Manager arrested for duping bank of Rs15 crore

Source:Somendra Sharma / DNA
Wednesday, March 17, 2010 1:18 IST

Mumbai: The officers of the Economic Offences Wing (EOW),
 of the Mumbai Crime Branch arrested the general manager of
 a private bank on Monday for allegedly misappropriating the
 bank’s funds to the tune of Rs15.55 crore.
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 The arrested man has been identified as Hillary Grecian
Anthony Barboza, a resident of Virgo Villa Apartment on SV
Road in Bandra (W).

According to the police, Barboza was working as the general
manager of a co-operative bank that has its branches at Dadar
and Lower Parel. “Between 2002 and 2005, there have been several
cases of dividend warrant misuse, current account misuse and
current account cash-credit misuse found within the bank.

The Cooperative Commissioner was also conducting investigations
into the case, as it was learnt that within just three years there
had been fraud worth Rs15.55 crore committed at the bank,”
said an officer from the EOW, requesting anonymity.

The officer added that the Reserve Bank of India had underwritten
the bank, and a case of fraud was registered with the general
cheating branch of the EOW.

“We had arrested Barboza on Monday and produced him before a local
court for police remand. The court has remanded him in judicial custody
 till March 17, as he is suffering from hypertension. He was later
 admitted to JJ Hospital in Byculla,” the officer said.
   

Yash Birla Group to invest Rs 5,500 cr in power, lifestyle

BS Reporter / Mumbai March 18, 2010, 0:43 IST

The Yash Birla Group is planning an investment of over Rs 5,500 crore 

over the next three years in emerging business segments like

thermal and solar power, wellness and lifestyle, garments and education.



Yash Birla Birla Urja and Birla Energy Infra, two newly-floated subsidiaries of genset maker Birla Power Solutions, will spearhead the Rs 3,000-crore turnover group’s foray into thermal and renewable energy.

Initially, Birla Urja will set up a 600-megawatt (Mw) coal-fired power plant at Dhule district in Maharashtra, with an investment of about Rs 3,000 crore and 20 Mw of grid connected solar power through three projects in Rajasthan, Haryana and Uttarkhand, and 50 Mw in Andhra Pradesh.

“We are planning 125 Mw of solar power with an investment of Rs 2,000 crore, utilising the incentives offered by the government to promote solar power,” said Yash Birla, chairman of the group, which currently constitutes over 20 companies, including eight stock exchange-listed entities.

The group will invest 30 per cent of the total investment as equity portion and is already talking to private equity players for investments in the two new subsidiaries.

“We will retain majority stake in the subsidiaries and at a later stage can approach the capital market for raising funds, if required,” he said.

Birla Power is now raising Rs 100 crore through American depository receipts (ADRs) to initiate work on the power plant, said P V R Murthy, group director, Yash Birla Group.

Birla Power had informed stock exchanges that its board of directors would meet on March 25 to consider increasing its authorised shared capital or raise funds by issue of global depository receipts, ADRs and foreign currency convertible bonds and equity shares or any other instrument convertible into equity shares.

The power plant, which will start production within three years, will use half of the power produced for captive consumption among group companies and the rest will be sold as merchant power. The group has already acquired majority of the land required for the project and is in advanced stages of discussions for various clearances, said Yash Birla.

In the education segment, the group is planning an investment of over Rs 500 crore. It plans to set up a university in Mumbai, besides 40 schools with classes up to 12th standard under the brand name ‘Globe Trotters,’ in various cities.

The Yash Birla Group had floated a company named Birla Edutech and had acquired Melstar, an information technology (IT) application management company, in 2008 to enter the education and IT business sectors.

The group is looking at wellness and lifestyle as another growth driver and has floated half a dozen incubation companies in this segment. Its Birla Pacific Medspa runs ‘Evolve,’ a joint venture between Yash Birla Group and Pacific Healthcare to set up healthcare spas. While Birla Lifesciences offers healthcare products through branded stores, Birla Kerala Vaidyashala offers authentic ayurvedic treatment.

Japanese companies eye Indian power sector

Sources:BS:Katya B Naidu / Mumbai March 18, 2010, 0:39 IST

Japanese power companies, including Tokyo Electric 

Power Company (Tepco) and J-Power, seek to make

their presence felt in India.



