Tides of 26.05.2010

1. Borrowing by telecom companies, which have to pay licence fees to the government, has led to a shortage of liquidity forcing banks to hunt for large deposits. Banks say that by next week lenders may have to seek refinance from the Reserve Bank of India. Reliance on refinance will immediately bump up overnight rates by two percentage points from the prevailing 3.75% to 5.75%, which is the rate at which RBI lends to banks.
2. Govt may allow 100% foreign NBFCs to set up subsidiaries, removing the curbs introduced by the FDI guidelines issued last year.
3. Five-year old Ujjivan Financial Services, a Bangalore-based micro lender with 6.5 lakh poor customers, said it will reduce lending rates by up to 290 basis points from July, as it has earned a profit for the first time since inception. Ujjivan’s announcement comes within a month of Bandhan’s decision to cut interest rates. Bandhan Financial Services is the country’s fourth largest microfinance institution (MFI) with nearly 26 lakh borrowers.
4. The European crisis that plunged global equity markets into the red appears to have deeply impacted the Standard Chartered IDR issue that opened on Tuesday.Of the 20.4-crore Indian Depository Receipts, only 1.11 crore IDRs, or 5 per cent of the total, were subscribed for.This being the first issue where qualified institutional buyers (QIB) had to pay 100 per cent money upfront could have been a reason why institutional response remained subdued, according to analysts. About 12 per cent of the shares on offer to QIBs were bid for.Brokers said that despite their efforts to persuade retail participants to subscribe to the issue, there were few takers. “There is just no excitement for this issue, people think they will not make gains on listing in such a market,” said a retail broker.
5. Lodha Group bids Rs 4,053 cr for MMRDA plot; plans residential complex. The Mumbai-based real estate developer Lodha Group has bid Rs 4,053 crore or Rs 81,818 a sq metre for a 25,000 sqm plot in an auction conducted by the Mumbai Metropolitan authority.
6. The two tribal development programmes, popularly known as Wadi, launched recently by National Bank for Agriculture & Rural Development (Nabard) in Bankura district of West Bengal, are targeted to benefit 1,000 families with sustainable livelihood, according to a Nabard release.The total assistance sanctioned under the programmes is Rs 5.12 crore, including a grant of Rs 4.34 crore and loan component of Rs 40 lakh.The cumulative sanctions under Wadi in West Bengal comprise Rs 33.73 crore of grant and Rs 2.25 crore of loan covering 14 projects in seven districts, totalling 8,566 families.The State Government, through its Backward Classes Welfare Department, has partnered with Nabard in six of the projects with Rs 8.87 crore of grant assistance.
7. Private insurers led by Reliance General are expected to take a hit of around Rs 450 crore from the Air India Express plane crash in Mangalore. The companies had earned a premium of around Rs 110 crore from Air India this year. This was the first time that private insurance companies had provided a comprehensive cover to the country's national carrier. Earlier, public sector players led by New India Assurance provided the cover. Apart from Reliance General, HDFC Ergo, Iffco Tokio and Bajaj Allianz were part of the consortium. Like any large risk, the general insurance companies had reinsured the risk, with Sumitomo being the lead reinsurer, a first for the company. ICICI Lombard had also participated as a reinsurer.