1. The Reserve Bank of India on Thursday increased the Cash Reserve Ratio – the share of deposits that commercial banks must hold in cash with the central bank – from 7.5 per cent to 8 per cent, in a bid to curb inflation by leaving less money with spenders. The 50-basis-point hike, which will come in two equal tranches effective April 26 and May 10 respectively, will result in sucking out Rs 18,500 crore from the banking system. It may increase cost funds for commercial banks, forcing them to increase interest rates they charge on loans to consumers.
2. India's wholesale price index rose 7.14 per cent in the 12 months to April 5, a government official said on Thursday. This is lower than the previous week's annual rise of 7.41 per cent and just below a median forecast of 7.19 per cent in a Reuters poll of analysts.
3. Interest rates on home and retail loans are expected to rise, as a fallout of Reserve Bank today announcing a 0.5 per cent hike in Cash Reserve Ratio (CRR) to squeeze money supply to rid the economy of inflation.The CRR, the amount of funds banks are required to park with the apex bank, has been raised to 8 per cent to suck out Rs 18,500-crore liquidity from the system.
Since banks would be left with less cash to lend and have to source funds at a higher cost, including by raising deposit rates, they may increase lending rates that will in turn temper demand and cool inflation that is at a three-year high of 7.14 per cent.The CRR would be hiked by 0.25 per cent from April 26 and by an identical percentage from May 10.Year-on-year inflation, which was 3.83 per cent during the last credit policy in January, had gone up to 7.41 per cent on March 29 before marginally falling to 7.14 per cent on April 5.
Since banks would be left with less cash to lend and have to source funds at a higher cost, including by raising deposit rates, they may increase lending rates that will in turn temper demand and cool inflation that is at a three-year high of 7.14 per cent.The CRR would be hiked by 0.25 per cent from April 26 and by an identical percentage from May 10.Year-on-year inflation, which was 3.83 per cent during the last credit policy in January, had gone up to 7.41 per cent on March 29 before marginally falling to 7.14 per cent on April 5.
4. A plan by India’s capital markets regulator to reduce the time it takes to list stocks after an initial public offering (IPO), from 21 days to seven days, will deal a significant blow to bankers to the share sales who enjoy the so-called float money on which they do not pay any interest.
Typically, the time between an investor putting in money for investing in an IPO and getting a refund after the shares are allotted, is three weeks and the bankers to the issue enjoy this money free for that period. Most IPOs are subscribed many times over and the banks have enjoyed this huge free float. According to Delhi-based primary market data provider Prime Database, a set of domestic and foreign banks active in this space could have gained at least Rs 2,300 crore in 2007-08 from this float. In 2006-07, banks have made Rs 630 crore from this business. A Mint analysis of IPO subscription data, provided by Prime Database, shows that 76 IPOs last year collected more than Rs 6.3 trillion, from retail investors, high net worth individuals (HNIs) and qualified institutional investors (QIBs) and the money was kept with banks for 14-35 days.
Typically, the time between an investor putting in money for investing in an IPO and getting a refund after the shares are allotted, is three weeks and the bankers to the issue enjoy this money free for that period. Most IPOs are subscribed many times over and the banks have enjoyed this huge free float. According to Delhi-based primary market data provider Prime Database, a set of domestic and foreign banks active in this space could have gained at least Rs 2,300 crore in 2007-08 from this float. In 2006-07, banks have made Rs 630 crore from this business. A Mint analysis of IPO subscription data, provided by Prime Database, shows that 76 IPOs last year collected more than Rs 6.3 trillion, from retail investors, high net worth individuals (HNIs) and qualified institutional investors (QIBs) and the money was kept with banks for 14-35 days.
5. To take on competition from private and foreign banks head on, SBI Card is firming up plans to distribute credit cards from the State Bank of India's branches from June. "We are working closely with State Bank of India to leverage the branch channel for increasing the company's reach and expand customer base substantially," SBI Card Chief Marketing Officer Nirupam Sahay told PTI.The company is a joint venture between between State Bank of India and GE Money.Currently, the company is operating from its own outlets and the tie up would offer huge business growth potential for the company, he said.