“They might not look at the bigger projects like ultra mega power projects
(UMPP) right away, but will look at projects with a size of 1,200 to 1,400 Mw,”
said an industry source. These companies were looking at
opportunities in the Indian power sector and might bid
for some power projects soon, sources added.

Tepco, the largest Japanese and the world’s fourth-largest
power generator, has a capacity of 64.3 gigawatts,
while J-Power, which operates 67 plants, has a
capacity of 16,985 Mw. E-mails sent to both
companies remained unanswered.

India has plans to add 78,000 Mw of power
generation capacity in the 11th Five Year Plan and these
companies want to seize this opportunity.

“Japanese companies can look at the opportunity as
they already have a presence in the equipment side of
the power market. India is a huge market, with high
requirement of electricity, leading to a demand supply
skew towards power generators. This is a country which
requires anywhere between 100,000 to 200,000 Mw of
power in the short to medium term,” said
Kuljit Singh, head-infrastructure, Ernst & Young.

Foreign companies, able to procure debt at a lower interest cost,
can be an advantage in this capital-intensive sector, according to
experts. “With two per cent interest cost and fixed returns of
eight-nine per cent, the power sector makes for a good
investment for foreign companies. Merchant power sales also
offer good profits,” said a Mumbai-based equity analyst.

Foreign companies will also have their share of challenges
in the Indian market. “The Indian market is a greenfield play
where you require assistance from many government agencies
for land acquisition, fuel, water, environment and other clearances.
Foreign companies might find it tough to handle such aspects on their own,” said Singh.

This has been one of the reasons for many foreign power
utilities to stay away from bidding, though the government allows
100 per cent FDI in the automatic route in generation, transmission,
distribution and power trading except in atomic power.
Besides, the negative publicity of the Dabhol and Enron
scandals also kept foreign investors at bay.

In 1992, many foreign power companies came to the
country and returned due to various issues. However,
some foreign companies made their presence felt,
although in a small way.

Genting, a Malaysian power company,

has bid for power projects along with Lanco Infratech, 

and both these companies own a 370-Mw gas-based
power project in Kondapalli, near Vijayawada in Andhra Pradesh.
American electricity major AES operates and owns a minority
stake in a 420-Mw coal-fired power plant in Orissa.

Hong Kong-based power utility China Light and Power (CLP),
which forayed into India a decade back, said that the situation
had changed drastically in the last few years. “Until 2004, the
experience was difficult, especially with payment defaults from
off-takers. Projects were not awarded on a competitive basis
and foreign companies were at a disadvantage. Last few years
have been positive, reforms have set in and all our dues have
been paid,” said Rajiv Ranjan Mishra, MD of CLP India.
CLP has two gas-based power projects in Gujarat, fou

r wind projects in Gujarat and Maharashtra, Karnataka 

and Tamil Nadu, and a coal-fired project in Haryana. 

The company plans to tread cautiously when it comes

to bidding for new projects. 

“The preferred size of projects that we would like

to bid for will be in the range of 1,000-1,500 Mw. UMPPs are way too big.”          
   

Borrowing calendar to be finalised on March 29

BS Reporters / New Delhi/ Mumbai March 18, 2010, 0:18 IST

Officials from the Reserve Bank of India (RBI) and the finance

ministry will finalise the borrowing calendar for the next financial

year on March 29. This is amid expectations the exercise

will be front-loaded.


This means the goverment will schedule a major part
of borrowings in the first half of the financial year.

This eases pressure on liquidity for borrowing by the private
sector in the second half of the financial year.

“We have not decided whether the borrowing programme will
be front-loaded like last year. At present, all options, of borrowings being front-loaded, back-loaded and evenly spread out throughout the year are open. The decision will be taken after taking the views of all concerned,” said a senior finance ministry official.

The official said the requirement of government funds was just one input. “The other important points are the expenditure pattern of states and the private sector, repayment of loans, expected bond yields, market liquidity and inflation,” he said.

The Centre’s gross borrowings are budgeted at Rs 4,57,000 crore, Rs 6,000 crore higher than this year (a record). On a net basis, the government will borrow Rs 3,45,010 crore in 2010-11, compared to Rs 3,98,411 crore this year. This year, the government completed two-third of its borrowing in the first half of the financial year to avoid putting pressure on fund-raising by the private sector.

