Tides of 24.12.2007

1. Some people call it a ‘micro branch’, while some others call it ‘branchless banking’. Finally, it comes to the point of leveraging the power of IT (information technology) for implementing financial inclusion programme. With the vast number of rural populace yet to get banking facility and the potential it provides for bankers, ‘branchless banking’ is all set to become the next killer product in the industry. Pilot projects by some banks, in association with technology partners, have proved that new generation technology tools and the dedicated human resource base will make branchless banking a gold mine for bankers in the years to come.

2. Old private sector banks are vulnerable to forces both within and from outside and it is time for them to focus on improving the work culture to face the threat from these forces, according to Mr Anantakrishna, Chairman and Chief Executive Officer of Karnataka Bank Ltd. Speaking at the inauguration of the 15th conference of the Karnataka Bank Officers’ Organisation (KBOO) in Mangalore on Sunday, he said that old legacy culture is the force affecting the old private banks from inside and ‘vulture’ is the force from outside.

3. Bonds softened last week in thin trading as credit offtake slowed down ahead of a long holiday season. Traders said that volatility in the foreign exchange market had little impact on bonds, as domestic factors overwhelmed exit by foreign institutional investors. In fact during the week, there was hardly any RBI intervention. The only intervention was to pump in liquidity through reverse repurchases. Net outflow on account of selling by foreign institutional investors was $907 million last week. This has prompted exporters and some potential foreign direct investors to take cover. As a result, one-month forward premia dropped below one per cent to 0.61 per cent last week. The previous week it was 1.75 per cent. Forward premia for three, six and 12-month also narrowed to 1.01 (1.73), 1.42 (1.88) and 1.11(1.40) per cent respectively.

4. Some of the public sector banks that have largely been sellers of bad loans are now considering buying such assets, sensing the business potential this market can offer.
A senior official from State Bank of India said that the bank has, in principle, decided to purchase assets and could start the process by April next year. “We have agreed in principle to start aggregating debt. We could either invest in them or try to sell to other asset reconstruction companies.

5. After steadily increasing for the past couple of months and surging by an all-time high of $11.871 billion during the week ended September 28, the country’s forex reserves fell by $599 million to $272.954 billion for the week ended December 14, 2007. The reserves increased by $33 million to $273.553 billion for the week ended December 7.

6. The World Bank approved $225 million loan/credit to Bihar to support the State in implementation of critical structural reforms to attain sustainable and inclusive development besides improving the delivery of services.

7. In a bid to give a further boost to infrastructure financing, the Finance Ministry has now allowed India Infrastructure Finance Company Ltd (IIFCL) to receive certain interest payments without them being subjected to tax deduction at source (TDS). The TDS exemption would be available only on interest payments other than ‘interest on securities’. It would basically be available on IIFCL’s loans and inter-corporate deposits.

8. The demand for commercial papers (CPs) is on the rise with mutual funds investing more in such short-term instruments. The total amount of outstanding CPs issued by companies rose by about 80 per cent to Rs 42,183 crore on October 31, 2007, against Rs 23,521 crore during the same time last year. “There is a latent demand from mutual funds for commercial papers and certificate of deposits as these are typically short-term instruments and they fit the overall maturity profile. The demand for CPs, however, falter when the mutual funds are hard pressed for cash particularly during the time of advanced tax outflows or tight liquidity conditions in the market.

9. The Reserve Bank of India is now rooting for environment conservation and fair social practices. In a circular issued today, the central bank has asked banks to put in place a suitable and appropriate plan of action towards helping the cause of ‘sustainable development’, with the approval of their boards. Spurred on by the worldwide momentum in sustainable development and the initiative being taken on various fronts by different organisations, including all major banks globally, Indian banks have been encouraged to actively look at corporate social responsibility, sustainable development and non-financial reporting.

10. Central Bank of India has launched a bouquet of products and services to cater to the needs of diverse strata of customers. Ms H.A. Daruwalla, Chairperson and Managing Director, Central Bank of India said that the new range of products and services would make Internet banking a reality. This would enable the bank to introduce a host of services and facilities like online booking of railway tickets and payment of utility bills, said a press release from the bank.

Tides of 20.12.2007

1. Financing costly professional courses is set to become cheaper for students from modest middle class homes. A Rs 4,000-crore plan is in the works that will enable the government to take over the interest burden on education loans during the 'moratorium period' — the time when students are pursuing academics and have not yet begun earning. As things stand, education loans come with a clause that allows students not to pay interest during their academic life. The interest for this period is added to the principal and payments begin once the student starts working. But now, according to a mega scheme being finalised by the Planning Commission, the Prime Minister's Office and the ministry for human resource development, the government will take over the interest burden for the moratorium period — estimated at around Rs 650 crore a year, assuming that five lakh students from families earning Rs 2.5 lakh a year or less avail of the loans. To qualify for the scheme, the student's household income must not exceed Rs 2.5 lakh per annum. The scheme will be open for professional and technical courses at the undergraduate or postgraduate levels.
2. The move for a Rs 4,000 crore plan to enable the government to take over the interest burden on education loans during the "moratorium period" — the time when students are pursuing academics and have not yet begun earning, is aimed not just to check brain drain from the country but also ensure that the government taps talented students who cannot otherwise afford professional studies because of high fees. According to government estimates, there are approximately 50 lakh students in professional courses of which about 5 lakh students come from families within the income range of Rs 2.5 lakh per year. In recent years, a large number of students, especially those pursuing MBA courses in India or going abroad for higher studies, have borrowed from banks. According to latest RBI data, there was a 51% rise in education loans, from Rs 9,962 crore at the end of March 2006 to over Rs 15,000 crore at the end of March this year. Tax sops too have played a role in accelerating loans and with the government allowing parents to avail of benefits, there could be a further spike in the coming year. Earlier, tax sops were available only if the student borrowed and paid the loan individually on completing his education.
3. As a first move towards making India the first country to adopt accounting standards on carbon emissions, the board of ICAI (The Institute of Chartered Accountants of India) has constituted a group which will come up with the draft guidelines before March 31, 2008. The group, set up on December 11, will be headed by ICAI accounting standards board chairman, Amarjit Chopra. When contacted, Chopra said the group will look into development of accounting and disclosure practices on emissions trading. The group will study the full scope and relevance of the carbon market from India’s point of view. ICAI president Sunil Talati said, the group will seek clarity on how corporates need to treat the income earned from carbon credits. "There is a view that carbon credits should be recognised for the purpose of accounting after they have been traded. The group is likely to seek views of corporates like SRF and Coal India."
4. The Indian carbon sector is getting hot. Venture capital firms are making a beeline to set up exclusive carbon funds for clean development projects (CDM) which have the potential to generate carbon credits. Kick-starting the process is IFCI Venture Capital Fund, which is planning to float Green India Venture Fund with a corpus of around euro 50 million, to begin with. The fund could be raised to euro 100 million once a partner is roped in. ‘‘We are currently looking out for a partner. We will raise the corpus of the fund, depending on the appetite for the carbon sector in India. One can size up the growth potential after the interest generated in greenhouse gas mitigation projects post-Bali,’’ said IFCI Venture Capital Fund managing director Ashok Kumar Choudhary. Green India Venture Fund is expected to be two-tiered, one for the domestic market and one, probably, for outside India. The fund will scout for viable CDM projects which could generate a good amount of carbon credits. Other financial institutions and banks are also said to be considering similar carbon funds, on the expectation that the carbon market will witness a huge upside in terms of valuations.

Tides of 19.12.2007

1. Muthoot Exchange Company which has obtained the Authorised Dealer Category II Licence from the RBI recently and plans to start its own money transfer operations. The company already undertakes close to six lakh money transfers valued at Rs 1,200 crore every year. Having obtained the Category II Licence enabling it not only to remit money from abroad to India but also f rom India to foreign countries. The transaction undertaken through the 400 branches of Muthoot Finance and other agencies such as hotels, resorts, travel operators and franchisees have enabled easy foreign exchange transactions to NRIs, students, tourists and business visitors.

2. The Prime Minister’s Council on Trade and Industry today discussed the adverse impact of rising rupee on exports and industry, besides the challenges of managing the surge in dollar inflows into the country. The Government was looking at measures to counter the impact of the rising rupee, particularly on labour-intensive sectors.

3. A Watson Wyatt study on India’s bancassurance sector has revealed that bancassurance would generate about 35 per cent of the private insurers’ premium income by 2008.
The study entitled ‘India Bancassurance Benchmarking Study 2006-07’, which Watson Wyatt claims to the first of its kind on the Indian market and part of an Asia-wide analysis has focused on bancassurance distribution.

4. Tata AIG Life Insurance Company Ltd (Tata AIG Life) has launched ‘United Child Solutions’ – a range of insurance offerings for the customers of United Bank of India. It is available in three variants.Educare 18 is a graduate plan, which gives the child lumpsum benefits at age 18 to provide for his graduation expenses. Educare 21 is a post-graduate plan, which gives the child lumpsum benefits at age 21 for his post-graduate expenses. Career Builder Plan provides a lump sum at 18, 21, 24 and 27 to take care of expenses at various critical milestones. In these three plans, a payer benefit rider can be attached to ensure the child’s policy continues in case of untimely death of the paying parent.

5. The odds were for a 25 bps cut, but, when the Federal Open Market Committee (FOMC), which sets the benchmark Fed Funds and discount rates, did just that, the stock market was very disappointed. The Dow Jones Industrial Average fell more than 200 points. The much-read and dissected post-meeting statement conceded inflation risk is diminishing and growth risk increasing. It repeated the mantra of future rate decisions being guided by incoming data.

6. Mr R. Seetharaman, CEO, Doha Bank, and Chairman, Doha Brokerage & Financial Services (DBFS) Ltd, has won an American award for his contribution to promoting US-Qatari trade and financial ties.

