companies invested around Rs 75,000 crore in the stock markets and have together emerged as the largest domestic institutional investors.
Bharti says expects to close Zain deal by mid-May
Source:REUTERS:28 Apr 2010, 1524 hrs IST,
NEW DELHI: Bharti Airtel expects to close its $9 billion deal to acquire Kuwaiti telecoms Zain's African assets by mid-May, Manoj Kohli, the Indian firm's chief executive for international unit, told analysts on a conference call.
"The approvals are going on very well," he said.
Tuesday, April 27, 2010
Filing I-T returns to get easier with Saral II
Source:PTI:2010-04-27 15:06:08
New Delhi: The Finance Ministry has come out with 'Saral-II', the new income tax returns form, that seeks to make tax filing easy on the assessee and gather information on TDS paid on salary and interest.
Tax special
The Saral-II, a two-page form, was mentioned by Finance Minister Pranab Mukherjee in his Budget speech for 2010-11.
"This form will enable individuals to enter relevant details in a simple format in only two pages," he had said.
Tax saving options under Section 80C
Besides the usual columns to elicit details of income chargeable under the head salaries and pension, house property and other sources for calculating gross income, the form also includes columns to furnish details of Advance Tax and Self Assessment Tax Payments and transactions reported through Annual Information Return.
Interns need to file tax returns
The form can be downloaded from income tax department's website www.incometaxindia.gov.in.
Wrong ATM debits can be rewarding
| Compensation for banks' delay in attending to complaints. |
Complaintspertaining to ATMs top all others in banks (file picture).
Source:BL,ChennaiG. Naga Sridhar,Hyderabad, April 6
Got a wrong debit in an ATM transaction? Don't sweat. It might actually turn into a reward, though delayed, for the trouble that you have been put through.
Many banks are acting slowly in rectifying the mistakes in ATM transactions. This despite an April 2009 directive from the Reserve Bank of India that a compensation of Rs 100 a day should be paid from the 12th day after the wrong transaction till the date it is corrected.
Advantage for many
As a result, notwithstanding a temporary inconvenience to a customer, a wrong debit could finally end up as an advantage for many.
“We recently awarded a compensation of Rs 20,000 for a wrong debit of Rs 8,000. There are other similar cases as well,'' Mr M. Sebastian, Banking Ombudsman in Hyderabad, told Business Line here. There was a ‘concentration' of complaints pertaining to ATMs, he observed.
The complaints pertaining to ATMs top all other complaints in banks. “A majority of complaints we receive are on ATM transactions,'' Mr Shiv Kumar, Chief General Manager, State Bank of India, said. He added that special efforts were being taken to dispose them off.
While banks are tight-lipped about actual number of complaints, officials say that enclosures are created to tackle ATM complaints and there is also long pendency.
“When I complained to Andhra Bank on an ATM wrong-debit, I have been told to wait as complaints have been pending for the last two years,'' said Mr R Gopal, a customer of Andhra Bank.
Mr R.S. Reddy, Chairman and Managing Director Andhra Bank, however, said there was no such long pendency.
“As people are using other banks' ATMs, there are procedures to follow in establishing the authenticity of a complaint. As multiple agencies are involved, it takes time,'' he said.
Mr Asit Pal, Executive Director of Corporation Bank, and Ms Renu Challu, Managing Director, State Bank of India, also share a similar view.
‘poor awareness'
There are also allegations that banks are not prompt in payment of compensation according to RBI norms unless it is asked for as there is still ‘poor awareness' among the general public on the norm.
“Given the circumstances, it is not fair to ask us for compensation which will run into huge amount. The RBI should not have kept 12-day limit,'' said a top official of a public sector bank.
Have Union Bank home loan, get sops on other advances
Source:BL:K Ram Kumar:Mumbai,
Buy one shirt, get 50 per cent discount on the second. This is a common sales pitch adopted by outlets selling readymade garments. Now, a public sector bank has taken a leaf out of this popular retail sales strategy to push home loans.
Mumbai-headquartered Union Bank of India has unveiled a new campaign whereby it promises loyalty rewards to its home loan customers.
Under the loyalty reward scheme, the bank's home loan customers will get 50 basis points (one basis point equals 0.01 per cent) concession in interest rate on car loans and waiver in processing charges in the case of education loans.
Besides, the bank will also offer its customers, who have serviced their home loans regularly for three years, top up loans to the extent of the amount that has been repaid.
Portfolio growth
According to a senior official, the scheme has been drawn up to ensure that along with the home loan portfolio, the car and education loan portfolios also grow.
“Through the recently launched loyalty rewards scheme for home loan customers, we want to carry forward the growth momentum we achieved in FY2010 in the retail lending portfolio,” said Mr S Govindan, General Manager, Union Bank of India.
As of March-end 2010, home loans accounted for 67 per cent (or Rs 9,000 crore) of the bank's total retail lending portfolio of Rs 13,500 crore. Education and car loans accounted for 11 per cent (or Rs 1,500 crore) and 9 per cent (or Rs 1,200 crore) respectively of the total retail lending portfolio.
Union Bank's credit portfolio increased by a robust 23.3 per cent (to Rs 121,000 crore) as against the Reserve Bank of India's non-food credit growth projection of 16 per cent for the banking sector for FY2010.
In order to attract savings bank (SB) deposits, the state-owned bank also plans to unveil a pre-sanctioned loan facility for its SB account holders. The loan amount in this case will be linked to the average balances maintained by them in the account.
The bank's current account, savings bank account (CASA) deposits nudged up to 31.68 per cent (30.06 per cent in FY2009) of the total deposits of Rs 170,000 crore as of March-end 2010. In FY2010, its deposits increased by 22 per cent.
According to Mr Govindan, the bank's latest ‘10/10' campaign on home loans, among others, focuses on features such as hassle-free documentation, extended repayment period (25 years), flexible equated monthly instalment facility and no prepayment penalty.
SAIL, JSPL and Tata Steel to benefit most from rise in iron ore prices
Source:ML:Amritha Pillay:April 26, 2010 02:28 PM
With captive mines under their belts, SAIL, JSPL and Tata Steel could emerge as the biggest winners due to rising iron ore prices. These companies are well placed to cash in on the subsequent rise in steel prices, while their raw material costs will remain comparatively on the lower side
With iron ore prices skyrocketing, steel companies like Steel Authority of India (SAIL), Jindal Steel and Power ltd (JSPL) and Tata Steel are likely to make the most of the situation.