The market expects the government to follow a similar strategy next
year too as credit demand is low at the moment and is expected to
pick up in the coming months. Besides, unlike last year, the tools
available are fewer as the balance under the market stabilisation
scheme was estimated at 7,737 crore on March 5, as
against 88,077 crore a year ago.

High borrowings and expectations of monetary tightening in the
wake of higher inflation saw the yield on the benchmark 10-year
government paper reaching a 17-month high of 8.02 per cent last week.
Traders are not ruling out the yield touching 8.5 per cent in the weeks ahead.

Inflation is widely expected to reach double digits next month,
compared with 9.89 per cent in February, raising expectations
of RBI increasing policy rates when it announces its annual policy on April 20.

“It (the yield) will go around the 8.5 per cent level before peaking,
but it is tough to predict the time-frame.

Once auctions start, yields may go up. But without supply, you are
not going to see too much price action,” said a senior executive
at ICICI Securities Primary Dealership.

Today, the yield on the benchmark paper fell to the lowest
in a week as traders sought to cover short positions
following the recent sell-off.

The yield on the 6.35 per cent security maturing in 2020
hit a low of 7.93 per cent and closed at 7.95 per cent.

It has been around 8 per cent for a week and breached the mark
last week to touch 8.02 per cent.

Banks cautious on further lending to sugar companies

Sources:BS/Ajay Modi / New Delhi March 18, 2010, 0:24 IST

Banks have become more cautious in lending to sugar 

companies following a sharp fall in prices and are

working on a fresh set of borrowing limits based on 

lower valuations. Companies borrow against sugar

stocks to pay sugarcane farmers.

In January, a number of companies got advances against a valuation of Rs 3,600 a quintal for their sugar inventories. While granting limits to sugar companies, banks take into account the previous three-month average price or the current price, whichever is lower. However, banks are now adjusting the drawing limits to the current sugar price of Rs 3,100 a quintal, says an industry source. Consequently, the drawing limit of companies has come down by nearly 14 per cent.

“We are facing working capital problems. While sugar realisation is low, we are still paying Rs 260 a quintal for sugarcane. We apprehend that some sugarcane payment arrears will build up if sugar prices do not improve. This would adversely affect the farming community and sugarcane acreage might not increase significantly. This would again lead to import dependence in the sector,” said an official of a Uttar Pradesh-based sugar major.

Most sugar companies claim that the cost of sugar production — considering the existing rate of sugarcane at Rs 260 a quintal and a 20 per cent levy of sugar at Rs 1,300-1,400 a quintal — is Rs 3,600 a quintal.

Banks allow companies to draw 85 per cent of the total value of sugar meant for open market sale. However, for 20 per cent of the sugar (which is sold to government for levy at a fixed price), companies can draw 90 per cent of the total value. “We have elaborate norms for lending to sugar companies and the adjustments are done keeping in view such norms,” said an executive with a nationalised bank.

On actual sale of sugar, companies repay the amount to 

banks on a regular basis. Banks, on their part adjust the

limits on a weekly basis and companies are required to submit a

weekly statement of stocks to the banks.

Ex-mill sugar prices had touched a record
high of Rs 4,300 a quintal in January.

Prices, however, started softening towards the
end of January and continued to decline in
February following government initiatives — like
weekly sale mechanism and stockholding limits —
and a decline in international prices.

However, companies continue to pay the same price
to farmers as they were paying in January. Moreover,
with extended crushing in states like Uttar Pradesh and
Maharashtra, most companies have already exhausted
their drawing limits. And with a decline in their drawing power
some sugarcane arrears might build up.

The low sugar realisation has been reflecting in the share price of top sugar companies.
Most sugar stocks have fallen sharply from their 52-week high in the month of January.

At the Bombay Stock Exchange, Bajaj Hindusthan has
corrected over 39 per cent to Rs 146.75 from its 52-week
high of Rs 242.90 on January 7. Dhampur Sugar has
corrected over 49 per cent to Rs 79.80 from its 52-week high of Rs 158.60 on January 11.

Dubai allows Hindujas to offer full range of banking services

Source: BS/Press Trust of India / Dubai March 17, 2010, 13:22 IST

The Dubai Financial Services Authority (DFSA) has 
upgraded the Hinduja Bank's licence, a move that
will allow it to provide a whole range of financial
services to clients in Europe, Middle East and South Asia.