7. The Finance Ministry has relaxed encashment norms for joint holder type term deposits under the tax-saving ‘bank term deposit scheme’ framed last year. This scheme was developed to encourage flow of long-term deposits into the banking system.In the event of the death of the first holder, the Central Board of Direct Taxes (CBDT) has now allowed the joint holder to encash the term deposit before its maturity. Hitherto, the scheme did not permit any encashment of term deposits before the expiry of five years.

8. I-flex® solutions has forayed into the private banking and wealth management space with the launch of FLEXCUBE® Private Banking Suite. The FLEXCUBE Private Banking Suite provides financial institutions and their customers a unified view of customer wealth across their portfolios, including the ability to consolidate the holdings of a family. “The FLEXCUBE Private Banking Suite empowers institutions to shift their approach from a “one size fits all” to a personalised model. It will also help them reduce costs by giving them the ability to retire standalone wealth management solutions.

9. The Reserve Bank of India has detected and plugged a loophole in FEMA (Foreign Exchange Management Act) regulations which some Indian companies were exploiting to raise funds abroad and bring to India.The regulations are related to repayment of advances that are paid by overseas investors to Indian companies for allotment of shares under automatic FDI route. Under these regulations, while Indian companies are allowed to receive advance payment from NRIs and overseas investors, no time limit was stipulated for issue of shares or refund of the amount.

Tides of 14.12.2007

1. There has been a 63 per cent increase in external commercial borrowings made by Indian companies during the first seven months of this fiscal. About 384 companies have borrowed about $19 billion during the seven months ended October 2007, according to information released by the Reserve Bank of India.During the whole of the last fiscal, about 921 companies borrowed money worth about $25 billion abroad. This year the heavy borrowing comes despite steps taken by the Reserve Bank of India to limit access to external commercial borrowings to certain sectors and also tighten it generally by imposing a cap on the interest rates that can be paid on such borrowings.

2. The forex reserves increased by $33 million to $273.553 billion for the week ended December 7, due to currency revaluation. Compared to the earlier weeks the increase in this week is slightly subdued. The reserves went up $1.239 billion to $273.520 billion for the week ended November 30. In the week prior to that as well, forex reserves had increased by over $1 billion.

3. International ratings agency, Fitch Ratings, today upgraded Axis Bank’s National Long-term rating to ‘AAA (ind)’ from ‘AA+(ind)’. Fitch has also upgraded the bank’s individual rating to ‘C’ from ‘C/D’ and Support rating to ‘3’ from ‘4’. The ratings of debt programmes have also been upgraded.

4. Bank loans to equity-oriented mutual funds will now form part of the bank’s total capital market exposure, said the Reserve Bank of India in a note issued today.
In its note the RBI said, “Banks are advised to be judicious in extending finance to mutual funds and grant loans and advances to mutual funds only to meet their temporary liquidity needs for the purpose of repurchase/redemption of units.”

6. CITI BANK-The bank generated in 2001-02 business worth Rs 15.7 crore per employee. But the bank has been able to generate only Rs 13.6 crore in fiscal 2006-07, down roughly 13 per cent. On the parameter of profit per employee, another key element, the figure for the latest year stands at Rs 17.33 lakh as against Rs 22.14 lakh, its best in 2001-02.

7. As many as three consortia have submitted their financial bids for buying 26 per cent stake in the country’s oldest financial institution, IFCI Ltd. The last date for submission of financial bids was December 14.

8. Asian Development Bank (ADB) would provide India with up to $500 million in loans designed to promote public-private partnerships (PPP) between the Government and the private sector in order to ramp up investments in infrastructure.The funds would be provided to government-owned India Infrastructure Finance Company Ltd (IIFCL) in multiple tranches over the next four years. It is estimated that the money would help catalyse private sector investments in infrastructure of up to $3.5 billion.IIFCL would provide funds at commercial terms with over 20-year maturity for infrastructure projects, which is not being currently provided by the market.

9. Calyon Bank, Mumbai, belonging to the Credit Agricole Group of France, has signed a `White Label' agreement with Karnataka Bank Ltd, to provide risk management services. This agreement will enable the bank to provide hedging products like derivatives to its customers.

10. Corporation Bank will now offer a ‘financial health check-up’ for its customers. The bank is offering this service at two of its centres, Mumbai and Bangalore. Customers can get their finance portfolio examined, find out if it is a healthy mix and get advice on making investments.
The bank plans to introduce this service at all its other important centres.

11. UTI Mutual Fund and SBI Mutual Fund have been given the mandate to manage the funds mobilised under the life insurance services provided through the post offices network.
Such services are currently administered by the Postal Department under the banner of Postal Life Insurance (PLI) and Rural Postal Life Insurance (RPLI) schemes.

12. Small Industries Development Bank of India (SIDBI) would within the next two months approach the Reserve Bank of India for approval to set up an asset reconstruction company (ARC) targeted at the small and medium enterprises (SME) sector. It is in talks with many public sector banks including Punjab National Bank, Canara Bank, United Bank of India to set up an ARC for the non-performing loans in the SME sector.

13. Vijaya Bank plans to raise Rs 500 crore this year through issue of the perpetual bond issues. It is raising the resources to strengthen the tier-one capital. Perpetual bond issues are treated as tier-one capital under the Reserve Bank of India guidelines. Vijaya Bank’s move to tap perpetual bonds was partly due to the fact that it has little room to raise equity resources. This was because current regulations allow government equity in public sector banks at a minimum of 51 per cent. Government stake in Vijaya Bank’s paid-up equity of Rs 433.52 crore is currently 53.87 per cent.

Tides of 5.12.2007

1. Reliance Money has announced a distribution tie-up with Kerala-based Muthoot Group, a non banking finance company, for retailing its pure gold coins.
2. There is huge uncertainty on the growth prospects of Indian IT industry over the next four to five years if the rupee appreciation goes unabated, according to Mr Kiran Karnik, President, Nasscom.
3. Premature liberalisation of money and bond markets can lead to large and volatile capital inflows, intensifying complications for macroeconomic and monetary management, said Dr Rakesh Mohan, Deputy Governor, Reserve Bank of India.
4. Private sector projects in India supported by the International Finance Corporation (IFC) have a ‘high development outcome ratings’ than in China. The success rate in India — per cent of tracked companies with successful development results ratings — was 72 per cent compared with 43 per cent in China.
5. Centurion Bank of Punjab has launched ‘Post Box Service’ in the two countries for NRI customers who can use the service to send documents, statement and cheque requisition, account instructions, electronic banking application form, mandate application form, change of address form, PIN re-generation, debit card re-issue or any other account operating instructions including FD opening or renewal instruction.
6. Karur Vysya Bank (KVB) has tied up with IDBI Capital Market Services Ltd to provide online trading facility on both BSE and NSE for its demat account holders. These transactions could be put through idbipaisabuilder.in of IDBI Capital and the service would be available from March 1, 2008.
7. The Securities and Exchange Board of India has relaxed guidelines for issue of corporate bonds through the public issue route. The new norms permit companies to come out with bonds with below investment grade popularly known as “junk” bonds. A SEBI circular issued today said that for developing a market for debt instruments, the regulator has decided to allow issuances of bonds below investment grade to suit the risk as well as returns appetite of investors.SEBI has reasoned that as of now corporates were not allowed to issue bonds below investment grade, but in a disclosure-based regime, it should be left to the investor.
8. It is obvious that Indian policymakers can do little about containing the magnitude of the liquidity squeeze that has been the by-product of the sub-prime saga in the US. The RBI will have to factor in this reduced availability of external credit in its plans, if any, to tighten the credit delivery system.
9. The forex reserves went up by $1.133 billion to $272.281 billion for the week ended November 23 following constant intervention by the Reserve Bank of India in the market.
10. Banks may no longer be able to resort to strong-arm techniques for loan recovery. The draft guidelines issued by the Reserve Bank of India suggest that banks should use the forum of Lok Adalat for the recovery of personal loans, credit card loans or housing loans of less than Rs 10 lakh. Recently, some banks have been in the spotlight for alleged harassment of their customers by recovery agents.

Tides of 30.11.2007

1. Indian workers in other countries will soon be able to send money, less than $100, to their family back home using a mobile phone. Bharti Airtel and Western Union have decided to jointly develop and pilot a mobile money transfer service in the country. The move is part of a global initiative by the GSM Association wherein 35 mobile operators spread across 100 countries have taken a commitment to enable the world’s 200 million international migrant workers to easily and securely send remittances to their dependents.

2. Short-term hedging, particularly those ranging from 12 months to within three years, are the most frequently used by corporates and there are hardly any takers for the long-term hedging contracts in India, as per a survey report.

3. The Insurance Regulatory and Development Authority (IRDA) plans to soon come out with separate guidelines for health insurance players, aimed at comprehensive medical insurance coverage and redressal of consumer grievances.“To handle a plethora of issues relating to health insurance with focussed attention, a separate health unit has been set up in the Authority; specialised resources have been inducted to strengthen the role of IRDA in the development and better conduct of health insurance business,” Mr C.S. Rao, Chairman of IRDA, said at a conference organised by FICCI.

4. Faced with a deteriorating US dollar, public sector banks (PSB) are beginning to reduce their cash and cash equivalent balances with the American banks and shifting to the Euro.

5. Mr K.V. Kamath, Chief Executive Officer of ICICI Bank, has been named the Businessman of the Year 2007 by Forbes Asia magazine. The 60-year-old is the third Indian in four years after Mr Nandan Nilekani of Infosys.

6. Reliance Industries Ltd plans to investment Rs 17,000 crore in oil and gas exploration over the next few years.

7. Credit Analysis & Research Limited (CARE) and United Bank of India have signed a MoU for facilitating Bank Facility Ratings to borrowers of United Bank of India from CARE for the purpose of Basel.

8. ICICI Bank is talking to the West Bengal government to involve with the University of Calcutta for starting a banking and insurance course.