All three companies have access to assured iron ore supplies from their own private mines. Unlike others, these companies are not dependent on external iron ore purchases.
Last week, we had reported on how iron prices in the spot market had increased due to low supply from Indian mines. Softening of iron ore prices looks unlikely as supply bottlenecks continue to haunt Indian mining activities. Iron ore prices have touched a high of $192 per tonne, moving closer to the all-time high of $200 per tonne reached in 2008. Industry sources expect a further increase of 10% to 20%.
Amid such a scenario, SAIL, JSPL and Tata Steel are expected to emerge as the biggest winners. According to a PTI report published last week, steel companies like Tata Steel, SAIL and JSW Steel have increased the prices of their products by about Rs6,000 a tonne since February 2010. This increase for Tata Steel and SAIL will go straight to their respective bottom-lines.
Among the smaller steel companies, Prakash Industries and Ispat industries are expected to benefit. Both these companies don’t have access to their own iron ore mines, but have reportedly enough raw material supply through long-term contracts. However, there are concerns on whether Prakash Industries will be able to use its long-term deals to its advantage.
SAIL, JSPL and Tata Steel will be able to jack up their selling prices, and will enjoy greater margins, thanks to lower input costs.
Last week, steel secretary Atul Chaturvedi had indicated that further fluctuation in steel prices was likely. “Steel prices could rise or fall by Rs2,000-Rs2,500 a tonne mainly due to fluctuation in prices of raw material in the next six months,” Mr Chaturvedi was quoted as saying. On an average, any change in iron ore prices could lead to a doubling of steel prices.
India gains more say in the World Bank
Source:Moneylife Digital Team:April 26, 2010 02:36 PM
The country is now the seventh largest member in terms of voting power, with the United States leading the table with 15.85%, Japan (6.84%), China (4.42%), Germany (4%), France (3.75%) and the United Kingdom (3.75%)
India saw its say in the World Bank increasing a bit after member nations approved a shift in voting rights, while China’s voice in the funding agency grew louder than that of Germany, France and the UK.
Both India and China has enjoyed an identical 2.77% voting rights. While India’s voting power stands increased to 2.91%, China leaped to 4.42%—placing it third overall.
India is now the seventh largest member in terms of voting power, with the United States leading the table with 15.85%, Japan (6.84%), China (4.42%), Germany (4%), France (3.75%) and the United Kingdom (3.75%).
Membership of the financial institution gives certain voting rights that are the same for all countries, but additional votes are granted depending on a country’s financial contributions to the organisation.
Since 2008, emerging economies have overall gained 4.59% in voting rights.
“The change in voting power helps us better reflect the realities of a new multi-polar global economy where developing countries are now key global players,” said World Bank president Robert B Zoellick.
The member-nations also agreed to raise more funds for global aid at the annual spring meeting of the World Bank and the International Monetary Fund (IMF).
The change gives emerging nations more say in how the bank is run and how its funds are disbursed.
“This change in voting share, giving developing countries over 47%, is a significant step,” Mr Zoellick told reporters, hoping that shareholders will review the approach in 2015.
Mr Zoellick said that at a time when multilateral agreements between developed and developing countries have proved elusive, this accord is all the more significant.
This increase fulfils the Development Committee commitment in Istanbul in October 2009 to generate a significant increase of at least 3 percentage points in Developing and Transition Countries’ (DTCs) voting power.
“We, in calculating this, looked at the size of the world economy, using purchasing power but also exchange rate measures, but also, as a development institution, the contribution to development including the contribution to IDA, our fund for the poorest, the World Bank head said.
The governments also approved over $90 billion in extra money for the World Bank’s various arms that provide aid and capital to member countries.
Mr Zoellick said that the shift in voting powers was designed to try to reflect past contributions, citing the example of Japan that has been “a very gracious contributor” and to encourage new ones, including developing and transition countries.
The 186 countries that own the World Bank Group also endorsed boosting its capital by more than $86 billion for the International Bank for Reconstruction and Development (IBRD), the arm that lends to developing countries.
The increase would come from a general capital increase and a selective capital increase linked to the change in voting powers, including $5.10 billion in paid-in capital.
It further agreed on a $200-million increase in the capital of the International Finance Corporation (IFC), the World Bank Group’s private sector arm, as part of an increase in shares for developing and transition countries.
IFC will also, subject to board approval, consider raising additional capital through issuing a hybrid bond to shareholding countries and through retaining earnings.
The IBRD 2010 realignment will result from a selective capital increase of $27.80 billion, including paid-in capital of $1.60 billion.
Noting that this represents a dynamic transformation for the World Bank Group, Mr Zoellick said that the additional capital means that the bank will no longer face the possibility that it would have to cut back its lending later this year.
“We came into this crisis well-capitalised, thanks to sound financial policies. We have provided a record $105 billion in financial support since the crisis began to bite in July of 2008. This additional capital means that we will be able to continue to play the role that is demanded of us,” he said.
Limited customer concentration mars Mandhana IPO
Source:Moneylife Digital Team April 26, 2010 08:15 PM
Mandhana Industries Ltd hits the market on 27 April 2010.
The company derived 77.79% of its exports from Europe compared to 83.62% as on 31 March 2010. As of 31 December 2009, exports constituted 17.13% of the company’s total sales. The company derived 55.34% (Rs243.07 crore) of its revenues for the nine-month period ended 31 December 2009 from its top 10 customers. Mandhana’s earnings per share (EPS) stands at Rs16.11 for the year ended 31 March 2009 while the average return on net worth is 27.35%.
The company recorded a net profit of Rs36.56 crore in FY09 compared to Rs35.30 crore in FY08 with total income of Rs463.25 crore and Rs406.93 respectively.
The company had negative cash flows from its operating activities in financial year 2007-2008 and for the nine-month period ended 31 December 2009 amounting to Rs4.32 crore and Rs11.68 crore respectively due to an increase in inventory holding and receivable levels and also due to sharp increase in debtors and advances paid. For the corresponding periods the company’s earnings before interest, depreciation, tax and amortisation (EBIDTA) were Rs73.09 crore and Rs93.28 crore respectively.