"The new licence enables it (Hinduja Bank-Middle East)
to provide full range of banking services from the Dubai
International Financial Centre (DIFC)", the bank said in a release.

Hinduja Bank (Middle East), a subsidiary of the Hinduja-promoted
bank in Switzerland, started operations 16 months ago and now
has been provided the licence to operate as Category-1 bank by the DFSA.

"The upgrade of the Hinduja Bank's licence will enable it to make
a greater contribution to the future growth of the region...
Dubai will be the crucial economic and financial link between
the Middle East, Asia and the West", said Group chairman S P Hinduja.

Over 850 global companies have already registered with the DIFC,
which offers incentives like 100 per cent foreign ownership,
zero tax on income and profit, and free foreign exchange regime.

LIC to decide on entering banking: FinMin

 Source: BS/Press Trust of India / 
New Delhi March 17, 2010, 20:45 IST

The Finance Ministry today said the board of the
state-owned Life Insurance Corporation of India (LIC) 
will have to take a call on entering the
banking sector.


"The LIC board will have to decide that first. Let the board decide, discuss and debate whether LIC should get into the banking business or not," financial services secretary R Gopalan said when asked whether the largest insurer is keen to enter the banking space. Gopalan was talking to the media on the sidelines of a Ficci seminar on microfinance here.

Presenting the budget, Finance Minister Pranab Mukherjee said the Reserve Bank of India (RBI) could allow more entities, including NBFCs, to set up banks, since then speculation has been rife that LIC's housing finance subsidiary is eyeing banking licence.

"We need to ensure that the banking system grows in size and sophistication to meet the needs of a modern economy. Besides, there is a need to extend the geographical coverage of banks and improve access to banking services," the Finance Minister had said in the Budget speech.

With a market share of over 60 per cent in the life insurance space, LIC has subsidiaries operating in housing finance and mutual funds.

According to reports, the Reliance Anil Dhirubhai Ambani Group and many other private sector groups and NBFCs, such as Aditya Birla Group and Malvinder Singh-led Religare Group, have also been eyeing the banking space.

SAIL, NTPC seek Maharatna status

 

BloombergUTV /PTI
Published on Thu, Mar 18, 2010 at 12:24 IST


NEW DELHI: SAIL and NTPC, two of the blue- chip PSUs,
have approached the government seeking the coveted
Maharatna status that will give them greater financial autonomy.

"We have received their applications. We will send them to the
Cabinet Secretary within 15 days," Bhaskar Chatterjee
Secretary in the Department of Public Enterprises told PTI.

He said, applications from oil PSUs--ONGC and IOC--are also expected in the next few days.

The Union Cabinet had cleared the Maharatna scheme in December 2009 and set the eligibility norms for the same.

For the Maharatna tag, companies need to have a three-year track record of annual net profit of over Rs 5,000 crore, net worth of more than Rs 15,000 crore and turnover of more than Rs 25,000 crore, besides being listed on the stock exchanges.

At present, only these four firms meet the stringent criteria.

A Maharatna tag will give the companies the power to take
investment decisions of up to Rs 5,000 crore independent of
the government against the present limit of Rs 1,000 crore,
accorded to them under the Navratna status.

Of the 158 profit-making PSUs, 18 enjoy the Navratna status while 62 are mini-Navratnas.

Central Bank plans to use postmen to reach rural areas

In talks with India Post to deploy its staff as business correspondents.

 Source: Business Line,K.R. SrivatsNew Delhi, March 17

Central Bank of India is in talks with India Post to rope in 

village postmen as business correspondents (BCs), 

its Chairman and Managing Director, Mr S. Sridhar, 

has said.The bank's plan to increase BC appointments 

comes at time when perception is gaining ground that the 

business correspondent model has not achieved the desired 

impact since its inception in January 2006.Most banks do not see 

BCs as a viable model though there is plenty of opportunity to use

it to their advantage, given the extent of exclusion.

Till date, public sector banks have appointed 85 BCs, who have opened about 80 lakh accounts.On the other hand, private sector banks have appointed about 44 BCs, who have opened 8 lakh accounts.

