It decided to defer, until July 2000, the second round of reduction in telecom tariffs, which included reduction in long distance STD/ISD charges. The Trai will now review the entire tariff re-balancing exercise that was done in 1999.

The decision to defer the reduction was taken on the basis of a representation made by the Department of Telecom Services (DTS) which said that any further reduction in the long distance rates would further erode the department’s profitability and it would not be able to finance the planned expansions.

29 March 2000

ICICI Bank lists on the New York exchange
Mumbai : ICICI Bank today became the first Indian bank, and the second from Asia, to list on the New York Stock exchange, when its American Depository Shares (ADS) began trading. Each ADS represents two underlying shares of ICICI Bank and the price was fixed at $11, which is a 5.5 per cent premium on the scrip’s five day average on the BSE and NSE. The ADS opened for trading at $14 representing a premium of over 27 per cent on the issue price.

The $175m issue generated an exceedingly good demand when it was oversubscribed by 13 times to give a demand size of $2.2 billion. While almost $1.5 billion of this demand came from institutional investors, the balance $700m came from retail investors. The bank came out with the issue within two months of receiving the mandate, the fastest possible time for any ADS issue from India.

The bank is reported to have stated that the funds from the ADS will be used selectively to pursue growth opportunities through acquisitions and strategic investments.

Finance minister says rates are high
Mumbai: In a statement that was extremely guarded, so as not to upset the money markets, Mr. Yashwant Sinha, the country’s finance minister stated that cost of funds to Indian industry was high.

He made this statement at the annual general meeting of the Indian Banks Association while stating the Indian industry, services and agriculture cannot be globally competitive if the cost of funds is this high.. Mr. Sinha said that the banks should reduce their transaction costs by curtailing expenditure while increasing their business volumes. He also said the private and foreign banks should seriously do some introspection to reduce the high level of NPAs their balance sheets are beginning to show.

28 March 2000

Foreign investment norms in NBFC eased
New Delhi: The union finance ministry announced new guidelines for investment in NBFC that will pave the way for further liberalisation in this sector.

Under the new guidelines, the minimum equity investment in a fully owned company has been reduced to $5 m from the earlier limit of $50 m., with a stipulation that the wholly owned subsidiary will divest 25 per cent of the equity in favour of the public within three years of operations. The norms for holding companies – minimum capital of $50m – however, continues to stay. According to a release by the ministry, the new guidelines have been framed after a detailed review of the existing guidelines, especially since foreign companies were finding it very difficult to locate credible partners in a short time.

ICICI Bank provides more for NPAs
Mumbai: ICICI Bank, which is in the final lap of its roadshows to raise $175m through the issue of ADRs, has made an additional provision of Rs. 13.5 crore for NPAs under the US GAAP for the quarter January to March 2000. The bank had, earlier, made a provision of Rs. 22 crore for the first nine months of this fiscal year. This additional provision has been made on account a private finance company, to whom loans have been extended, and which has gone into winding up before the BIFR.

The decision to make this additional provision was taken at a meeting of the board of directors held on March 14.

Kerry Packer floats $250m fund with two Indian partners
Mumbai: Autralian media tycoon, Kerry Packer, following in the footsteps of his compatriot, Mr. Rupert Murdoch, has announced the setting up of a $250m investment fund in association with Mr. Vinay Maloo, chairman of Himachal Futuristic Communication Limited (HFCL) and noted BSE stock broker, Ketan Parekh. The two Indian partners are said to be holding their stakes in their individual capacities.

The fund will aim to identify investment opportunities in high growth, high technology areas like internet, software, e-commerce, telecom and media and entertainment. KVP Ventures, the name of the fund set up, will be third investment made by the Australian tycoon in this country, after his investments in HFCL and Sahara TV.

IBA signs wage pact with unions
Mumbai: The Indian Banks Association (IBA), the apex body of the banking sector which represents all the banks, today signed a wage settlement with four bank staff unions, thus bringing to an end a year long negotiations between the two. The agreement will pave the way for a 12.25 per cent increase in the salaries of bank staff.

The agreement, however, left out three weak banks from the purview of the new wage scales. These were Indian Bank, UCO Bank and United Bank of India.

Sources also said that this wage agreement may be the last sector wide settlement reached by the IBA, since the IBA is of the view that, in future, wage negotiations should be bank-specific and not sector wide. The union leaders, however, are opposed to such a move.

27 March 2000

Global Trust to issue preferential shares
Mumbai: One of India's earliest entrants into the private sector banking sector, Global Trust Bank, is seeking to enhance its net worth to over Rs. 100 crore, by issuing preferential shares to mutual funds and other institutional investors. It is believed that this step is being taken with a view to enabling the bank to enter the insurance sector.

According to Mr. Ramesh Gelli, managing director of the bank, it is scouting around for a foreign partner who will take a strategic 20 per cent stake in the bank. Global finance institution, International Finance Corporation, is said to be helping the bank finding the right partner.