9. Bank of India (BoI), along with its partners Union Bank of India and Dai-Ichi Insurance, is likely to infuse around Rs 500 crore in the next 6-7 years in a proposed life insurance joint venture.

10. The Foreign Exchange Services (FES) division of Centurion Bank of Punjab Limited (CBoP) is contemplating forging tie ups with travel companies like Kuoni Travel Group and Cox & Kings for launching various travel products. Aimed at offering convenience in payments and credit to travellers, the FES division plans to launch a slew of products including holiday loans and travel-oriented cards. The move is aimed at cashing in on the growing outbound tourism market in India. The number of Indians travelling abroad is set to reach 50 million by 2010.

Tides of 24.11.2007

1. Import power plants, facilitate corporate borrowings, reduce dollar liabilities, and don’t squander away foreign exchange (forex) reserves. These are among the suggestions that Mr N. A. Mujumdar makes in a recent book titled ‘Inclusive Growth: Development Perspectives in Indian Economy’ ( www.academicfoundation.com).

2. The country’s forex reserves increased by $967 million for the week to touch $271.148 billion for the week ended November 16, as per figures released by the RBI. The forex reserves had increased by $3.663 billion to touch $270.181 billion in the previous week. Forex reserves have been rising for over two months now. The buying of dollars by the RBI to keep the rupee from appreciating suddenly has also helped augment the forex kitty.

3. ICRA Ltd and the city-headquartered United Bank of India have signed a memorandum of understanding to rate the bank’s loans and its other exposures under the standardised approach of RBI’s new capital adequacy framework for Basel-II. According to statement by the company, its ratings for the standardised approach would be carried out under its ‘Line of Credit” rating service, and would enable UBI to assess the new risk weights applicable to its borr owers under Basel-II. The risk weights would be linked to the various rating categories and would be as per RBI’s relevant guidelines. ICRA will assist borrowers of the bank to obtain ratings and offer special terms to the clients of the banks covered by the MoU. An ICRA rating for the bank’s client will enable faster loan processing and competitive credit terms from the bank.

4. The merger of Centurion Bank of Punjab (CBP) with the Kerala-based Lord Krishna Bank (LKB) would be completed by March next.

5. Effective management, optimal use of capital, and implementation of sound human resource practices are the key challenges facing the Indian banking industry, according to Mr. H N Sinor, Chief Executive, Indian Banks’ Association (IBA). These must be addressed in order to prepare Indian banking for adopting global best practices. “Managing capital risk is particularly important in order to maximise returns,” said Mr Sinor, in the context of two-day Bankers’ Conference (BANCON) in Mumbai, starting November 26.

6. The Life Insurance Corporation of India has formed a separate company called “LIC Pension Fund Ltd” to manage pension funds. This is the first company incorporated in India to manage pension funds under the New Pension System (NPS).

7. Banks may have access to a new means of loan recovery if the recommendations of a working group appointed by the Indian Banks’ Association are accepted by the Reserve Bank of India and the Government.The IBA’s suggestions include setting up of fast track courts on the lines of a ‘Lok Adalat’ to facilitate the speedy recovery of loans and repossession of property within the existing legal framework.“What is missing in our country is the presence of some special courts, which can deal with such cases expeditiously. There is a need to create such infrastructure so that there is some legal recourse for such problems,” said Mr H. N. Sinor, Chief Executive, Indian Banks’ Association.The working group will submit its recommendations in the next 15 days.

8. Dhanalakshmi Bank Ltd is contemplating the rights issue route to enhance its capital base.

9. ICICI Bank has joined hands with Johnson & Johnson, world’s largest healthcare product manufacturer and had offered a free blood glucose monitoring test for its customers at Vadakara branch.

10. Indian corporates have raised around $11.9 billion through overseas borrowing in the first five months of 2007-08, according to the Reserve Bank of India (RBI) data on external commercial borrowings.

Tides of 21.11.2007

1. The global economic and financial environment continues to deteriorate. The (sub?) prime concern is the US. A new study estimates credit will contract $2 trillion as financial institutions repair balance sheets. That puts a lot of new lending on hold, which means less spending (the American economy is credit-driven, if not anything else) and considerably increases the odds of a recession.
2. State Bank of India has tied up with its wholly owned subsidiary SBICAP Securities Ltd for providing e-trading services to its customers, the bank said in a notice to the BSE today. SBI already provides online trading through ‘eZ-trade@sbi, in a tie-up with Motilal Oswal Securities Ltd. It is a three-in-one account where the demat account and the savings or current account is with SBI and the trading account is with Motilal Oswal.
3. ICICI Prudential AMC has entered into a strategic partnership with Central Bank of India for distribution of its mutual fund schemes to further strengthen its distribution reach. Central Bank of India will now be distributing ICICI Prudential Mutual Fund products to its customers across India. This alliance between ICICI Prudential AMC and Central Bank of India will be a step further towards reaching retail investors and providing them with investment solutions to facilitate their inclusive growth in the process of wealth creation.
4. Syndicate Bank has launched an online loan application facility that does away with the branch as an intermediary for generating loan queries. The bank has launched this facility for housing loans, educational loans, Rs 10 lakh and above loans for SME sector and Rs 2 lakh and above loans for self-employed, professionals and traders.
5. State Bank of India Staff Association (SBISA) will oppose the merger of associate banks with State Bank of India, despite having agreed to the merger of Bank of Saurashtra with the parent bank.
6. The US economy may fall into a recession if the Fed takes counter-measures, such as tightening credit.
7. The Indian banking sector is undergoing rapid transformation and is expected to change and evolve considerably in the near future.Mainly two factors are driving these changes. One, Indian banks are gearing up to face the post-2009 challenges, when they will be exposed to increased foreign competition. From April 2009, foreign banks will be allowed to own up to 74 per cent stake in Indian private banks. The foreign banks with large capital, advanced technology, best international practices and skilled personnel are expected to pose competitive challenges to Indian banks. Two, several Indian banks are expanding overseas as Indian companies are going global and India is attracting more foreign capital. Banks have to match their services to global standards.
8. The Hinduja Group is planning to enter the financial services space in India with a bang. Apart from plans to set up life insurance, non-life insurance and asset management companies, the group is also working towards areas such as wealth management, broking and portfolio management services. The group has finalised its partners for setting up a holding company, which will have three business arms offering wealth management, broking and portfolio management services. In a three-way agreement, IndusInd Bank along with AMAS Bank (a private banking entity owned by Hinduja Group in Switzerland) will own 51 per cent stake while the foreign partner will own the remaining 49 per cent in the holding company. IndusInd Bank officials, however, refused to disclose the name of the foreign partner.
9. Life Insurance Corporation of India (LIC) is in another legal soup, this time on overcharging of fees for assignment of insurance policies. LIC is already facing two legal suits over not allowing assignments for trading and lending in ealrier insurance policies. The petitioner in the present case is Dravia Finance, an NBFC owned by Ketan B Mehta, the person who won both the ealrier cases in the Bombay High Court against LIC over the same issue. Assignment or transfer is a method by which a policyholder can transfer his rights and benefits in the life insurance policy to another entity. The assignee entity can be a family member, relative, friend, a lending institution like a bank or a non-banking finance company (NBFC). The case has been filed in the Bombay High Court on grounds that Section 38 of the Insurance Act does not permit any insurer to exceed a fee of Re 1 for an assignment.
10. Indian Bank is gearing up to further its financial inclusion initiatives and increase penetration into rural areas. The public sector bank, the first one to implement a financial inclusion project (which involves instilling the banking habit among the lesser privileged of urban and rural India), expects to open five lakh “no-frills accounts” to encourage rural savings and business ventures by the end of this financial year. It has already opened over 4.5 lakh such accounts.

Tides of 17.11.2007

1. Corporation Bank on Friday launched two maiden services for its customers — ‘Financial Health Check-Up’ and ‘Invest Shoppe’ — in Mangalore. While the financial health check-up service facilitates the customer to get his/her finance portfolio examined from the point of having a healthy mix and to get advice on risk-reward portfolio sharing, Invest Shoppe provides a host of financial services such as investments in share market, sale of mutual funds and gold coins and tax collection under one roof.

2. Inflation is the result of synchronised currency debasement by central bankers the world over. The markets understand this better and have been sending the right message through rising gold prices, particularly during the last few years. The RBI woul d do well to read the signals and take appropriate measures, says SHANMUGANATHAN in Business line.

3. The country’s forex kitty swelled by $3.663 billion to $270.181 billion for the week ended November 9. The reserves had increased by $4.068 billion to touch $266.518 billion for the week ended November 2, 2007.

4. Resident Indians may soon have a new instrument to hedge themselves against exchange rate fluctuations. A panel appointed by the Reserve Bank of India has recommended trading in currency futures on dedicated exchanges.A currency future is an exchange-traded derivative that allows investors to sell or buy a currency at a fixed price on a future date. To begin with, futures trading would be allowed only in rupee-dollar contracts. The Indian rupee has appreciated by around 11 per cent against the dollar this calendar year.

5. United Bank of India proposes to shortly launch online trading of shares and cash management services as part of its efforts to boost non-interest income. It has achieved more than 65 per cent growth in non-interest income in the first half and it wants to continue with it in the second half also, particularly when the net interest margin is under pressure.

6. Central Bank of India is poised to regain its position and market share among the public sector banks (PSBs) as at the time of nationalisation. Currently in 7th place, the bank is working to secure a market share of 4.25 percent by the end of this fiscal.

7. Public sector banks saw a slowing down of profits in the second quarter. Profit growth was at about 23 per cent compared to over 47 per cent in the first quarter. And a few banks faced difficulty in this quarter with profits actually dipping compared to last year. State Bank of Bikaner and Jaipur was one of them.