"We are having discussions with the postal department on the commercial terms. Many of the postmen are on contract basis. The postal department has a different system," Mr Sridhar told Business Line on the sidelines of National Microfinance Conference, organised by Sa-Dhan and FICCI here on Wednesday.

Central Bank of India has so far appointed 18 correspondents. Mr Sridhar said that the bank wants to ramp up BC appointments and the focus would be on those districts where it is the lead banker.

As for the banks that had roped in post offices for financial inclusion, only State Bank of India has made some progress.

SBI has covered about 5,200 post offices as part of its plan to adopt them as outlets of BC/banking facilitator model.Conceived as an innovation in financial inclusion, the BC model was expected to give a boost to the banks to reach the unbanked segments of the country, especially the villages. 

The RBI has been constantly improving the model by expanding the definition of BCs. 

Recently, kirana shops in rural areas were recognised as banking correspondents.The model allows banks to do "cash-in-cash-out" transactions at a location much closer to the rural population, thereby addressing the last mile problem. 

Unlike banking facilitators, who act as agents for rendering support services to banks but do not handle cash, BCs are allowed to handle small value deposits or credits and can undertake recovery of principal or collection of interest. The client portfolio will appear in the books of the banks, who are responsible to the customer for the acts of omission or commission of the business correspondents or business facilitators.Mr Sridhar said that Central Bank's perspective on using banking correspondents is different from that of the foreign banks. 

"We are looking at it from the perspective of our national obligation to reach under-banked villages and not so much from the opportunity of expanding business," he said.Out of the 24,000 villages allocated to Central Bank for achieving 100 per cent financial inclusion, the bank has achieved the target in about 17,000 villages, mostly through its own branches. "The balance we will do through business correspondents. 

So it will be a mix of BCs and branches," he said.The Chairman said that the bank is also in talks with telecom service providers to see if their representatives could be appointed as BCs. "That model is not yet crystallised," he added.

Bank accounts matches with details of terrorist names appearing in UN consolidated lists

 18th March ,2010

Reserve Bank of India (RBI), in terms of instructions contained in
the guidelines on Know Your Customer (KYC) norms, have advised
the banks that before opening any new account it should be ensured
that the identity of the customer does not match with any person
with known criminal background or with banned entities such as
individual terrorist or terrorist organisation etc.

Banks are stipulated to file suspicious transaction reports
 pertaining to remittances/withdrawals from bank accounts and
 in respect of account holder.

Financial Intelligence Unit – India (FIU-IND) has been set-up
to receive information relating to certain types of transactions
 including suspicious transaction from financial sector, analyze
received information and disseminate information in appropriate
cases to relevant intelligence/law enforcement agencies.

FIU-IND has received certain suspicious reports on account of
matches of certain details of terrorist whose names are appearing
in UN Consolidated lists and other lists. In most of the cases the
 matches were partial or incomplete.

Enhanced due diligence was conducted by FIU-IND and thereafter
 information was disseminated in appropriate case to relevant
law enforcement/intelligence agencies.
 

As reported by RBI,
two bank accounts have been frozen 

under the provisions of the
 Unlawful Activities (Prevention) Act, 1967.

This information was given by Minister of State for Finance,
Namo Narain Meena in written reply to a 
question raised in Rajya Sabha on 16th March 2010

UBI lists with 17% premium on BSE

By PTI Mar 18 2010 , Mumbai
State-run United Bank of India (UBI) today listed
with a premium of 17 per
cent on the BSE, over its issue price.

Shares of the bank opened at Rs 77, also its early
morning high on the Bombay Stock Exchange, over its
issue price of Rs 66.

"Fuelled by positive sentiments, the stock listed with
a premium on the bourses. However, the it will see some
 profit booking later and will perform as per the other banking
 stocks listed," SMC Global Vice-President Rajesh Jain said.

On the National Stock Exchange, the stock listed at Rs 74.90,
up 13.48 per cent.

A total of 1.79 crore shares of UBI changed hands on the bourses
in the early morning trade. The company has offered 31.64 crore
shares for the public subscription.

With the listing, the government stake in United Bank has now
come down to 84.2 per cent from the earlier 100 per cent,
 resulting in stake dilution of 15.8 per cent.

The bank will utilise the IPO proceeds to expand its balance
 sheet and augment capital base.

