14 june 2003

alf to mop up rs 105 cr through preferential issue
chennai: chennai-based ashok leyland finance ltd plans to raise rs 105 crore through the issue of 2.08 crore cumulative convertible preference shares to the existing shareholders of the company. the board of directors, in their meeting held on friday, has decided that the shareholders will be issued two ccps for every three equity shares held. the ccps will have a face value of rs 50 and carry an interest rate of 7.5 per cent per annum. the ccps will be converted into equity shares after a three year period at a premium of rs 40 (face value rs 10) or the average of the six month trading price at the exchange, where the stock is frequently traded (with a minimum of rs 10), whichever is lower. the issue of ccps will help extend the firms financing capabilities besides boosting capital adequacy, which stands comfortably at 16 per cent (march 2002), as against the rbi stipulated 12 per cent. currently, the paid-up share capital stands at rs 31.13 crore and the ccps will be considered as tier ii capital.

ifc likely to pick imgc stake
chennai: the national housing bank is likely to get a $6 million (approximately rs 30 crore) equity investment from the international finance corporation, washington for its india mortgage guarantee company. imgc is being promoted by nhb in association with four foreign partners as the first mortgage guarantee company for housing finance firms in the country. though nhb has not yet finalised the initial equity capital base, the paid-up equity of the company is expected to go up to $40 million as per business requirements. ifc has evinced keen interest in investing in the venture and is expected to take a final decision in this regard by early next month, senior nhb officials said. ifc director board would consider the investment in imgc at its next meeting scheduled to be held on july first week, ifc has notified.

hdfc targets 30 per cent growth in loan approvals, disbursements
kolkata: housing development finance corp ltd has set a 30 per cent growth target in loan approvals and disbursements during the current financial year 2003-04, hdfc managing director keki m mistry said. "during the financial year ended march 31, 2003, hdfc's total loan approvals stood at rs 11,732 crore and we hope to achieve a 30 per cent growth during the current fiscal," he said, while attending a seminar on real estate and housing - new growth sectors in eastern india - organised by the bengal chamber of commerce & industry here on friday. during the fiscal 2002-03, hdfc disbursed a total loan of rs 9,957 crore. "we have set a target to increase this figure by 30 per cent as well during the current financial year," he said, adding hdfc has securitised rs 500 crore worth of loan in 2002-03. "we have done this securitisation in six indian states where the stamp duty on loan securitisation has been reduced," he said. these six states are west bengal, andhra pradesh, tamil nadu, karnataka, gujarat and maharashtra

hdfc expects to borrow rs 6,000 cr from markets
kolkata: housing development finance corporation expects to borrow over rs 6,000 crore this year from both domestic and global markets. it is specifically looking at a $200-million package from international finance corporation. hdfc, said keki m. mistry, corporation's managing director, is in negotiations with the washington-based agency with regard to the loan. this will form a critical part of the company's overall borrowings. the housing finance company also expects to close the year with a 30 per cent growth in loan approvals and disbursals. last year, its approvals stood at rs 11,732 crore, and disbursements at rs 9,957 crore.

hdfc sells 20 lakh shares of amc to standard life
mumbai: housing development finance corporation ltd has sold 20 lakh equity shares of rs 10 of its subsidiary, hdfc asset management company ltd, to standard life investment ltd for a consideration of rs 34 crore. in an intimation to the bombay stock exchange, hdfc has said that consequent to this sale, the corporation would hold 50.10 per cent of the total paid-up capital of hdfc amc and the balance 49.90 per cent would be held by standard life investment ltd.

rs 28-cr loan default to karur vysya bank - interim injunction passed against hamsaveni spinners
coimbatore: the debt recovery tribunal, coimbatore, has passed an interim injunction against hamsaveni spinners (p) ltd - a spinning unit - for defaulting their bankers - karur vysya bank to the tune of rs 28 crore. the order was passed on june 9. the drt, in its order, identified shivashanmugham as the official receiver to take possession of the property. kvb had extended various credit facilities to this unit, which had filed a reference with the board for industrial and financial reconstruction under section 15 (1) of the sick industrial companies (special provisions) act in september 2001.

arvind mills commercial paper gets `p1+' rating
mumbai: the rs 20-crore commercial paper programme of arvind mills ltd has been assigned a `p1+' rating by crisil, which indicates a "very strong" rating for the paper. according to crisil, the rating is based on the unconditional and irrevocable standby facility provided by state bank of saurashtra to the extent of the rated amount. the standby facility will be available for the entire duration of the commercial paper to make timely repayments. the rating on the rs 25.36-crore non-convertible debenture has been upgraded to bb, indicating "inadequate safety," from d, which falls in the "default" category.

drt recovers rs 53 cr till april
coimbatore: the year-old debt recovery tribunal) here has recovered rs 53 crore up to april 2003. appreciating the efforts taken by the presiding officer of the drt at the second annual meet of banks and fis, the co-ordination committee for drt (represented by bankers) noted that the tribunal had performed reasonably well during last year.