8. The Finance Minister, Mr P. Chidambaram, met exporters from the textiles, clothing and handicrafts sectors on Thursday, who have been hit by the strengthening rupee and hardening interest rates over the last several months. The meeting was also attended by chiefs of a number of public sector banks and institutions.According to industry players, the Minister assured them that the Government would work out “concrete measures” to help them tide over the crisis. The Export Promotion Council for Handicrafts Executive Director, Mr Rakesh Kumar, told presspersons after the meeting that the Minister was “very positive” and had assured them that the Government would come out with steps to help the exporting community.

9. The Reserve Bank of India has launched a financial education Web site.
The Web site is aimed at teaching the basics of banking, finance and central banking to children of different age groups. It will soon also have information that would be useful to other target groups such as women, rural and urban poor, defence personnel and senior citizens.

10. IndusInd Bank today signed up with Cholamandalam MS General Insurance Company to sell the insurer’s products through its branches.

Tides of 11.11.2007

1. Canada’s largest public pension fund, Caisse de Depot et Placement du Quebec (CDPQ), is eyeing investments in the booming Indian real estate sector, with plans to invest up to $1.7 billion (US dollars) over the next five years.

2. The forex reserves increased by $4.068 billion to touch $266.518 billion for the week ended November 2, 2007, according to the Reserve Bank of India’s Weekly Statistical Supplement.

3. The excess supply of funds is expected to continue, despite the recent measures announced by the Reserve Bank of India to mop up the surplus, say analysts and bank treasury managers, even after the 50 basis points hike in cash reserve ratio.

4. Public sector entities are expected to swamp the domestic financial markets with bonds worth Rs 9,000 crore over the next four months.Public sector banks (PSBs) alone are expected to raise Rs 5,500 crore during the period. Banks in the fray to raise resources through bonds include Bank of India, State Bank of India, Union Bank of India, Vijaya Bank, UCO Bank and Dena Bank. In addition, transmission utility, PowerGrid Corporation of India Ltd, is expected to raise Rs 3,300 crore during the current financial year. Banks are raising the resources to beef up their respective Tier II capital, for propelling their asset growth and partly for offsetting the impact on capital standards after migrating to Basel II next financial year.

5.LIC Housing Finance may look at the possibility of issuing equity shares through preferential allotment to promoters or investors. This is in addition to the option of issuing equity shares on Qualified Institutional Placement basis.

6. The Reserve Bank of India has further relaxed the remittance limit to $300,000 from $100,000 to importers of rough diamonds provided import bills and documents are directly procured from overseas suppliers.

7. The Government has elevated seven General Managers from various public sector banks to the post of Executive directors, filling up top level vacancies in certain banks.

8. The Reserve Bank of India has constituted an Internal Working Group under the Chairmanship of Mr V.S. Das, Executive Director, Reserve Bank of India, in order to examine the recommendations of the Radhakrishna Expert Group on Agricultural Indebtedness. The report submitted by the committee addresses issues relating to creation of credit absorption capacities, need for risk mitigation practices, introduction of cyclical credit system, dispute resolution mechanisms and setting up of a debt redemption fund.

9. Appreciation of rupee against the dollar has thrown a new M&A opportunity for India Inc, which wants to reach out to the world by acquiring concerns on a global scale, according to the industry chamber, Assocham.

10. The Reserve Bank of India has advised banks to ensure that promoters of projects bring in their equity capital before the debt is advanced. RBI has also asked banks also to ensure that the stipulated debt equity ratio is maintained throughout the life of the debt.
In a circular to banks, the central bank said normally, the promoters either bring their entire contribution upfront before the bank starts disbursing its commitment, or they bring certain percentage of their equity (40–50 per cent) upfront while the balance is brought in stages.

Tides of 3.11.2007

1. Forex reserves were up by $1.307 billion to touch $262.450 billion, for the week ended October 26, according to figures released by the Reserve Bank of India. The rise was mainly on account of currency revaluation. The gain was lower than the previous week’s rise of $4.457 billion, when the forex reserves touched $ 261.143 billion. Forex reserves have been rising for over two months now. It has also been aided by the Reserve Bank of India buying dollars to keep the rupee from appreciating.

2. Corporate India may be reporting good profit numbers. But lending money didn’t make much for public sector banks as a group in the second quarter ended September 30. Their net interest income (or interest earned less interest expense) did not grow at all in this quarter. Yet profits grew 23 per cent for a set of 21 public sector banks for which the figures are available.It was liquidation of some of their equity investments, cashing in on the stock market boom, some recoveries of old bad debts, some treasury gains from the bond and forex markets and some other non-interest income that rescued public sector banks this quarter. Other income grew 45 per cent for these banks contributing almost the entire profits for this quarter.

3. Dhanalakshmi Bank has posted a net profit of Rs 13.50 crore during the half year ended September 30 as compared to Rs 7.02 crore for the previous corresponding period, registering a growth of 92.31 per cent. The operating profit increased from Rs 16.65 crore to Rs 25.04 crore. The total income increased from Rs128.08 crore to Rs170.73 crore. The total deposits increased from Rs 2,643 crore to Rs 3,247 crore , while total advances moved up from Rs 1,776 crore to Rs 1,978 crore .

4. Birla Sun Life Insurance has registered 94 per cent growth in new business premium at Rs 585 crore in the first six months of the current fiscal.The company would grow faster than the life insurance industry this fiscal. It hopes to end the year with a growth of 150-170 per cent in new business premium. The industry is expected to end the fiscal with a growth rate of 50-60 per cent.

5. For the first time, the market share of Life Insurance Corporation of India, the first year premium income fell below 50 per cent in September to 49 per cent, compared with 79.6 per cent a year ago, and 74.5 per cent in August, according to the data compiled by Insurance Regulatory and Development Authority. The sharp fall in market share was on account of a 47.4 per cent year-on-year decline in LIC’s first year premium income to Rs 2,555 crore in September.

6. The World Bank has signed three loan agreements with India for total assistance of $944 million towards three projects in the critical areas of rural finance, vocational training and restoration of water bodies.The loan agreements are for strengthening of rural credit cooperatives involving a loan assistance of $600 million, vocational education training project with assistance of $280 million and additional financing for the Karnataka Community-based Tank Management project involving $64 million loan and credit.

7. To tap the transport and energy financing market, German bank NORD/LB plans to set up an office in India shortly. The representative office, to come up in Mumbai, is expected to commence operations in January 2008.

8. Central Bank of India plans to launch the reverse mortgage scheme for the senior citizens. “We are ready to launch the product soon, but we are just waiting for the taxation issues to get resolved,” said Ms H. A. Daruwalla, its Chairperson and Managing Director.Reverse mortgage is a stream of loan payments against the homeowner’s net equity stake in the property. In this scheme, the lending institution gives the borrower a fixed sum of money on monthly basis. The borrower can also choose to take a lump sum payment.

9. Karur Vysya Bank has introduced yet another variant of its multi-city current account product – KVB Economy.The other variants include KVB Standard, KVB Classic, KVB Premium, KVB Gold and KVB Platinum. The major difference in opting for a particular variant of this product is in the maintenance of the minimum average balance. KVB Economy, according to a release, would require current account holders to maintain a minimum average balance of Rs 10,000.

10. Bank of Baroda is planning to raise about Rs 2,500-3,000 crore by January to meet capital requirements under Basel II norms and for further growth in business. The bank is yet to decide on whether the capital would be tier-I or tier- II.

Tides of 1.11.2007

1. The Extraordinary General Meeting (EGM) of shareholders of Karnataka Bank on Wednesday passed a unanimous resolution giving consent to the issue of 63.73 lakh equity shares of Rs 10 each on preferential basis.

2. Canara Bank rebalanced its credit portfolio and shifted focus to priority sector areas during the second quarter of the current financial year.
It has contained the growth of retail advances. Retail advances grew only 5.91 per cent on year-on-year basis to Rs 17,187 crore. Priority sector advances grew 25.08 per cent during the same period to Rs 38,920 crore.The portfolio moderation notwithstanding, the yield on advances improved to 10.23 per cent from 8.95 per cent. The improved yield was partly achieved through repricing of advances.

3. Bank of Baroda is planning to raise about Rs 2,500-3,000 crore by January to meet capital requirements under Basel II norms and for further growth in business. The bank is yet to decide on whether the capital would be tier-I or tier- II.

4. Backed by a growth in other income, Centurion Bank of Punjab has posted a 33.76 per cent in net profit at Rs 41.64 crore for the quarter ended September 30, 2007, against Rs 31.13 crore in the corresponding quarter of the previous year.

5. ICICI Bank Eurasia LLC, a subsidiary of ICICI Bank, has opened a branch in St Petersburg. The branch will offer a range of banking and financial services.This is the 5th branch that ICICI Bank has opened in Russia.

6. Standard Chartered Bank plans to ramp up its activities in the microfinance space in the coming months. It will increase its exposure as well as the number of microfinance institutions (MFI) partners. Microfinance is also a commercially attractive proposition. The aim is to increase the exposure from current level of close to Rs 100 crore to about Rs 500 crore by December 2008.

7. The economy continues to do well with GDP registering a growth of 9.3 per cent in the first quarter of this fiscal. Thoughthis is lower than the 9.6 per cent recorded in the same period last year.

8. The most significant announcement by the RBI Governor, Dr Y. V. Reddy, is the hiking of CRR by 50 basis points. The Bank rate, the repo rate and the reverse repo rate have thankfully been kept unchanged.

9. Karur Vysya Bank has registered a net profit of Rs 43.41 crore for the quarter ended September 2007 against Rs 42.56 crore during the corresponding quarter of the pervious fiscal.

10. Karnataka Bank Ltd has recorded a net profit of Rs 60.14 crore in the second quarter of the current financial year as against Rs 59.61 crore in the corresponding period of the previous year, registering a growth of 0.89 per cent.