6. HDFC Bank has unveiled plans to foray into Bahrain by the middle of the year, following Bank of Baroda's re-entry into the Kingdom after 18 years. According to a media report, HDFC Bank announced plans to raise $ 1 billion through a medium-term note issue to fund its overseas expansion plans, beginning with Bahrain.Bahrain has been the hunting ground of Indian banks since there are 300,000 Indians working in the Gulf state and the country's authorities are liberal in issuing news licences.BoB and HDFC joined the list of Indian banks eyeing Bahrain. India's leading bank - State Bank of India and the country's largest private sector bank, ICICI, already have operations in Bahrain.
7. In a move to help CEOs of small and medium enterprises sharpen their skills and knowledge, ICICI Bank on Tuesday launched a programme SME CEO Knowledge Series in collaboration with CyberMedia. The programme envisages to provide a platform to the CEOs of various SMEs for interacting with experts of various fields including human resources, finance and entrepreneurship. For this purpose it has identified clusters in 26 cities across the country.
The bank has already conducted the programme at a leather cluster in Agra, ICICI Senior General Manager and Global head SME Vijay Chandok told reporters here."The SME CEO Knowledge series will enable us to cater to the entrepreneurs at the root level," he said.
A host of SBI branches are being identified for issuance of credit cards and the initiative would be operational by June, he said.The company is also planning to launch new products specifically for the SBI Branch channel.
The bank has already conducted the programme at a leather cluster in Agra, ICICI Senior General Manager and Global head SME Vijay Chandok told reporters here."The SME CEO Knowledge series will enable us to cater to the entrepreneurs at the root level," he said.
A host of SBI branches are being identified for issuance of credit cards and the initiative would be operational by June, he said.The company is also planning to launch new products specifically for the SBI Branch channel.
8. Market regulator SEBI said on Friday it will issue guidelines on real estate mutual funds in the next 15 days, enabling retail investors as well to access the realty market which has witnessed a boom in the last few years."SEBI is ready with guidelines on real estate MFs that could be issued any day. The outer time limit to issue guidelines is 15 days," Securities and Exchange Board of India's whole time member TC Nair told reporters in New Delhi.Speaking at a conference on Real Estate Mututal Funds, organised by Assocham, he said all legal issues including accounting and valuation have been resolved and norms could be issued anytime. SEBI board has already given its nod, he said.
9. Family Credit, a non-banking finance company fully owned by Societe Generale Consumer Finance, France, is planning to ramp up its India operations by doubling its branches.The Kolkata-based NBFC would add 35 new branches to its existing 36 branches by end of December 2008, Mr Parthanil Ghosh, Country Head (India), Family Credit, told Business Line here.
“Though our network is now present across the country there will be more focus on tapping the South Indian market over the next two years,” Mr Ghosh said.Plans were afoot to open new branches in the tier-II and tier-III towns, he added.
“Though our network is now present across the country there will be more focus on tapping the South Indian market over the next two years,” Mr Ghosh said.Plans were afoot to open new branches in the tier-II and tier-III towns, he added.
10. Some corporates who filed cases against banks after they suffered losses on currency derivative deals, are willing to settle out of court, as court may take a long time to settle these cases, said Ms Chanda Kochhar, Joint Managing Director, ICICI Bank.She said there is no systemic risk from currency derivatives transactions and the estimated loss is not very large compared to the total cash flow of corporates. Speaking to presspersons on the sidelines of a banking seminar, Ms Kochhar said that it is unfair to take a general view that many corporates did not understand the derivatives deals. “The corporates were aware. More than 80 per cent of the corporates involved who have exposure to currency derivatives are mid and large corporates. Sometimes there are profits and sometimes there are losses,” she said.
