12 Oct 2002

Profit, loss route to forex adjustments
"The existing treatment requires exchange differences on repayment of liabilities incurred for acquisition of assets to be loaded in the cost of assets. Now such differences will have to be charged to the profit and loss account."

RBI rejects Kumar Auto application
Mumbai: The Reserve Bank of India (RBI) has rejected the application for certificate of registration submitted by New Delhi-based, Kumar Auto Finance Pvt Ltd for carrying on the business of a non-banking financial institution.

HDFC finds going good
Mumbai: Housing Development Finance Corporation Ltd (HDFC) finds its bread buttered on both sides. On the one hand, the cost of funds is falling - is now at less than 8 per cent. On the other, the demand for housing loans is going up.

Cap on health riders in life policies - IRDA makes insurers uneasy
New Delhi: Health is threatening to become a perennial source of concern for the Insurance Regulatory and Development Authority (IRDA). Days after the insurance regulator brought smiles among life insurers through its decision to go easy on the cap on health riders on life polices, it is now the turn of the non-life companies to complain about uneasiness because of the move.

Liquidity overhang pulls down real yields
Mumbai: The liquidity overhang in the banking system is beginning to push down real yields and real interest rates to two-decade lows. Real yields/real interest rates are the difference between the nominal rates and inflation rates.

Bank of Punjab's `Mobile Wallet'
New Delhi: Bank of Punjab has launched `Mobile Wallet', a payment mechanism whereby a customer holding a debit or credit card can make a purchase by sending messages through the mobile phone for the payment.

Telebanking from Dhanalakshmi Bank
Kochi: Film star Samyukta Varma inaugurated the telebanking facility of Dhanalakshmi Bank at Thrissur. By making use of this facility, customers can get details of their accounts, latest interest rates prevailing for deposits and can request statement of their accounts over fax and voice.

REC cuts rates for short-term loans
New Delhi: Rural Electrification Corporation (REC) has reduced the lending rates on short-term loans by 0.50 per cent, according to an official release. The company has also introduced two new loan instruments - short-term loans having a two and three-year repayment tenor. Till recently, the company had only a one-year short-term loan instrument.

PDs can lend 25 per cent in call market
Mumbai: Primary Dealers (PDs) are free to lend up to 25 per cent of their net-owned funds on `an average basis during a reporting fortnight' instead of on a daily basis, in the call/notice money market, effective from October 5.

HDFC eases housing loan norms for traders, businessmen
Chennai: Housing Development Finance Corporation (HDFC) is planning to relax the existing norms for housing loans for the trading and business community to enhance the housing credit offtake.
HDFC executive director R V S Rao says his company is trying to introduce a flexible approach in offering housing loans to the non-salaried class people. “The trading and business community offers a huge potential for HDFC. Discussions are on to identify the basis on which these prospective customers have to be assessed.“
HDFC is also planning to be more aggressive on the non-resident Indians (NRI) front. “We are targeting the untapped potential available in countries like the US, the UK and Canada besides focussing on the Middle East. As per the revised policy of the company, we are looking at foreign citizens with Indian origin as well to boost credit offtake in the NRI segment,“ says Rao.

After the 11 September 2001 attacks, credit offtake in the NRI segment, especially in the US, has gone down substantially. The company is trying to tap the market more aggressively, Rao adds. HDFC, during the current fiscal, is targeting the NRI business, which is worth Rs 400 crore as against the previous year's performance of Rs 300 crore.

RBI allows gold, forex to have a single open position limit
Mumbai: The Reserve Bank of India (RBI) has decided to allow bullion banks to have one single open position limit for both gold and forex, albeit after banks get the board approval in this regard. Till recently, the RBI treated bullion banks' limits in both gold and forex separately.
In its circular on sale of gold / silver / platinum dated 7 October 2002, sent to all banks authorised to import these metals, the RBI said: “[Bullion] banks need to have a single open position limit for both gold and foreign exchange. Banks may operate within the aggregate of the open position limits for foreign exchange and gold already approved by [the RBI]. In case there is a need for enhancement in the common open position limit, banks may approach the department for approval of such enhanced limit. In terms of our extant instructions, the open position limit would carry 100-per cent risk weight.“
As per the RBI's earlier circular dated 4 March 1998, these banks were advised to lay down, with the approval of their boards, prudential limits on taking open position in gold and also to obtain the specific approval of the RBI for such limits. The latest circular, thus, removes this requirement and considers the open position in both gold and foreign exchange as one, giving clear indication that gold will now be treated similar to foreign currencies.
The latest move will have wider implications on the use and treatment of the precious yellow metal in India. The move is expected to see the emergence of trading in gold, both physical and gold certificates (paper gold as it is commonly known), not permitted currently. And gold would then be traded as forex is traded.