TIDES OF 20.10.2007

1. The forex kitty swelled by $5.356 billion to $256.686 billion for the week ended October 12, backed by sustained intervention by the Reserve Bank of India in the forex market.The reserves had gone up by $3.568 billion.

2. ICICI Bank posted a net profit of Rs 1,002.6 crore for the quarter ended September 30, 2007, up 33 per cent from Rs 755.01 crore in the corresponding quarter last year on the back of a 33 per cent growth in advances.

3. As part of its efforts to penetrate the semi-urban and rural areas of Gujarat, SBI Life Insurance, a joint venture between State Bank of India and Cardif-A BNP Paribas Company, on Friday announced a strategic bancassurance tie-up with the Valsad District Co-operative Bank Ltd (VDCB).The tie-up is a referral arrangement wherein SBI Life products will be available throughout all the 43 branches of VDCB.

4. Bank of Rajasthan, with a pre-dominantly North Indian focus, seeks to increase its presence in the Southern States with at least 10 new branches this fiscal.

5. Andhra Bank has reduced interest rates on housing, personal, vehicle loans and on advances to transport and agricultural sector during the festival season.

6. State Bank of Mysore (SBM) intends to raise Tier II capital through bond issues of up to Rs 400 crore during the year to support its asset growth. In addition, the bank is also planning a follow-on public issue.

7. The board of directors of ICICI Bank has approved the establishment of ICICI Foundation for inclusive growth, subject to the required approvals. The Foundation would integrate, consolidate and scale up the group’s existing initiatives in the area of philanthropy and development.

8. UCO Bank has announced festival discount on its home loans under UCO Shelter. For all new housing loans up to Rs 20 lakh, the bank will charge with immediate effect 0.25 per cent less than the normal rates.

9. HSBC has launched an enhanced version of the ‘HSBC Premier’ service for its mass affluent customers.The new HSBC Premier offers cross-border banking services where customers can take their accounts, credit history and banking relationships with them wherever they choose to live and work- subject of course to local regulations. It also offers emergency encashment facilities across any Premier branch or centre, a single global emergency number which you can access anywhere in the world and swipe-based Internet Protocol phones which connects a customer to his home country call centre.Customers will also have special benefits on their HSBC Premier Master Card credit card.

10. Punjab & Sind Bank plans to soon raise a sum of Rs 1,000 crore through Certificate of Deposit, which is a debt instrument. ICRA has assigned A1+ rating .

Tides of 14.10.2007

1. The country’s forex kitty swelled by $3.568 billion for the week ended October 5, on the back of continuous intervention by the Reserve Bank of India in the forex market. The forex reserves had surged by a whopping $11.871 billion to touch $247.762 billion for the week ended September 28, 2007, said the Weekly Statistical Supplement from RBI.

2. HDFC Bank saw a rise of 33.4 per cent in its total customer assets (including advances, corporate debentures, and investments in securitised paper) to Rs 65,812 crore (Rs 49,326 crore) in the quarter ended September 30, 2007.
The bank is planning to maintain its share of low-cost deposits at 50 per cent this fiscal.

3. A healthy interest income from higher advances helped HDFC Bank post a 40 per cent increase in net profit for the quarter ended September 2007. It was also able to maintain its net interest margin at four per cent (3.8 per cent last year). The net profit rose to Rs 368.48 crore from Rs 262.94 crore in the corresponding quarter last year.

4. Asian Development Bank (ADB) sees scope for continued increase in its financial assistance to India in the coming years.

5. For the first time ever, bank unions are to submit a common charter of demands to the Indian Banks’ Association (IBA) for the next wage revision settlement.With the existing settlement, arrived about five years back, set to lapse on October 31, the nine bank unions are to meet in Mumbai on October 18 to finalise the charter of demands. The meeting would he held under the aegis of the United Forum of Bank Unions (UFBU).

6. Life Insurance Corporation of India (LIC) has said that it would complete the process of digitisation of all the policies in the next three years.

7. When the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) 2002, was brought in, the idea was to recover the Rs 75,000-odd crore of bank NPAs, half of which were of the large companies. But today, while the large borrowers “negotiate” for waivers and rebated repayments, banks seize the assets of micro units, alleges the newly formed All India Micro, Agro, Rural & Small Industries Association.

8. The Basel Committee on Banking Supervision is confident that its ongoing initiatives would help address the types of issues and risks arising from the recent financial market turbulence. In a statement issued at the conclusion of its 8-9 October meeting, the committee has said that it continues to assess the supervisory and risk management issues arising from recent financial market developments and, where appropriate, would consider supervisory responses that are pragmatic and proportionate.

9. Resident individuals can now book forward contracts based on self-declaration, without producing underlying documents up to a limit of $1,00,000.

10. The net profit of South Indian Bank dropped 14% in the second quarter of this fiscal ended September 30. However if the extraordinary gains made in the corresponding quarter of the previous year are removed, then the profit has grown by 90 per cent to Rs 35.69 crore (Rs 18.81 crore) during this second quarter. The extraordinary gains made in the previous year were from the sale of the bank’s stake in Bharat Overseas Bank.

Tides of 10.10.2007

1. Indian IT services firms are expected to post a robust growth for the second quarter (Q2), despite currency volatility. The earnings momentum as a result is likely to be sustained, after a slip in Q1 this year. Industry analysts expect Tier I companies to outperform their own projections to post 7-10 per cent quarter-on-quarter revenue growth driven by strong volumes for the seasonally strongest quarter. Profits are expected to grow 3-6 per cent sequentially.

2. Birla Sun Life Insurance has received capital infusion of Rs 100 crore from its promoters taking it to a total of Rs 877 crore.

3. Worried about forgetting the due date of your life insurance premium or having to waste time standing in line to renew it? Life insurers are addressing this issue by introducing alternative modes of payment. According to industry estimates, around 25 per cent of the policies each year lapse due to non-payment of premiums on time.While most of the companies in the life insurance business offer online payment service or electronic clearance services, ING Vysya Life Insurance and Max New York Life (MNYL) have gone a step ahead. Both companies have launched premium pay service through SMS, and the latter has also tied up with two banks to offer premium pay services through ATMs.

4. A consortium of five banks, the Andhra Pradesh Government and the National Bank for Agriculture and Rural Development (Nabard), has set up the Andhra Pradesh Bankers’ Institute of Rural and Entrepreneurial Development.
The Institute, a first of its kind in the country, will provide support to rural youth in equipping themselves with skills, especially in sustainable technologies and employment generating sectors. The consortium members are Andhra Bank, Canara Bank, Indian Bank, Indian Overseas Bank and State Bank of Hyderabad. The State Government will provide 17 acres land on the outskirts of the city to set up the facility. Till the permanent facilities come up, the Institute will function out of the Andhra Pradesh Academy for Rural Development.

5. The Government has given an in-principle nod for State Bank of India (SBI) to raise about Rs 10,000 crore of capital.

6. State Bank of Patiala (SBP) has started offering online education loans facility under the SBP-Gyan Jyoti Scheme. The applicant (student, parent/guardian) can now apply online for education loans on a link provided in bank’s Web site.

7. The Finance Minister, Mr P. Chidambaram, on Tuesday asserted that the Government would implement the recommendations of the Rangarajan to achieve the goal of financial inclusion among the economically disadvantaged. The final report of the committee is yet to be submitted to the Government.

8. State Bank of India has set a target for increasing its Current Account and Savings Account (CASA) deposit base by 300 basis points this year. The bank is also focusing on small and medium enterprises (SMEs) segment.

9. Tamilnad Mercantile Bank has introduced a new deposit scheme,‘TMB 222 Days Deposit’. The scheme offers higher interest rate for this particular tenor and senior citizens would earn interest rate of 9.25 per cent.

10. Having got the Reserve Bank’s approval and the shareholders’ nod for raising capital through issue of 68 lakh equity shares of Rs 10 each at a premium on preferential basis, the Kumbakonam-headquartered City Union Bank today went ahead with the allotment.The bank has allotted 3 lakh shares to L&T and 15 lakh shares to LIC at Rs 169.15/share, while fixing the rate at Rs 190 each for the 15 lakh shares allotted to FMO, Netherlands, 12.5 lakh shares each to Ares Investments LLC and Argonaut Ventures and 10 lakh shares to Yatish Trading Company.

Tides of 4.10.2007

1. Soon insurance agents can get their commission transferred straight to their accounts and need not wait for the clearance of cheques or demand drafts. Visa is in talks with insurance companies to offer the money transfer service.Visa money transfer is the process of transferring funds through a customer’s bank account, debit or credit card via the Internet or ATM (Automated Teller Machines).

2. Canara Bank has reduced the rate of interest on fresh housing loans by 50 basis points. For loans with tenures up to 5 years up to Rs 20 lakh, the rates have been fixed at 10.25 per cent. For tenures between 5 years and 10 years, the rate is 10.50 per cent. For tenures above 10 years up to 20 years, the rate is 10.75 per cent. The rate of interest for fresh housing loans above Rs. 20 lakh for repayment periods up to 5 years is 10.50 per cent; above 5 years up to 10 years 10.75 %; and above 10 years up to 20 years 11 per cent. Processing charges are also reduced by 50 per cent up to December 31.Central Bank of India has reduced interest rates by 0.50 percentage point on retail loans, effective October 1.

3. From passion-driven financing to funding by the “parallel economy” (mafia money), the aspect of financing in Hindi film industry has seen a sea change in the last 110 years.The art of film making has witnessed transformation through the years.

4. Mukesh Ambani’s Reliance Retail plans to enter non-banking finance business (NBFC), besides insurance broking and travel services.
These businesses will be set up, in the near future, as independent companies in the context of Reliance Industries venturing into a range of services as part of its retail operations.

5. The State Bank of India is in the process of strengthening its overseas branches.Specialised cells were also being opened in the country to facilitate loans to Indian companies starting operations in other countries.