The company’s non-executive director Sanjay Asher, who was associated with Duck Tarpaulins Ltd (1 January 2002 to 31 March 2002) and Asian Electronics Ltd (31 March 2008 to 31 December 2009) appeared in the wilful defaulters list of the Reserve Bank of India (RBI).
Mandhana has obtained various export licenses under the Export Promotion Capital Goods Scheme (EPCG) wherein the company is required to export goods of a defined amount, failing which, it has to make payment to the Indian government equivalent to the duty benefit enjoyed by the company under the particular scheme along with interest. Promoters will own 62.21% equity post the issue. As on 31 December 2009, its export obligation was Rs317crore.
Ratings agency CARE has assigned ‘IPO Grade 3’ to the issue. According to the Red Herring Prospectus, the proceeds of the IPO will be utilised for setting up of a new garment manufacturing facility at Tarapur, for expansion of yarn dyeing and weaving facility at Tarapur, and to pump margin money for working capital and general corporate purposes. There are 11 litigations pending against the company and four litigations against the director in various categories including one criminal case.
The company’s top ten customers accounted for 55.34% of its revenue for the nine-month period ended 31 December 2009
The issue opens on 27 January 2010 and closes on 29 January 2010. The company plans to mop up Rs99.60 crore to Rs107.90 crore at a price band of Rs120-Rs130 per share by issuing fresh equity of 83 crore shares of Rs10 each.
Edelweiss Capital Ltd and Axis Bank Ltd are the lead book-running managers to the issue.
Monday, April 26, 2010
China influence in World Bank rises
Sources:ieAgencies ::Mon, Apr 26 10:58 AM
The World Bank recognized China's growing economic influence and agreed Sunday to elevate Beijing's voting power to behind only the U.S. and Japan in the 186-nation lending organization.
Lifting China above a number of Western powers, including Germany, France and Britain, also gives other nations with emerging economies more voice and say in how the bank operates and lends money.
Bank members also decided to increase the institution's capital by $3.5 billion; it was the first increase in more than 20 years.
China's stake at the bank, in terms of voting power, climbs from
2.78 percent to 4.42 percent. The U.S., the world's largest economy,
remains No. 1 spot at 15.85 percent, effectively giving it veto
power, followed by Japan at 6.84 percent.
Countries such as China, Brazil, India and Russia long have
complained about the dominance of the United States and European nations in the bank's decisions. Under an informal agreement dating to the end of World War II, an American is president of the bank and a European leads its sister institution, the International Monetary Fund.
Robert Zoellick, the bank's president, said at a news conference that the shift in voting power "recognizes that we need to consign outdated concepts like 'Third World' to history. Today the world is moving toward a new, fast evolving multipolar economy."
Speaking after a meeting of the bank's policy-setting Development Committee, Zoellick said countries with emerging economies are critical sources of demand in the global economic recovery under way and over time "can become multiple poles of growth."
But Oxfam, a development advocacy group, said the World Bank broke a promise made at its meeting last year in Turkey to protect the voice of the poorest countries.
"Of 47 countries in sub-Saharan Africa, said Caroline Hooper-Box, an Oxfam spokeswoman, "more than a third have lost share, stayed the same and one (Sudan) has gained." Zoellick said the capital increase "means that we will no longer face the possibility that we would have to cut back our lending later this year."
He said the bank has provided $105 billion in financial support to its members since the financial crisis began to bite in July 2008.
Treasury Secretary Timothy Geithner said the bank "made a strong and compelling case" for the capital increase and said he would seek approval of the U.S. share - about $117 million each year over five years - from Congress.
World running out of diamonds: De Beers
Source:I A NS :Apr 26 11:10 AM
London, April 26 : The supply of diamonds in the world is dwindling, said De Beers, the biggest miner of the sparkling gem.
De Beers said it will reduce its production to extend the life of its mines, The Telegraph reported Monday.
Des Kilalea, a diamond analyst at RBC Capital Markets, said that taking into account the moderated output diamond prices could rise by at least 5 percent a year for the next five years.
The diamond industry, in the past 20 years, has not found new diamond deposits to match the two biggest mines in Africa, which are owned by De Beers, or the Russian mines of Alrosa.
De Beers accounts for 40 percent of global rough diamond sales.
Punjab & Sind Bank IPO in June to raise Rs.500 crore
Source:Indo Asian News Service: Mon, Apr 26 04:23 PM
New Delhi, April 26 (IANS) Punjab and Sind Bank will hit the capital market with an initial public offering (IPO) of 50 million shares in June to raise around Rs.500 crore for business expansion, the public sector lender's managing director G.S. Vedi said Monday.
'We are in the advanced stage of preparations for launching an IPO. We understand that the government is actively considering the proposal and with this, we hope to launch it by June-end or first week of July,' Vedi told reporters here.
With the launch of the IPO, the government's stake in the bank will come down to 82 percent from the present 100 percent.
The funds raised will be utilised to expand the bank's business, Vedi said.
'We will file the prospectus with the Securities and Exchange Board of India by this month-end or the first week of the next month,' he said.
The bank targets to grow by at least 30 percent and have total business of over Rs.one lakh crore this financial year. Its total business stood at Rs.81,894 crore as on March 31, 2010.
The bank plans to take up the total number of branches to 1,000 by March 2011 from the present 920. It will open around 30 branches in villages.
It will also recruit 800 people, including 500 probationary officers, this fiscal.
Bank frauds solved with duo's arrest-South Delhi
Source:Express News Service :Sun, Apr 25 04:34 AM
The South Delhi police arrested two persons, including an employee of a public sector bank, and claimed to have solved at least two major cases in which large amount of money were withdrawn from the accounts of corporate and public entities with inside information.
The arrested duo have been identified as Sanjeev Kumar Verma, who was the gang leader, and Mukesh Kumar, who worked as a clerk at the Kamla Nagar branch of Canara Bank
and allegedly passed on vital information about big corporate account-holders in the bank.
According to the police, the gang withdrew Rs 67 lakh from the account of National Book Trust at Canara Bank's Vasant Kunj branch. In a second case, they withdrew Rs 1.31 crore from Swaraj Mazda's account in a Chandigarh branch of the same bank.
A third gang member, one Neeraj Chauhan, is still absconding, the police said on Saturday.
The police have registered a case and formed a team to investigate the matter, on a complaint filed by I P Chawla, the manager of Canara Bank's Vasant Kunj branch.