sidbi seeks govt nod to buy securitised assets
mumbai: the small industries development bank of india is envisaging a new role for itself, as a buyer of securitised assets in an attempt to increase the lending capacity of banks to the small-scale sector. "the board of directors of the development financial institution has approved the idea and we are now writing to the union government for permission to buy securitised assets. we should be starting the process in a month's time once we procure regulatory consent,'' said p. srinivasa rao, chief general manager, sidbi. the sidbi act 1989 does not specifically authorise the institution to purchase securitised assets and therefore the government's approval is necessary. the aim is two-fold for sidbi, to increase bank credit to ssis and to grow its own asset book.

ifc to advance $15 million to balrampur chini mills
new delhi: the international finance corporation will be providing a loan of $15 million (rs 72 crore) to balrampur chini mills ltd, one of the leading manufacturers of sugar in the country. according to an ifc release, this loan will partially finance an integrated greenfield sugar mill with a capacity of 4,000 tons of cane a day and an associated 20 megawatt co-generation power plant in haidergarh in uttar pradesh. it will also partly fund a 60 kilolitre a day ethanol distillery with a biomass fertiliser unit at the company's existing babhnan plant in up. the new plant is expected to process sugarcane from about 40,000 farms in the area. production of ethanol is also expected to reduce the environmental impact of relying on fossil fuel. ethanol and gasoline will be blended to generate electricity on a sustainable basis through the use of bagasse, a by-product of the milling process.

13 june 2003

irda nod for afp courses
hyderabad: the association of financial planners (afp) has received recognition from the insurance regulatory and development authority (irda) as its approved training & examining body. in a press release here on thursday, afp said it was the first organisation whose courses had been given irda's approval to be equivalent of 100 hours of training and pre-licensing examination. at present, any candidate desirous to become an insurance agent is required to have, from an irda approved institution, a practical training of minimum of 100 hours and appear for pre-licensing examination. afp, a non-profit professional association, based in new delhi was established in april 2001 through the contributions of financial services companies such as alliance capital, american express, bajaj capital, cholamandalam finance, deutsche bank, franklin templeton investments, hdfc mutual fund, hsbc, icici prudential life insurance, idbi principal, il&fs amc, prudential icici mutual fund, skp securities limited and sun f&c mutual fund.

andhra bank to offer new services
hyderabad: andhra bank proposes to diversify into other financial segments such as distribution of insurance products, mutual fund products, cash management services, health insurance for customers, hassle-free electronic card for people who are going abroad. the bank has realised that its spreads would continue to be under strain in the soft interest regime and also in the framework of stringent income recognition and provisioning norms. "reduction in costs, increase in income flows and improving delivery channels by effectively using the technology initiatives would be focussed with clear-cut strategic intent," the bank assured its shareholders. aimed at leveraging information technology for better customer service, reducing costs and imparting the ability to handle higher volume of business, the bank has computerised 1,087 out of 1,100 branches. "the bank is racing towards seamless integration of branches through cluster banking solution by september 30, 2003."

syndicate bank to adopt new risk management system
hyderabad: aimed at effectively addressing the three categories of risks - credit, market and operational, syndicate bank has decided to put in place a new risk management architecture. this is expected to enable the bank prepare groundwork for the implementation of new basel framework on risk management. "for the first time, a comprehensive risk profile of the bank has been prepared on the basis of templates provided by reserve bank of india," the syndicate bank chairman and managing director, michael bastian, said. the risk profile captures eight business risks and four control risks. further, the risk profile indicates level and direction of risk in each of these areas, michael bastian informed the shareholders in the management discussion and analysis enclosed to the latest balance sheet. according to him, a board level sub-committee on risk management (irmc) has been constituted to oversee the risk profile and implementation of various risk management and control policies and procedures. separation of risk control and risk taking functions were clearly delineated, he said.

exim bank pays out rs 45 cr to govt
mumbai: exim bank has paid rs 45 crore dividend to the union government for the financial year ended march 31, 2003. the dividend payout amounts to 22 per cent of the bank's net profit of rs 207 crore. t.c. venkat subramanian, managing director and chief executive officer, handed over the cheque to anandrao adsul, union minister of state for finance.

corpn bank cuts rates on forex deposits
mangalore: corporation bank has revised its interest rates on fcnr(b) deposits with effect from june 9. according to a bank release issued here today, the interest rates on dollar deposits for tenures of one year to less than two years and two years to less than three years remain unchanged at 0.90 per cent and 1.20 per cent respectively. the interest rate applicable for deposits for a period of three years only is 1.55 per cent (previously 1.65 per cent). currently, fcnr(b) deposits are accepted in three currencies - us dollar, pound and euro. interest rates on euro deposits have also been revised. euro deposits for a period of one-year to less than two years will earn interest at the rate of 1.90 per cent (1.95 per cent earlier). the revised rate for deposits of two years and less than three years is 2.00 per cent (2.05 per cent) and for deposits of a period of three years 2.25 per cent (2.30 per cent).