6. Indian Bank is bullish on micro credit in urban areas. It plans to add seven more exclusive micro-finance branches (Microsate) by the end of the current financial year.The bank currently has five Microsate branches (a satellite branch for micro loans) for extending credit to self-help groups (SHGs) in urban areas.

7. The Andhra Pradesh Government will ensure availability of Rs 7,000 crore micro loans to members of self-help groups (SHGs) in the State.

8. Technology solutions provider and multi-bank promoted company FINO (Financial Information Network and Operations Ltd) plans to partner with Punjab National Bank for rolling out smart cards for the rural masses in Rajasthan.

9. State Bank of India is planning to build a parallel structure, within the bank, to focus on non-performing assets and recovery. The idea is to have a separate ‘bad bank’ and ‘good bank’.Currently, the bank has the Stressed Assets Management Group (SAMG), which deals with NPAs in the corporate sector and Stressed Assets Realisation Centres (SARCs) for retail and SME sectors. The bank has 10 branches under SAMG and SARCs in 55 centres. The SAMG branches handle accounts that have a credit limit of Rs 1 crore and above. The SARCs handle all small and medium business, and personal segment loans such as housing loans, consumer durables and auto loans.

10. The Institute of Clinical Research (India) is set to get financial support from ICICI Bank for a dedicated clinical research institute that would come up in Bangalore. Looking to invest in the growing opportunity of clinical research, ICICI Bank has approved a Rs-18-crore-loan towards setting up the dedicated clinical research institute.

11. American Express and Kingfisher Airlines announced the launch of airline corporate charge card programme on Monday, targeted at the small to medium sized enterprises (SMEs).Benefits .As per the co-branding arrangement between the two companies, the card would offer eight per cent corporate rebate on Kingfisher Airlines air travel purchased with the card. Companies could also save up to 30 per cent under the programme on business expenses and also reduce costs on business travel and entertainment. Some of the other benefits of being a card member would include direct membership for King Club, the airline’s frequent flier programme.

Tides of 1.10.2007

1. The Delhi State Consumer Commission has slapped a penalty of Rs 1 lakh on Axis bank for lapses in finalising the account of an 85-year-old customer.

2. Information and communication technologies (ICT) may not be a cure to all problems, but it can be a powerful tool to facilitate economic, individual and social development, said Prof K Raj Reddy of Carnegie Mellon University (USA) at the 73rd and 74th convocation of Andhra University .

3. Indian banks face the likelihood of scaling down their lending targets for 2007-08, following a slump in credit off-take during the first six months of the financial year resulting from successive rounds of interest rate hikes. The loan portfolio of banks has grown by Rs 54,908 crore till September 14, representing only 3.6 per cent growth. During the same period last year, banks had lent Rs 147,657 crore, a rise of 10.5 per cent. As a result, banks anticipate credit growth in 2007-08 to be closer to 20 per cent, down from 27.6 per cent in 2006-07 and short of the target of 25 per cent set at the beginning of this fiscal.

4. Need for funds slows as credit offtake till mid-Sept crawls to just 9% of annual target. The sustained slowing of credit growth has made State Bank of India (SBI), the country’s largest lender, consider shelving its proposed rights issue of Rs 8,000-12,000 crore, sources in the bank told Business Standard. The bank’s credit portfolio has grown by just about Rs 9,000 crore in the first five and a half months of 2007-08 against the bank’s target of increasing its advances by Rs 1,00,000 crore.

5. State Bank of India, the country’s biggest lender, became the first public sector bank to touch a market capitalisation of Rs 1,00,000 crore.

6. State Bank of India (SBI) will lend another $1-1.5 billion to Tata Steel UK to enable the Tata group to refinance a part of the bridge loans taken by it for the acquisition of Anglo-Dutch steel maker Corus. Tata Steel is unable to raise funds from foreign banks, which have turned risk-averse following the US sub-prime mortgage crisis. The Indian conglomerate has therefore turned to the country’s largest lender for funding support. The fresh loan will be in addition to the $1 billion SBI sanctioned late last month. SBI will take the enhanced exposure to Tata Steel through its overseas branches. This will become a substantially bigger acquisition financing exposure of SBI, considering that it till now was involved in deals only of less than $100 million.
Tata needed refinance to pay-off $7.2 billion of bridge loans taken for the biggest buyout by an Indian company.

7. In the first-ever case of its kind, ICICI Bank has compensated the families of its two borrowers who allegedly died due to harassment by the bank’s recovery agents. The bank has paid Rs 10 lakh in the form of fixed deposit to the family of Prakash Sarvankar from Andheri here who committed suicide after being publicly humiliated by the agents for recovery of a personal loan.

8. The country's largest private general insurer ICICI Lombard has bagged a contract from the railways to provide personal accident cover at a premium of just 4.75 paise per passenger.

9. Standard Chartered Bank recently announced the acquisition of American Express Bank for $860 million in cash. This purchase would give the UK-based bank an expanded presence in India and boost its recently launched private banking business in the country. Its wholesale banking business focuses on the entire spectrum ranging from emerging corporates, small and medium enterprises (SME) and large corporates. It is doing well and will continue to grow at 20 per cent to 25 per cent. It wants to expand the SME business as it accounts for around 20 per cent of our revenues. The small and medium enterprises business segment is growing at upwards of 50 per cent and will continue to report robust growth.

10. RBI is in favour of a domestic card payment settlement company to rival the global payment majors Visa and MasterCard. The Indian Banks Association (IBA) had earlier proposed the setting up of a domestic card transaction settlement company called India Pay, following a forecast that card payments in India will increase three-fold in five years. The central bank wants new players to be promoted so as to infuse competition in the card payment market. All card-based transactions are currently settled through the global payment network of Visa and MasterCard. The central bank’s Board for Payment and Settlement Systems observed that nearly 95 per cent of the card-based transactions in the country were domestic in nature, but most of the credit card, debit card and pre-paid cards issued were affiliated either to Visa, Master card or American Express. The RBI has asked IBA to submit a detailed report on the feasibility of setting up an indigenous payment settlement system. A streamlining of card transactions could reduce the cost of operations.

Tides of 30.09.2007

1. Experts in forex management from HSBC Eastern India, analysing the risk and problems faced by exporters in the wake of rupee appreciation, said here that the best strategy for corporates would be “combined hedging”. They also stressed on the formulation of a clear-cut policy on risks and hedging with appropriate levels of controls and authority. Once a strategy is zeroed in, it is necessary to choose the available instruments in the prevailing context of regulatory framework, and then execute the strategy. They also advocated periodic review of performance. The key market parameters that need to be studied, according to them, are spot exchange rate, forward premium differential, long-term forward premium and currency volatility.

2. With the successful issue of further capital to the tune of two crore equity shares at Rs 163 per share, which includes the premium, the net worth of South Indian Bank has crossed Rs 1,000 crores.

3. Bankers and primary dealers are of the view that the Reserve Bank of India’s suggestion to provide a mechanism for corporates to calculate the variation in the prices of derivative products, would not be practical.

4. The Insurance Regulatory and Development Authority (IRDA) has set up a 10-member committee to look into the working of the various distribution channels of insurance companies.

5. Tractor manufacturer TAFE today shook hands with City Union Bank over an agreement under which the bank will provide quicker and easier finance for those who buy the company’s tractors. A farmer could avail himself of a loan paying only 5 per cent of the tractor’s cost upfront. A typical loan arrangement will be for an interest rate of 11.75 per cent and a period of seven years.For TAFE, which is the country’s second largest tractor manufacturer (after Mahindra & Mahindra), this is not the first agreement with a bank, but for City Union Bank it is the first and the only one with a tractor company.

6. Economists do not seem to be too perturbed by the external debt data put out by the Reserve Bank of India. Total external debt amounted to $165.4 billion as of June 2007, recording an increase of $8.7 billion or 5.6 per cent over the March-end levels. External commercial borrowings (ECBs) contributed around 63 per cent of the increase in total external debt, followed by NRI deposits (15.6 per cent).

7. Pandyan Grama Bank, the regional rural bank of Indian Overseas Bank, has registered a record achievement of zero non-performing assets (NPAs) for the past five years.

8. The Government of India has reportedly advised the Reserve Bank of India (RBI) to subscribe to bonds issued by the overseas arm of India Infrastructure Finance Company Ltd (IIFCL) using $5 billion from the country’s foreign exchange reserves. This directive has wide-ranging implications and raises several issues.Over the last few years, there has been a surge in capital flows into the country leading to swelling of foreign exchange reserves to over $225 billion. However, this is not purely a blessing. Capital inflows lead to appreciation of domestic currency, thereby reducing the country’s export competitiveness and worsening trade deficit.

9. Non-resident Indians are sending more money ‘home’. Individual remittances from Indians working overseas have surged 50 per cent at $8.6 billion in the first quarter of 2007-08, against $5.9 billion in the year ago period, according to the Balance of Payment data released by the RBI.Economists believe that although the US has seen a slow down in economic growth, remittances may not have been hit. Regions such as West Asia and Europe, which are the other sources for remittances into India, have shown strong growth.

10. The forex reserves surged by $ 3.704 billion to touch $ 235.891 billion for the week ended September 21, due to currency revaluation and the central bank’s buying of dollars to stem the appreciation in rupee.In the earlier week, the forex reserves had increased by $1.810 billion to touch $232.187 billion. This is the third week in a row that forex reserves have shown an accretion.

Tides of 26.09.2007

1. The Annual General Meeting of Federal Bank approved a dividend of 40% for the year 2006-07. Addressing the AGM, Mr M. Venugopalan, Chairman, said the business volume of the bank had grown by 23.19 %.