Last month, the initial public offer (IPO) of the state-run
 United Bank of India (UBI) got a stupendous response with the
issue getting subscribed nearly 33 times on huge
demand by retail investors.

Source: Financial Chronicle

Infosys to take time to recover

By Sanjeev Sharma Mar 17 2010 , New Delhi


Infosys expects recovery to be a long–drawn affair, as,
 despite the resumption of discussions
 on discretionary projects, clients remain cautious on
tech spending in the near term, according to a Morgan
Stanley report.

According to the report, V Balakrishnan, Infosys chief
 financial officer, in a meeting with Morgan Stanley i
ndicated that

70 to 75 per cent of clients had finalised their budgets
for 2010 and in most cases budgets were flat to up
(with increases of only up to 3 per cent year on year).

“Overall, the pace of decision-making has improved
 and is better than what was seen in 2008.

The management expects banking and financial services to lead growth

in 2010, followed by telecom.

Clients in the retail vertical are relatively slow
adopters of offshore services and are likely to improve
 with a lag, whereas manufacturing clients continue to
struggle and could take longer to recover,” says the report.

It says pricing pressure has dissipated and the pricing outlook
 appears stable. However, Infosys is finding it tough to roll
back the one-year conditional pricing discounts given in 2009.

When contacted, Infosys board member and human resources director,
 Mohandas Pai, declined to comment, saying that the company was
 in the silent period. A Wipro spokesperson also said his company
was in the silent period.

Indian IT companies have been under pressure after clients cut
 IT spending due to the global credit crunch. The IT industry has
 been one of the sectors impacted by the slowdown.

After two quarters of flat growth, the industry is showing
signs of revival; companies announced improved results in the third quarter.

The next critical event will be Infosys guidance on April 13.

The Morgan Stanley report says the business momentum for offshore
 deals has picked up since February. There has been a material
increase in the flow of requests for proposals (RFPs) and client
discussions on deals that were postponed earlier have also resumed.

“However, it is not clear to us whether the guidance will signal
materially higher growth rates. It is unclear if the recent improvement
 in deal discussions, RFP flows, etc, is significant enough for the
 management to guide for materially higher growth rates than
the 13 to 15% year-on-year growth indicated by Nasscom for 2010,”
the report says.

It adds that Infosys could implement another round of wage hikes in April.
“The Infosys management indicated that it had seen instances of irrational
pricing by a few offshore vendors outside of the top three. Infosys believes
 that rising offshore wages could force pricing discipline in the market –
especially for smaller vendors,” it said.

According to an earlier Morgan Stanley report, Infosys management had
indicated that in Europe, growth in tech spending by clients could
range from flattish at the lower end to as much as 7 per cent at the
higher end.

As per the report circulated in the first week of March,
in investor meetings in London, Infosys executive council
 member and head of manufacturing, B G Srinivas, indicated
that the company was witnessing clear signs of improvement
in the demand environment.

The report says that whereas earlier the focus was on cost
 savings, now executives are focused on working and delivering
 on the IT plans rather than just saving costs. This should result
 in improved quality of conversations with clients – leading to a
higher flow of business.

It says that though Infosys is likely to outperform its
 fourth-quarter guidance, the degree of outperformance
may not be as wide as in the third quarter. The euro and
the pound have depreciated by between 2 and 6 per cent against
the dollar over the past few weeks, which is likely to be drag
 on growth. “Overall we continue to believe that even a 15 per
cent dollar revenue growth guidance could lead to a single-digit
 earnings- per- share growth outlook in rupee terms (EPS of approximately Rs114)
 for the next financial year.”

The report notes that Infosys also appears to have resumed print
 advertising for hiring. “We have noticed print ads after a gap of
at least six months. We note that till 2008 such ads were a weekly
feature before they dried up in 2009. Given the increased focus on
 hiring now, we would expect Infosys to further raise its full-year
hiring guidance from 15,000 campus hires to 20,000 in April this year.
The gross addition in 2010 could be between 25,000 and 30,000 employees.”

This (resumption of large- scale hiring) should lead to an across-the-board
 increase in offshore wages for 2010, though the timing of the wage hike will
 be interesting to watch, according to Morgan Stanley.

(With inputs from Bhaskar Hazarika)
Source: Financial Chronicle