The police learnt from their interrogation that Kumar allegedly passed on information about serial numbers of cheques that were yet to be presented.
Verma and Chauhan opened accounts in different private banks with fake identities and forged documents, the police said. After this, they made fake cheques of the required series and presented them in the private bank where they had opened accounts in the name of non-existing firms, an officer said.
The police recovered Rs 4,80,000 cash and a Hyundai Verna car from the duo's possession.
Court stays government-aided Islamic banking
Source: IANS:Thursday, April 8, 2010 |
Kochi, April 8 The Kerala High Court Thursday in an interim order restrained the government or state-run organisations from starting Islamic banks, but allowed a private company to start its operations.
The bench headed by Chief Justice J. Chalameshwar allowed Al-Baraka Company to go ahead with its operations.
Former union minister Subramaniam Swamy and one more person had petitioned the court against state-owned Kerala State Industrial Development Corporation starting an Islamic bank with private collaboration.
The court asked the state government to freeze all such activities till a final verdict on the issue.
Chief Minister V.S. Achuthanandan said the state government will look into all aspects of the court's interim verdict and then decide what needs to be done.
"We have to see if such a thing happens, will it be good for the people or would it be detrimental. So at the moment I do not wish to make any comments. We will study all aspects and then decide," said Achuthanandan.
Director of Al-Baraka, prominent businessman E.M. Najeeb said, "In the wake of this verdict, the board of the company will soon meet and decide the future course of action."
Al-Baraka has 14 promoters who have contributed Rs.4.2 crore and a
17-member board with prominent Middle East businessman P. Mohammed Ali as its chairman and another businessman, C.K. Menon, as the vice-chairman.
With the latest verdict, three government officials who are on the board of the company will have to step down.
According to the company, the proposed bank will give no interest and a sharia board will decide on what sort of investment to make.
Muslims are the second largest community in the state with close to 24 percent of the 3.2-crore population.
US witness 57 bank failures this year; 16 go belly up in April
Source:PTI, Apr 25, 2010, 02.04pm IST
NEW YORK: The American banking industry continues to be shaky, with nearly 15 banks on an average biting the dust every month.
Notwithstanding healthy economic growth and rebound of Wall Street majors, a staggering 57 banks have been shut down so far this year and seven of them collapsed last Friday.
As many as 15 entities, most of them small and medium banks, have gone out of business in the last two weeks. So far this month, 16 banks have gone bust.
The failure of the seven banks last Friday is expected to cost the Federal Deposit Insurance Corporation (FDIC) as much as $973.9 million.
FDIC is the federal agency which insures deposits at over 8,000 American banks.
The latest ones to go belly up are New Century Bank, Broadway Bank, Wheatland Bank, Peotone Bank and Trust Company, Citizens Bank and Trust Company of Chicago, Lincoln Park Savings Bank and Amcore Bank, National Association.
The number of failures are expected to climb till the labour market situation becomes more steady.
Despite a quarterly economic growth of over five per cent and improving performance of Wall Street firms, small and medium banks continues to be hit by defaults due to high rate of unemployment.
Currently, the jobless rate is over nine per cent. Last month, 19 banks went bust while the count of failures touched seven in February. The authorities closed down shut down 15 banks in January.
A whopping 211 entities have collapsed since the bankruptcy of Lehman Brothers in September 2008.
India to play major role in Asia's growth: IMF
Source:PTI, Apr 25, 2010, 03.54pm IST
WASHINGTON: India is now integrating more with the rest of Asia and will play a major role in the Asia's growth, top officials of the International Monetary Fund has said.
"You have a very rapidly growing large economy in the South Asia region, and that is India, and India is now also integrating much more with the rest of Asia," Kalpana Kochhar, IMF Deputy Director of the Asia Pacific Department told reporters late yesterday.
"For example, trade between China and India is growing rapidly. Of course, it is mostly imports from China-but it has grown very rapidly in recent years. So prospects for integration both in the South Asia region amongst themselves and with the rest of Asia I think have greatly improved and will continue to do so," she said.
IMF Director, Asia Pacific Department, Anoop Singh said that the fund expects Asia to continue leading the global recovery and grow by about 7 per cent this year and next year.
"As is now well-known, China and India will again lead Asia's growth with growth rates of 10 and 8.8 per cent this year," he said.
While the pattern of recovery has varied in Asia, as it has in other regions, Singh said it is important to note that both the more domestically oriented economies such as China, India and Indonesia as well as the more export-oriented economies are experiencing strong upturns.
Responding to a question, Singh said the IMF expects output gaps to close this year in a number of economies, including countries in South Asia such as India.
"Therefore, it is not surprising that inflation has begun to turn up. I recently presented an outlook that shows how expectations have moved up. There is a significant contribution to higher inflation coming from food and energy prices.
"There are reasons for that increase in food and energy prices, so we are not yet seeing an increase in underlying inflation at the same rate at which we are seeing a rise in overall inflation," he said.
He said that there is a clear commitment in many countries to ensure that inflationary expectations do not broaden to result in higher underlying inflation.
"So we are seeing monetary policy already being tightened in a number of countries. For example, India moved the second time just last week," Singh said.
DLF arm buys out PE stake in group firm for Rs 3085 cr
Source:TNN, Apr 26, 2010, 12.44am IST
MUMBAI: In a move that could have far-reaching positive implications on the revenues of real estate major DLF, it has announced that Caraf Builders & Constructions, a fully owned subsidiary of the Gurgaon-based company, has raised its stake in DLF Assets (DAL) to 91%. The deal was done through the purchase of convertible shares from private equity firm SC Asia for Rs 3,085 crore.
Caraf, which has recently been merged into DLF, is the holding company of DAL that was set up by DLF promoters to buy commercial properties of DLF. ‘‘Caraf Builders & Constructions, a subsidiary of DLF, has purchased 24.52 crore compulsorily convertible preference shares (CCPS) issued by DAL and held by DSIPL (a company owned by SC Asia), for a consideration of Rs 3,085 crore,'' DLF said in a statement to the BSE.
Compulsorily convertible preference shares are those which have to be converted into ordinary shares after a predetermined date. The transaction is in line with DLF's overall strategy to consolidate its holding in DAL. Post this deal, SC Asia will continue to hold 4.6% in DAL.