2. While the Indian rupee has appreciated to a nine-year high against the dollar, its neighbouring counterparts the Pakistan rupee, the Bangladeshi taka and the Chinese yuan have a different story to tell.The Indian rupee has appreciated by around 13 per cent in the past one year- the currency which is at 39.80, was at 45.95 in September last year.However the political turmoil in Pakistan and Bangladesh has meant that these currencies have not seen much movement against the dollar. This is bad news for India’s exporters, since Bangladesh and Pakistan are strong competition in textile exports.

3. Nabard has sanctioned Rs 50 crore from its Rural Infrastructure Development Fund XIII (RIDF XIII) for a new IT complex at Infopark in Kochi being implemented by the IT Department of Kerala Government.The complex, covering an area of 4.27 lakh sq ft, will house 50 IT companies and is expected to create employment for around 5,000 professionals.

4. Union Bank of India has cut interest rates on home loans by 25-50 basis points, depending on the size of the loan. The reduced rates are applicable to new home loans.For loans less than Rs 20 lakh.

5. Punjab National Bank today signed an MoU with the Government of Assam to provide housing loans to employees of the State Government with a minimum service period of three years. The bank has agreed to provide relaxation of the interest rate over and above the current flexible rate. The rate will be subject to change as decided by the bank. The house building loans will be for purchase of house/ flat / plot etc., and also for taking over of loans from other financial institutions.

6. In a bid to ease the pressure of forex inflows in the wake of the rate cut by the US Fed, the Reserve Bank of India on Tuesday allowed Indian companies to invest more funds overseas without its prior permission.RBI would now allow higher limits for corporates in direct and portfolio investments besides pre-payment of external commercial borrowings. Individuals have been permitted to remit up to $2 lakh per annum ($1 lakh earlier) without RBI permission.

7. The public sector banks are now gearing up to shed their dowdy image and introduce upmarket branches in order to tap the younger generation customers. They are looking at bringing the ‘luxury element’ to their branches to attract tech-savvy customers.Senior officials at public sector banks feel that a majority of the affluent young customers flock to the new generation private sector banks.

8. Public sector banks (PSBs) in the country are equipping themselves to successfully take on the challenges by the entry of foreign banks into the country in 2009.

9. The Boston Consulting Group (BCG) has been given a deadline of six months for submitting its report on restructuring of the three public sector general insurance companies.

10. The Union Cabinet is set to approve a proposal to allow sugar mills to access interest-free loans from banks against their excise payments during the 2006-07 and 2007-08 seasons (October-September).

11. ICICI Bank has launched a floating rate repayment product for car loans, commercial vehicles loans, construction equipment loans and professional equipment loans from September this year.

12. Axis Bank plans to offer wealth management services to its semi-urban and rural customers. The bank, which launched its focussed group on wealth management two years back, is now planning to give wealth advisory and wealth management tips to the customers in Tier II and Tier III cities and villages.

Tides of 15.09.2007

1. Interest rate hikes notwithstanding, public sector banks are supporting farm sector with credit below the current benchmark prime lending rates (BPLR).
Bankers said that the credit support for the farm sector was not just for crop loans, but also for non-crop loans, including consumption credits and rural housing. Currently, crop advances are priced at 7%.

2. International credit enhancement agencies may get to operate in India, with the Finance Ministry urging the Reserve Bank of India (RBI) to frame appropriate regulations for the entry of such companies. Credit enhancement agencies are basically institutions whose backing enhances the credit worthiness of debt issuances of municipal corporations and other organisations and helps them raise funds at better rates.

3. The country’s forex reserves increased by $1.530 billion to $230.377 billion for the week ended September 7 on account of reasonably good inflows and revaluation of currency assets, said a dealer with a private bank. “The central bank has also been constantly intervening in the forex market to cap the appreciation of rupee,” said the dealer.The reserves had fallen by $2 million to touch $228.847 billion for the week ended August 31, according to the weekly statistics from the Reserve Bank of India.

4. LIC has set itself a target of 31 per cent growth in new business premium for the current fiscal.

5. Greater attention to price stability and pre-emptive measures taken in the economic policy has helped contain inflation rates and inflation expectation.
Maintenance of price stability and financial stability is essential for healthy corporate sector performance, said Dr Rakesh Mohan, Deputy Governor, Reserve Bank of India.

6. The public sector Bank of India is receiving encouraging response from the trading community following the introduction of various unique schemes, which are designed to provide hassle free financial assistance for businessmen in Kerala State.

7. Indian Overseas Bank is looking for a tie-up with another bank to expand its business and reach. Without naming the likely partner, Mr S. A. Bhat, Chairman and Managing Director, IOB, said, “Talks are at a very formative stage. We will tie up with a bank that will complement us in terms of business and geographies".

8.The intermediate holding company model being proposed by ICICI Bank and State Bank of India will insulate banks from the risks of raising capital for non-banking business, as the holding company would be able to raise funds independent of the bank. It will also limit exposure of the parent bank and its investors to the non-banking business. This is the view expressed by the Indian Banks’ Association in its response to the discussion paper on the holding companies released by the Reserve Bank of India.

9. India is largely insulated from the subprime crisis and will continue to see mergers and acquisitions, said investment bankers, speaking at a banking seminar. “Indian corporates are largely under-leveraged and we will not see any drying up in the financing of large Indian contracts. Pricing of these deals may, however, be higher than what has been in the last few years,” said Mr Tarun Kataria, Head, Investment Banking & Markets, HSBC, speaking at a FICCI-IBA seminar.He added that the uncertainty due to a global credit slow down could continue for a while. Deals that are stuck will get repriced and restructured.

10. Trade finance opportunities in India could offer revenues in excess of over $2 billion in the next five years, against the current $1.2 billion, said Mr J. Chandrasekaran, Chief General Manager, Small and Medium Enterprises, State Bank of India.

11. HDFC Bank expects its overall advances to grow by over 30 per cent this fiscal, much higher than the anticipated credit growth of about 20-25 per cent for the banking industry in the period.An important driver of this growth is likely to be retail advances, which are expected to grow by 30-40 per cent this fiscal, according to Mr Pralay Mondal, Country Head, Retail Assets and Credit Cards.

Tides of 8.09.2007

1. The RBI’s Annual Report admits of “some evidence of cyclical elements in the growth process” albeit significant structural changes in the economy. The accent is on the continuing need for vigil on price stability, including financial stability.

2. Housing Development Finance Corporation was at an all-time high of Rs 2,140 on Friday on the BSE. Despite the sub-prime originating out of housing finance companies in the global markets, domestic housing finance companies such as HDFC and LIC Housing Finance are faring well.Analysts feel that the banking finance sector is comparatively better off than others, one of the reasons being the low mortgage penetration to GDP ratio i.e., the amount of mortgage banks have in turn for their lending for housing to the GDP. It is as low as 7.1 per cent, whereas in the US and the UK it is 54 per cent and 57 per cent, respectively, according to an analyst.

3. The Mumbai city based Financial Technologies India Ltd has partnered with the University of Mauritius Trust (UoM) to set up a ‘Centre for Organized Markets’ in Mauritius, an initiative aimed at create a sizable talent pool for financial markets. The UoM signed an MoU with MCX Centre of Academia, a part of the Financial Technologies group, on August 27. The collaboration is expected to benefit university staff in terms of staff exchange and training, and also professionals and students who wish to work in the financial services at large.

4. The Reserve Bank of India would like foreign banks to get a flavour of semi-urban India and the rural hinterland. Going by the statistics provided in the RBI’s annual report, it appears that foreign banks are being gently nudged away from metros, when they apply for permission to open a new branch.The branches of foreign banks that have been approved between July 2006 and June 2007 are mostly in smaller towns and tier-2 and tier-3 cities. Of the 13 branches for which permission was given, only one branch belonging to Shinhan Bank has been allowed in New Delhi.

5. Centurion Bank of Punjab (CBOP), which had recently merged with the Kerala-based Lord Krishna Bank, has chalked out ambitious plans for the State with a focus on NRIs. The NRI population from the State is the immediate priority.

6. Corporation Bank has offloaded its stake in the National Stock Exchange by 0.27 per cent. Fidelity Trustee Corporation and HDFC Ltd have together picked up the stake sold by the bank for Rs 35 crore on September 7.

7. Banks in India are becoming cautious about lending to weak borrowers, says India Knowledge @ Wharton, an online resource centre for information on India-related issues at the University of Pennsylvania, quoting industry experts.
The online resource centre quoted data on provision for non-performing assets made by banks in the first quarter of fiscal 2007-08 which it says are higher than similar provisions made the same time last year and cautions that it could go up further. It referred to State Bank of India (SBI)’s performance which saw gross NPAs rise to Rs 10,760 crore as on June 2007 from Rs 9,720 crore in June 2006, a level that it says is the highest in the last 14 quarters. The bank had also substantially hiked (161%) its provision for such NPAs at Rs 538 crore in June 2007.

8. While employees and officers of banks under the United Forum of Bank Unions (UFBU) banner have decided to observe an all India strike on September 12, the Central Bank Employees Union has given a strike call on September 13.

9. The Indian Institute of Banking and Finance (IIBF) has started a diploma course in Banking and Finance (DBF) for graduates of any discipline or students in the final year of graduation.The diploma was being offered in association with Manipal Universal Learning. The course, equivalent to Junior Associate of Indian Institute of Bankers (JAIIB), is aimed at fulfilling the demand for qualified manpower for the banking sector, which is expected to grow in the coming years.

10. Andhra Bank will be hiring about 2,000 personnel in different categories over the next three years to strike a balance between retirements and new business needs.

Tides of 31.08.2007

1. There is a Shylock on the prowl in most urban cities, preying on unwary and gullible victims. Numerous middle-class Indians have fallen prey to its usurious ways. With Urban India’s new-found prestige and affinity to hoard and flaunt credit-cards, this tech-savvy 21st century shyster comes in three distinct shades — silver, gold and platinum. Surprisingly, it is still to extend its reach in a big way into Rural India.

