Tides of 11.06.2007

1. To facilitate faster credits, State Bank of Hyderabad has introduced `Express Clearing' in its 104 branches in Hyderabad and Secunderabad. "Express Clearance is the first of a number of programmes lined up for the next couple of months to provide higher comfort levels to the customers. While the cheques drawn on any branch of our bank can be cleared on the same day, instruments drawn on other local banks would be cleared within one working day. All 104 branches of the bank in the twin cities would have a drop box. Further, a jumbo box is kept at the service branch in Abids here which would be cleared once in every half an hour for processing cheques and DDs.
2. Fixed maturity plans, which were hugely in demand till recently, are suddenly not so hot any more. Other debt products, and, certainly, bank deposits, seem to be regaining their appeal insofar as a large section of the market is concerned. The situation calls for a fresh look at the FMP segment, especially with regard to the products that are now in place and the ones that are likely to be rolled out in the near future.
3. Fraudsters have declared an open season on banks. And most ‘serious’ fraudsters are using non-electronic methods to cheat. Largely because electronic methods are easily traceable. While methods vary, all of them revolve around misleading banks about the identity of fraudsters. A popular technique they use is the ‘set-up’ fraud. Consider the case of Godrej Consultancy. This company had nothing to do with the Godrej group, but it was enough to attract direct selling agents who were looking forward to acquire new customers. There were around 30 employees in the company which had an operational record of around three months. Based on the name and operations, the employees were able to obtain credit cards from many important banks. After receiving the cards, they maintained clean credit histories on credit card spendings for a while, which attracted banks to sell them personal loans. The moment the loans were disbursed, the employees did a vanishing act. Thus, banks became victims to what is termed as identity theft. There is an estimate that many banks have lost at least Rs 1 crore through this modus operandi, but no bank is willing to admit the problem.
4. Life Insurance Corporation of India is reducing its exposure to real estate stocks, taking a cue from the banking regulator, the Reserve Bank of India, which has warned of an asset bubble building up in the sector.
5. The Reserve Bank of India (RBI) has announced enhanced auctions of treasury bills and government bonds totalling Rs 22,000 crore next week as part of the government’s borrowing programme. The RBI will on Monday issue 91-day and 182-day treasury bills for Rs 3,000 crore and Rs 2,000 crore, respectively, followed by auction of 7.49 per cent, 2017 bond in tranches of Rs 5,000 crore on Tuesday and Rs 6,000 crore on Friday. Another auction of 91-day and 182-day t-bills for Rs 5,000 crore would be held on Wednesday.
6. The Reserve Bank of India has barred companies from raising funds overseas through issue of optionally and partially convertible bonds under foreign direct investment (FDI) regulations.
Companies will now be allowed to only sell bonds that compulsorily convert into equity within a specified timeframe.