Caraf is engaged in the business of acquisition and development of real estate properties in India and presently holds four rent-yielding properties in Gurgaon, Kolkata and Chandigarh. DAL is a co-developer for four IT/ITES Special Economic Zones (SEZs) based in Gurgaon, Chennai and Hyderabad, the DLF release said.
RBI’s new directive to make customer more careful regarding cheques
Source: Vaibhav Aggarwal,Rupeetimes,Apr 8, 2010
Reserve Bank of India has come up with a new circular which if implemented would force the customer to be more observant while issuing a cheque. The new circular states that the bank has full liberty to return a cheque if it bears any form of correction other than that in the date.
This means that any change in the amount, both numeric and words or change in the name of the payee would lead to the cheque being returned by the bank. The directive has been formulated as a measure by the RBI to prevent fraudulent activities which have become highly prevalent in the system.
HDFC Bank is in the process to implement the circular in its terms and conditions laid for cheque books.
Not all banks are in sink with the directive. "Frauds do not only happen because of cheque alterations. This is only one modus operandi. Some people change the cheque's page name; remove account payee and amount etc. Some people also print fake cheques. This one circular is not going to reduce such fraud cases," said Ramavatar Singh, general manager, Bank of India.
"No changes/corrections should be carried out on the cheques (other than for date validation purposes, if required). For any change in the payee's name, courtesy amount (amount in figures) or legal amount (amount in words), etc., fresh cheque forms should be used by customers," the circular states.
Although the standard format of writing a cheque refrains people to make any kind of alterations in the cheque but mostly banks clear cheques ignoring minor changes.
"There is no rule as such. If one or two corrections are made and if it is countersigned then the cheque can be cleared," said an official from a private bank.
"As of now we have not fixed any date for implementation of this circular. Somebody who is in a state of readiness can implement it. It is for the benefit of the customers," a RBI official said.
Saturday, April 24, 2010
SBI goes green, installs windmill for captive use
| In pact with Suzlon Energy. |
Source:BusinessLine: Coimbatore, April 23
It was with a sense of pride and a touch of symbolic triumph that the State Bank of India Chairman, Mr O.P. Bhatt, spoke at the inauguration of a windmill at Panapatti village, Pollachi Taluk, Tamil Nadu.
Speaking at what he called the “signal event”, Mr Bhatt said the bank's resolve to go green was o
ne of the many initiatives mooted in the last two-three years, and definitely one that would further its green banking initiative.
The bank has partnered with Suzlon Energy by installing windmills for captive use.
It has installed 10 windmills with an aggregate capacity of 15 MW in Tamil Nadu, Maharashtra and Gujarat.
The power generated by these windmills would be wheeled to various HT consumption points of the bank spread across these States, he said.
“It is not an IPP project; we are not selling to utilities. It is for captive use.”
Stating that the initiative was symbolically huge and reiterating the need for others to emulate State Bank in the green environment and clean energy initiative, he said the bank would add 20 MW during the next year.
“We will in due course estimate our carbon footprint and implement that much (100-150 MW) clean energy for the bank.”
Initiatives
He said SBI had spelt out several initiatives within the bank to further the cause of green banking by sensitising employees through training, workshops and education programmes; by investing in efficient lighting systems, energy savers and waste water management; and mooting a project within the bank to determine its carbon footprint.
The go-green resolve would extend to the new SBI buildings that it plans – at Pune, Hyderabad and Jaipur, among others.
“We offer concessional rate of finance for projects that are green, or for implementing clean technologies in building concepts. Carbon Credit Plus is a product for financing carbon credit receivables for our customers,” Mr Bhatt said
Referring to exploitation of resources beyond replaceable limits, the banker said: “It is because of our arrogance over science and technology that we have forgotten our wisdom and balance that is important to protect nature. If we do not maintain it (the balance), it will be a catastrophe of our own making.”
Bench divided on lie-detection test for Ramalinga Raju
Mr B. Ramalinga Raju
Source:Business line Bureau,Hyderabad, April 23
The Andhra Pradesh High Court on Friday delivered a split verdict on a petition by the Central Bureau of Investigation seeking permission to conduct lie-detection test on Mr B. Ramalinga Raju, founder and former chairman of Satyam Computer Services Ltd.
The two-member Bench took divergent views with Mr Justice Gopal Reddy declining permission for the test and Mr Justice Govinda Rajulu approving the CBI's request.
Meanwhile, on directions from the Special Court trying the Satyam fraud case, the Nizam's Institute of Medical Sciences (NIMS) had submitted the case sheet of Mr Raju to the court.
Earlier, the CBI had contended that Mr Raju — who is undergoing treatment for Hepatitis C at NIMS — was intentionally delaying the court proceedings citing health reasons. The Additional Chief Metropolitan Magistrate, Mr B. V. L. N. Chakravarti, then directed the NIMS authorities to submit daily reports on Mr Raju's health.
ADB appoints Lakshmi Venkatachalam as VP
Source:Press Trust of India / Mumbai April 23, 2010, 17:31 IST
The Asian Development Bank (ADB) today said it has appointed Lakshmi Venkatachalam as Vice-President for a period of three years.
Venkatachalam, currently the Director-General of Shipping and ex-officio Additional Secretary in the Indian Government, will be responsible for ADB's private sector and co-financing operations, the multilateral funding agency said in a press release today.
ADB is planning to scale-up private sector operations and co-financing partnerships as a part of its long-term strategy.
Venkatachalam, an Indian Administrative Service officer from the Karnataka cadre, has also worked as Principal Secretary in the Karnataka Government. She was also the chairperson of the Coffee Board of India from 2000 to 2005.
Indian banks get Malaysian licence
Source:Reuters / Kuala Lumpur April 17, 2010, 0:04 IST
Malaysia has awarded a commercial banking licence to a locally incorporated bank to be owned by Bank of Baroda (BoB), Indian Overseas Bank (IOB) and Andhra Bank.
Bank Negara said the licence was given as a reinstatement of a commercial banking licence to an Indian bank that had formerly operated in Malaysia.
The earlier bank had been affected by a rule that was previously in force which prohibited any commercial bank under the effective control of a foreign government from holding a banking licence in Malaysia. BoB would hold a 40 per cent stake in the bank, IOB 35 per cent and Andhra Bank 25 per cent, Bank Negara said. The issue of the licence was not part of the new commercial banking licences to be issued under the country’s liberalisation measures announced last year, the central bank said.