2. National Housing Bank (NHB) is planning to invest equity in housing finance corporations engaged in rural housing finance.“While housing finance in the country is growing at a CAGR of 46 per cent, rural finance is not keeping pace with it. It wants to act as a catalyser to promote housing finance for middle-income and poor people.”

3. The Standing Committee on Finance has endorsed the proposal in the State Bank of India (Amendment) Bill, 2006, to bring down the statutorily prescribed minimum shareholding of the Reserve Bank of India (now the Union Government) in SBI to 51 per cent from the current level of 55 per cent.
Currently, the Centre holds 59.73 per cent stake in SBI, which is the country’s largest commercial bank. The Centre had in June this year acquired the entire shareholding of the RBI in SBI.

4. The Prime Minister, Dr Manmohan Singh, today expressed hope of doubling credit flow to the small and medium sector within five years. While giving away the national awards to small and medium enterprises (SMEs) in the Capital on Thursday, Dr Singh said, “I hope we can double the credit flow to this sector within a period of five years. I urge our banks and financial institutions to come forward and support and nurse SMEs, especially through risk and venture capital support.”

5. State Bank of Hyderabad (SBH) has put its public issue plans on hold till December and is awaiting ‘specific roadmap’ on a possible merger with State Bank of India.

6. Fullerton India Credit Company, a non-banking finance company, has launched a marketing programme named ‘Parivaar Laxmi’, which is an incentive-based referral system for housewives. This programme is targeted at the housewives residing in the neighborhood of Fullerton India branches spread across the country. Fullerton India has more than 300 branches spread across 100 locations. This company, which is a fully-owned subsidiary of Fullerton Financial Holdings, Singapore, has 8,000 employees on its rolls. The housewives who are appointed as ‘parivaar laxmis’ refer their friends, neighbours and relatives in their social network and pass on the leads as people who are interested in loans and insurance to the neighborhood Fullerton India branch.

7. Andhra Bank is very aggressive on the ‘kiddy bank’ account. Departing from the usual ‘Customer Meet’, Andhra Bank has this year commenced a month-long ‘AB Celebrations 2007’ drive to create awareness about the various products and services offered.

8. Infrastructure Development Finance Company Ltd (IDFC) plans to raise Rs 12,000-Rs 14,000 crore of debt from the domestic markets this fiscal to fund infrastructure projects in the country.

9. Banks are keen on increasing their exposure to regional cinema with more and more big-banner Bollywood filmmakers producing such movies and the kind of growth potential they see in this sector, say media analysts. Among regional movies, South Indian and Bhojpuri movies seem to be the favourites of these filmmakers.

10. The United Forum of Bank Unions has called for a one-day strike on September 12 in order to press for the implementation of the memorandum of understanding signed with Indian Banks’ Association.

11. YES Bank is looking at using mobile phone as a platform to enhance the reach and bring down the cost of micro-finance.
The bank along with Accion, the US based micro-finance agency, plans to tie up with a global software provider in order to find a software solution for the same.

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Tides of 29.08.2007

1. Mr S.S. Jawahar, launched ‘Canara Gramin Vikas Vahini’ scheme at Thottiyapatti village, 40 km West of Madurai recently, in an effort to take banking services to doorsteps in remote villages, under a nationwide scheme initiated in June. Executed through a van service equipped with public address system, the branch manager travelling in the van has the authority to sanction spot loans for eligible candidates, who could come and collect the amount the next day at a nearest branch.
2. Faced with the possibility of tightening liquidity, a clutch of banks has begun pushing for a rollback of the Cash Reserve Ratio (CRR) hike.The Reserve Bank of India hiked the CRR to 7 per cent from August 6 and mopped up Rs 15,000 crore of liquidity.The CRR hike had come at a time when credit offtake growth had slowed down to 22 per cent, as against the previous year’s 31 per cent.Bankers hope for a reversal in the current situation with better farm sector offtake. However, the fear is that the high CRR would impose a pressure on lending rates. This is partly because CRR balances earn no interest.
3. More than 5,000 bank employees and officers of the All India Bank Employees’ Association (AIBEA) and All India Bank officers’ Association (AIBOA) would stage dharna before Parliament on August 31 to highlight their charter of demands for banking industry and aam admi.Both AIBEA and AIBOA have launched a national campaign on various policy issues affecting the banking industry.
4. Commercial banks appointed by the RBI to deal in gold are pitching for an inter-bank gold market.“We are seeking some reforms to establish a gold industry for which an application will be made to the RBI in 3-4 weeks”, said Mr Rajan Venkatesh, Chairman of Indian Bullion Bankers’ Association.Although spot trading in the yellow metal is permitted, there is no developed inter-bank market. Regulatory conditions are not conducive for depth in these markets, according to chief of a commercial bank.
5. The proposals of ICICI Bank and State Bank of India to float holding companies for their insurance and asset management business may face regulatory hurdles, going by the Reserve Bank of India’s views expressed in a discussion paper on holding companies released on Monday.According to the discussion paper, the intermediate holding company model (which is being proposed by both the banks) will not come under the RBI’s regulatory supervisions as they are not required to be registered as non-baking finance companies.In the case of ICICI, its application for creating a holding company — ICICI Financial Services — is pending with RBI, though it has already been cleared by IRDA, FIPB, and the Ministry of Finance.
6. The Reserve Bank of India has sanctioned the scheme of amalgamation of Lord Krishna Bank Ltd with Centurion Bank of Punjab Ltd, said a press release from RBI.The scheme will come into force with effect from August 29. All the branches of Lord Krishna Bank will function as branches of Centurion Bank of Punjab effective August 29.
7. Punjab National Bank is working out a programme to cut its non-performing assets, which is currently among the highest in PSU banks.Dr K.C. Chakrabarty, who took over as Chairman and Managing Director of the bank in June, has given top priority to this programme, which he described as “ NPA administration.” Currently, over 3.81 per cent of the bank’s advances are bad loans or NPAs. Dr Chakrabarty’s aim is to bring it down to below two per cent at the earliest. For the quarter ended June 30, the bank had reported fresh NPAs of Rs 600 crore. This is over and above the Rs 2,000-crore slippage the bank had in the last fiscal. PNB had made Rs 137.87-crore provisions for NPAs in the first quarter.Dr Chakarabarty told Business Line “lots of NPAs were added last year. We have expanded fast but without adequate capacity. From a 15 per cent credit growth suddenly if you grow at 30 per cent, you have to examine the system.
8. Enthused by response to the ‘Corp Compassion’ scheme where the Corporation Bank donates Rs 10 to underprivileged children for every savings account opened, the bank has decided to extend it to Current Accounts opened during the next five weeks starting Monday.

Tides of 26.08.2007

1. State Bank of Patiala (SBP) has launched ‘SBP-Smart Deposit Scheme’ (term deposit and special term deposit) for a maturity period of 455 days. The deposits would provide an interest of 9.5 per cent per annum for general public.

2. State Bank of India, the country’s largest commercial bank, has kicked off the consolidation process with its associate banks. SBI has decided to merge State Bank of Saurashtra, a wholly owned associate bank, with itself. The boards of both SBI and State Bank of Saurashtra have given an in-principle approval to the merger proposal.

3.The country’s forex reserves fell by $2.551 billion to $226.445 billion for the seven days ended August 17, dipping for the second consecutive week.This was due both to FII outflows resulting from the US sub-prime loan crisis, as well as the RBI's recent curbs on external commercial borrowings. Market participants also attribute the fall in reserves to the revaluation of other currency assets.

4. Indian companies have borrowed about $14.97 billion through external commercial borrowing (ECB) and foreign currency convertible bonds (FCCB) within a span of five months from January to May 2007.Analysts feel that the huge borrowing through ECB route was mainly due to the high rates of interest in the domestic market. “The interest rates for borrowing through ECB/FCCB was about two-three per cent lower than that offered by the domestic market.”

5. LIC has launched two unit linked insurance plans - Profit Plus and Fortune Plus. Both are unit linked endowment plans, which combine insurance with market related returns.

6. The Kerala Government and the Centre in association with the United India Insurance Company Ltd will jointly launch a health and personal accident insurance policy for the “Tsunami affected elow poverty line (BPL).

7. The ICICI group is looking to hire about 20,000 people a year through direct employment for the next few years. The three back office hubs of ICICI Bank, in Bhubaneshwar, Hyderabad and Ahmedabad, have about 20,000-30,000 people at each location. The bank sees an attrition rate of 15-16%.One way of addressing the problem of attrition is to create and increase the pool of people with the right skill sets. For this, ICICI Bank has tied up with educational institutions such as NIIT, ICFAI and Manipal University for integrating the bank’s training modules as part of the curriculum.

8. The Reserve Bank of India today permitted foreign investment in ICICI Bank shares, as the share of Foreign Institutional Investors (FIIs) has gone down below the trigger limit of 74 per cent of its paid-up capital.

9. The share of credit flow to small scale industries from public sector banks have been steadily declining since early nineties. Lending to SSI sector accounted for 16.1 per cent of bank credit in 1991 and has declined to 8.5 per cent in 2006.

10. The Union Finance Minister, Mr P. Chidambaram, has assured the Lok Sabha that he would soon bring a Bill to regulate the various payment systems in the country, including those operated by non-banks such as card companies.

11. Giesecke & Devrient GmbH, a German company specialising in providing international technology services, is set to expand its product range for currency processing systems in India by introducing coin handling systems.

12. Small and marginal farmers availing agriculture loans up to Rs 50,000 need not pay any service charge and need not deposit land documents at bank branches. These are some of the recommendations of the group set up by the Reserve Bank of India.

13. In a notification issued to banks, the Reserve Bank of India said: “Banks and financial institutions are advised to invariably furnish a copy of the loan agreement along with a copy each of all enclosures quoted in the loan agreement to all the borrowers at the time of sanction / disbursement of loans.”
The condition would apply for all loans across the board.