The new licence will add to Malaysia’s already crowded banking sector, which has nine commercial banks serving a population of 28 million.
In November last year, Industrial and Commercial Bank of China was given a commercial banking licence as part of a bilateral agreement.
Bank Lending rates start inching up
Source:BS Reporters / Mumbai April 24, 2010, 0:28 IST
Rates go up on sub-BPLR loans.
JM GargBanks may have kept overall lending rates unchanged despite a rise in policy rates but have started increasing rates on corporate loans in the sub-benchmark prime lending rate (BPLR) segment.
“In the sub-BPLR segment, we are scaling up rates as and when these loans come up for renewal,” said Corporation Bank Chairman and Managing Director JM Garg. He said the bank was renewing these loans at 6-6.5 per cent a year. Most sub-BPLR loans were offered around 4-4.5 per cent.
“Over the past two to three weeks, interest rates have risen about 25 basis points. The (recent) changes in policy rates by RBI have not been factored in yet,” said a Bank of India executive.
A senior Axis Bank executive said rates for short-term loans had risen 50-75 basis points over the past few weeks. One reason is that banks were offering lower rates to expand their loan books before the close of the financial year.
A senior executive at Bank of Baroda said companies seeking short-term loans had sent tenders to banks to get the best possible rates. “We have set higher cut-off points in view of the likely hardening of rates following the steps initiated by RBI. The extent of increase is in the range of 25-50 basis points,” the executive added.
According to bankers, well-rated companies can avail of a six-month loan at 6.5-7.5 per cent while the rate for a-one year loan is 7.5-8.5 per cent.
On Tuesday, RBI announced a 25 basis points increase in the repo rate, the reverse repo rate and the cash reserve ratio. The two policy rates were increased by 25 basis points in March, resulting in a cumulative increase of 50 basis points over the last one month. Similarly, CRR, used to manage liquidity in the system, has gone up by 100 basis points since January.
Banks have responded by raising deposit rates.
A Bank of India executive said there were early signs of tightening, though liquidity remained sufficient. “In June, banks will have a clearer idea of credit growth as well as the monsoon, so we are likely to see some rate action then,” said a senior Bank of India executive.
According to RBI data, banks parked Rs 31,395 crore through the reverse repo window. Bankers said with credit demand likely to rise in the coming weeks, overall lending rates would rise in the second quarter.
Bankers said the increase in rates would be linked to the introduction of the base rate system from July. RBI plans to ban lending below base rates.
Garg, however, said there was a possibility of banks having multiple base rates for various maturities. So, there will be a separate base rate for a one-year loan and another for a six-month loan.
Govt to infuse Rs 15,000 cr in PSU banks in 2010-11
The Union Cabinet today approved Rs 15,000-crore capital infusion in public sector banks (PSBs) in the current financial year (2010-11). The initiative will increase the lending capacity of the PSBs by Rs 1.85 lakh crore. The move is also likely to help the banks maintain a minimum of eight per cent Tier-I capital to meet the credit requirement of the economy. The amount of Rs 15,000 crore is to be infused in Tier- I Capital instruments of the PSBs. The exact amount, mode of capitalisation and other terms and conditions would be decided in consultation with the banks at the time of infusion. Capital infusion will also help the banks, which are close to the requirement of a minimum 51 per cent government ownership and do not have the option to raise funds from the capital markets. Injecting more capital would increase government holding in such banks, thereby providing them more headroom to raise capital by diluting stake in the future. Oriental Bank of Commerce, Dena Bank, Andhra Bank, Bank of Baroda, IDBI Bank and Vijaya Bank have less than 55 per cent government equity. |
Sebi warns brokers against forcing clients to give PoAs
 |
| Source:BS Reporter / Mumbai April 24, 2010, 0:33 IST |
The Securities and Exchange Board of India (Sebi) has warned stock brokers against forcing clients to give a power of attorney (PoA) in their favour for operating client accounts.
Sebi said stock brokers could not use a PoA to transfer shares for off-market transactions or execute trades on behalf of the client without his consent.
The move follows instances of clients being forced to give irrevocable PoAs to brokers for managing their demat and bank accounts.
PoAs are executed in favour of brokers and depository participants to authorise the former to operate clients’ demat and bank accounts to facilitate delivery of shares and pay-in/pay-out of funds.
These are mostly taken from clients who want to avail of internet-based trading services. But, there have been instances of stock brokers seeking authorisations from clients to offer non-internet based services.
In some cases, the PoA even allows a broker to open and close accounts on behalf of the client and to trade on the client’s account without the consent of the client, says the Sebi circular.
Sebi said the PoA should be limited to transfer of securities in the beneficial owner’s account towards stock exchange-related margin requirements, pledging of shares in favour of the stock broker for the limited purpose of meeting the margin requirements of the client for trades executed through the same broker and to apply for products such as mutual funds, IPOs and rights issues, but only after instructions from the client.
The circular says a PoA shall not facilitate transfer of funds from the client’s bank account for trades executed through another broker or merging of balances (dues) under various accounts to nullify debit in any other account.
Lakshmi Vilas Bank upgrades its IT network by 100% implementation of MPLS architecture
Source:Mumbai, Maharashtra, April 23, 2010 /India PRwire/
Lakshmi Vilas Bank (LVB), the leading, fast-growing private sector
Bank has become one of the few banks in India to have
achieved 100% Multiprotocol Label Switching (MPLS) architecture.
The migration was completed in a record time of 45 days with the active involvement of BSNL and technology partner, Wipro. With this LVB became the first Bank based out of Tamil Nadu to complete 100% MPLS migration.
Lakshmi Vilas Bank's Managing Director, Mr. K.S.R. Anjaneyelu said, "The full implementation of MPLS will substantially reduce the network operating cost as well as provide higher availability of the network for the branches. It will also lead to better performance of the application at branches due to lesser congestion of the network."
Mr. Murali Nair, Chief Technology Officer of Lakshmi Vilas Bank observed that, "With 100% MPLS architecture, the Bank will do away with about 21 Hub locations across the country and save on the maintenance and operational cost of these hubs. We will also be able to save cost by redeploying the network equipment at these centres to other centres."
LVB has been a pioneer in Technology adoption. Bank has rolled out core banking solution at all its branches within a short span of 15 months. Based on this robust platform and centralized data, the Bank has launched various customer centric products. Lakshmi Vilas Bank, in partnership with the National Association of Software and Services Ltd (Nasscom) and the Data Security Council of India is helping the office of the CB-CID in Chennai to set up a 'cyber lab' to train police officials on cyber crimes. LVB has been offering various technology products and delivery channels including NEFT, RTGS, SMS Alerts,
SMS Pull Services, Net Banking, ATMs Mobile Payments and E-commerce.
Thursday, April 22, 2010
Cheques with alteration/corrections will not be honoured from 1st July 2010
Source:Apr 22, 2010 RBI
RBI has issued RBI Circular No. – DPSS.CO.CHD.No. 1832/01.07.05/2009-10 dated 22nd February 2010 by virtue of which Banks are supposed to prohibit alterations / corrections on the cheque leaf. Circular summary is as follows:-
Prohibiting alterations / corrections on cheques : No changes / corrections should be carried out on the cheques (other than for date validation purposes, if required). For any change in the payee’s name, courtesy amount (amount in figures) or legal amount (amount in words), etc., fresh cheque forms should be used by customers. This would help banks to identify and control fraudulent alterations.
Based on the above guidelines Banks clearing teams can return cheques which have any alteration in the
· Payee Name
· Amount in numbers
· Amount in words
The only alteration which is allowed is the alteration in the date.
RBI has issued RBI Circular No. – DPSS.CO.CHD.No. 1832/01.07.05/2009-10 dated 22nd February 2010 by virtue of which Banks are supposed to prohibit alterations / corrections on the cheque leaf. Circular summary is as follows:-
Prohibiting alterations / corrections on cheques : No changes / corrections should be carried out on the cheques (other than for date validation purposes, if required). For any change in the payee’s name, courtesy amount (amount in figures) or legal amount (amount in words), etc., fresh cheque forms should be used by customers. This would help banks to identify and control fraudulent alterations.
Based on the above guidelines Banks clearing teams can return cheques which have any alteration in the
· Payee Name
· Amount in numbers
· Amount in words
The only alteration which is allowed is the alteration in the date.
RBI issues draft norms on securitisation transactions
Source:BusinessLine Bureau:20 April,2010
Mumbai,
The Reserve Bank of India on Monday issued draft guidelines regarding the minimum holding period and minimum retention requirement for securitisation transactions. The aim behind the guidelines is to develop an orderly and healthy securitisation market, to ensure greater alignment of the interests of the originators and the investors, as also to encourage the development of the securitisation activity, said the RBI in its circular.
The circular says that originators should retain a portion of each securitisation originated, as a mechanism to better align incentives and ensure more effective screening of loans. In addition, the RBI has also recommended a minimum period of retention of loans prior to securitisation so as to give comfort to investors regarding the due diligence exercised by the originator. These were recommended by the RBI in its October 2009 Quarterly Review.
Minimum Holding Period
For loans of up to 24 months duration, in case of loans with periodic repayment schedules, the MHP would be nine months from a certain set of relevant dates, while in case of bullet repayment loans, the MHP is 12 months from the relevant dates.
These relevant dates are the date of full disbursement of loans for an activity or purpose; or date of acquisition of asset by borrower (i.e. car, residential house,); or date of completion of project; or date of first instalment of interest or principal or EMI; whichever is later.
For loans of more than 24 months, in case of loans with periodic repayment schedules, the MHP would be 12 months from the relevant dates.
In case of loans of more than 24 months with bullet repayment, securitisation would not be allowed, said the RBI guidelines.
The RBI guidelines also list certain assets where banks are not permitted to undertake securitisation activities or assume securitisation exposures.
These include re-securitised assets (e.g. collateralised debt obligations of asset backed securities, including, a CDO backed by residential mortgage-backed securities); synthetic securitisations (e.g. credit-linked notes or credit default swaps) and securitisation with revolving structures (e.g. (e.g. credit card receivables and cash credit facilities).
Barclays India head for corporate unit:Karan Bhagat
Source:ET:22 Apr 2010, 1136 hrs IST,REUTERS
MUMBAI: Barclays Plc has named Karan Bhagat as India head for the bank's corporate business that mainly focuses on the banking needs of companies, the British bank said in a statement. Bhagat joined Barclays in 1990, and has worked in different roles within corporate and investment banking.
MUMBAI: Barclays Plc has named Karan Bhagat as India head for the bank's corporate business that mainly focuses on the banking needs of companies, the British bank said in a statement. Bhagat joined Barclays in 1990, and has worked in different roles within corporate and investment banking.
Indian Bank may enter insurance sector
Source:21 Apr 2010, 2048 hrs IST,Nageshwar Patnaik,ET Bureau
BHUBANESWAR: Indian Bank is exploring options to add insurance products to its portfolio. For this, the Bank may partner with foreign players, if need be, Indian Bank executive director V Ram Gopal, said in Bhubaneswar on Wednesday.
Speaking to reporters here, Mr Gopal said the Indian Bank was bullish about its growth and he hoped that the inclusion of insurance products would further boost the bank’s business prospects.
“We are quite bullish about our growth. For the 2010-11 fiscal, we are eyeing a 22% growth in our business. We have set a target of Rs 2, 10,000 crore turnover for the year and 16% increase in our net profit,” Mr Gopal said.
Claiming that the national credit-deposit (CD) ratio of the Bank was 71% in the last fiscal, the ED said the Indian Bank always focused on winning the trust of its clientele, especially in priority sectors, by increasing the volume of lending.
He informed that the total lending of the Bank by March 31 was Rs 61,000 crore as against a total deposit of Rs 88,000 crore.
“Our priority sector lending is much above the stipulated 40%. In micro, small and medium-sized enterprises (MSMEs) sector together with retails, the total lending by March 31 was Rs 8,360 crore. In agriculture sector, our lending is much above the stipulated 18%,” he informed.
56 Indian firms in list of world's most powerful listed companies
Source:22 Apr 2010, 1124 hrs IST,IANS
WASHINGTON: China with 113 members and India with 56 members gained the most ground in breaking into the exclusive club of 'The Forbes Global 2000' - 'the biggest, most powerful listed companies in the world'.
The latest list of global giants released by the reputed US business magazine Wednesday shows the corporate dominance of the developed nations is steadily receding. The rankings span 62 countries, with the US (515 members) and Japan (210 members) still dominating the list, but with a combined 33 fewer entries.
The top ten among 56 Indian Global High Performers are Reliance Industries (126) with sales of $29.40 billion, State Bank of India Group (130), Oil & Natural Gas (155), ICICI Bank (282), Indian Oil (313) NTPC (341), Tata Steel (345), Bharti Airtel (471), Steel Authority of India (502) and Larsen & Toubro (548).
UCO Bank (1910) with sales totalling $1.78 brings up the rear for India.
Forbes' ranking of the world's biggest companies using an equal weighting of sales, profits, assets and market value to rank companies according to size 'reveals the dynamism of global business,' it says.
In total the Global 2000 companies now account for $30 trillion in revenues, $1.4 trillion in profits, $124 trillion in assets and $31 trillion in market value. All metrics are down from last year, except for market value, which rose 61 percent.
An analysis of the Global 2000 shows that despite the turmoil in the financial sector, banks still dominate, with 308 companies in the 2000 lineup, thanks in large measure to their asset totals.
The oil and gas industry, with 115 companies, scores high in sales, profits and stock-market value, yet these sectors were not the leaders in growth over the past year. Insurance companies (up 27 percent) led all sectors in sales growth, while the leaders in profit growth were drugs and biotech firms (up 20 percent).
To qualify as a Global High Performer, a company must stand out from its industry peers in growth, return to investors and future prospects.
Most of the 130 Global High Performers have been expanding their earnings at 28 percent a year and 20 percent annualised gains to shareholders over the past five years, Forbes noted.
WASHINGTON: China with 113 members and India with 56 members gained the most ground in breaking into the exclusive club of 'The Forbes Global 2000' - 'the biggest, most powerful listed companies in the world'.
The latest list of global giants released by the reputed US business magazine Wednesday shows the corporate dominance of the developed nations is steadily receding. The rankings span 62 countries, with the US (515 members) and Japan (210 members) still dominating the list, but with a combined 33 fewer entries.
The top ten among 56 Indian Global High Performers are Reliance Industries (126) with sales of $29.40 billion, State Bank of India Group (130), Oil & Natural Gas (155), ICICI Bank (282), Indian Oil (313) NTPC (341), Tata Steel (345), Bharti Airtel (471), Steel Authority of India (502) and Larsen & Toubro (548).
UCO Bank (1910) with sales totalling $1.78 brings up the rear for India.
Forbes' ranking of the world's biggest companies using an equal weighting of sales, profits, assets and market value to rank companies according to size 'reveals the dynamism of global business,' it says.
In total the Global 2000 companies now account for $30 trillion in revenues, $1.4 trillion in profits, $124 trillion in assets and $31 trillion in market value. All metrics are down from last year, except for market value, which rose 61 percent.
An analysis of the Global 2000 shows that despite the turmoil in the financial sector, banks still dominate, with 308 companies in the 2000 lineup, thanks in large measure to their asset totals.
The oil and gas industry, with 115 companies, scores high in sales, profits and stock-market value, yet these sectors were not the leaders in growth over the past year. Insurance companies (up 27 percent) led all sectors in sales growth, while the leaders in profit growth were drugs and biotech firms (up 20 percent).
To qualify as a Global High Performer, a company must stand out from its industry peers in growth, return to investors and future prospects.
Most of the 130 Global High Performers have been expanding their earnings at 28 percent a year and 20 percent annualised gains to shareholders over the past five years, Forbes noted.
PIL against insurance cos for ULIP `fraud'
Source:TNN, Apr 22, 2010, 05.27am IST
LUCKNOW: In a public interest litigation (PIL) filed with the high court, a lawyer has charged insurance companies of fleecing people of their hard-earned money through unit linked insurance policies (ULIPs).
The PIL comes after the insurance regulatory and development authority (IRDA) allegedly failed to protect the interests of the insured persons despite an order by the Securities and Exchange Board of India (SEBI) issued with the aim to check malpractice by insurance companies. Besides prominent insurance companies, the PIL makes the IRDA also a respondent, charging the regulatory authority of being "most unsympathetic" towards complaints of policy holders with a grievance. In fact, "when it comes to protecting the interests of insurance companies," IRDA "is most proactive", the PIL alleges.
The PIL gives as an example the IRDA order to defy the ban of SEBI and continue selling ULIPs. The PIL claims that the sale of ULIP is in violation of sub-section (11) of section (2) of the insurance Act, 1938 because ULIP contracts are based on share market fluctuations which are not a contract upon human life.
Charging IRDA of being "hand-in-glove" with the insurance companies, the PIL brings to the court's notice certain cases in which insurance companies had duped the insured persons, one a doctor, another a scientist and even a lawyer.
The PIL primarily requests the court to issue an order commanding insurance companies not to sell any ULIPs and IRDA not to approve any new ULIP. The PIL also requests that the Union government institute a committee to thoroughly investigate the fraud committed by private life insurers along with the role of IRDA on complaints against insurance companies.
LUCKNOW: In a public interest litigation (PIL) filed with the high court, a lawyer has charged insurance companies of fleecing people of their hard-earned money through unit linked insurance policies (ULIPs).
The PIL comes after the insurance regulatory and development authority (IRDA) allegedly failed to protect the interests of the insured persons despite an order by the Securities and Exchange Board of India (SEBI) issued with the aim to check malpractice by insurance companies. Besides prominent insurance companies, the PIL makes the IRDA also a respondent, charging the regulatory authority of being "most unsympathetic" towards complaints of policy holders with a grievance. In fact, "when it comes to protecting the interests of insurance companies," IRDA "is most proactive", the PIL alleges.
The PIL gives as an example the IRDA order to defy the ban of SEBI and continue selling ULIPs. The PIL claims that the sale of ULIP is in violation of sub-section (11) of section (2) of the insurance Act, 1938 because ULIP contracts are based on share market fluctuations which are not a contract upon human life.
Charging IRDA of being "hand-in-glove" with the insurance companies, the PIL brings to the court's notice certain cases in which insurance companies had duped the insured persons, one a doctor, another a scientist and even a lawyer.
The PIL primarily requests the court to issue an order commanding insurance companies not to sell any ULIPs and IRDA not to approve any new ULIP. The PIL also requests that the Union government institute a committee to thoroughly investigate the fraud committed by private life insurers along with the role of IRDA on complaints against insurance companies.
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