rating for new india assurance
mumbai: a.m. best co, an international insurance rating company, has affirmed the financial strength rating of new india assurance company ltd at a (excellent), for the fourth time in a row. the rating reflected the company's excellent capital position, the maintenance of its leading position in the domestic insurance market and substantial returns from its investment portfolio, said a press release. according to a.m. best co, new india's capital adequacy is excellent. the company's capital fully supports its plans for growth and diversification.

centurion prunes net loss
mumbai: centurion bank, which is being taken over by the rana talwar-led sabre capital worldwide, has reported a sharp drop in net loss for the quarter ended march 31, 2003 of 89.6 per cent to rs 11.39 crore from rs 109.66 crore in the corresponding period of the previous year. the bank has convened an egm in goa on june 14 to seek shareholders' approval for change of management control and infusion of capital to revive it. for the full financial year, the bank has registered 84 per cent decrease in net loss for the year ended march 31, 2003 at rs 25.36 crore, down from rs 161.84 crore in the previous year. v. janakiraman, chairman and managing director, told newspersons that the net loss of rs 25.36 crore should be viewed against the fact that the bank had taken an "extraordinary one-time loss of rs 14.10 crore on account of the sale of certain non-banking assets, namely windmills.''

hdfc sells 10 per cent in hdfc amc for rs 34 crore
mumbai: hdfc on thursday sold 10 per cent stake in its subsidiary, hdfc asset management company ltd (hdfc amc), to standard life investment for rs 34 crore. with this sale, hdfc's holding in its asset management arm has come down to 50.1 per cent from 60.1 per cent, and the balance 49.90 per cent is now with standard life investment, hdfc's treasury head conrad d'souza said. hdfc amc has a corpus of about rs 7,500 crore. hdfc has sold 20 lakh shares of rs 10 each of hdfc amc to standard life investment. this is the third time, hdfc sold its stakes in hdfc amc to bring in its holding to 50.1 per cent level.

kotak bank wants 'reasonable mass' before inorganic growth
mumbai: kotak mahindra bank ltd will endeavour to attain reasonable mass and size by strengthening its branch network and expanding its customer base, before giving a concrete shape to its plan to grow through mergers and acquisitions (m&a).
"we are open to mergers and acquisition, but not in the near future. the bank, for the time being, will concentrate on infrastructure, expansion of branch network and technology," bank executive director dipak gupta said. the promoters of the bank are required to lower their stake by 11 per cent to 49 per cent after march 2004, in order to comply with reserve bank of india's stipulations. the bank is exploring various options for offloading promoters equity, which now stands at about 60 per cent. it will consider mergers, public offers, private placements and other options and work out the plans. "we are open to these ideas. but not now," gupta said.

stanchart courts consumers with mega loan mela
pune: class bankers are now wooing the masses. standard chartered bank has for the first time organised a mega mela to promote its home loan, auto loan and consumer loans at pune. it has got 60 builders, 15 automobile companies and 50 consumer durable brands under one roof to offer customers a range of products. if the response is good it will take the mela to other cities as well. it also plans to take home loan to 22 cities by the end of this year, including nasik, nagpur and indore, using its dsa network in places where it doesn't have branches. murali mn, gm and head, home loans, car loans and banking strategy, said that the bank's home loan portfolio grew four fold since 2001, but did not disclose the exact size. "our portfolio has grown at a brisk rate of 25 to 40 per cent in the market we operate," he said.

$10-m usaid deal for insurance sector
new delhi: the united states agency for international development (usaid) has awarded a $10-million contract to bearingpoint for a four-year programme to develop the insurance sector in india. under the contract, awarded late last month, bearingpoint (formerly kpmg consulting) will implement a programme of technical assistance with the insurance regulatory and development authority (irda). bearingpoint has set up a project office in hyderabad to maximise its interaction with irda, also based there.

the us assistance will help irda to build its institutional capacity in the areas of solvency and market conduct supervision, promote an enabling policy and a regulatory and institutional environment for the development of health insurance system, develop key professions associated with the insurance sector, and also develop comprehensive database on insurance such as health insurance, non-life and life insurance, a press release issued by the us embassy said here on thursday.

sundaram finance net up 13 per cent to rs 46 cr in fy03
chennai: chennai-based sundaram finance ltd (sfl) has reported a 13 per cent growth in its net profit during the year-ended march 2003. net profit of the company was rs 45.66 crore as against rs 40.36 crore in the previous year. gross income, including other income, has gone up to rs 476.06 crore (rs 467.64 crore). the company has recommended a tax-free dividend of 75 per cent for the year. this includes additional dividend of 15 per cent to commemorate the commencement of the 50th year of operations of sfl. the outgo towards dividend would be rs 20.30 crore. capital adequacy ratio was 17.29 per cent. net non-performing assets of the company was 1.45 per cent (2.37 per cent). addressing a press conference on thursday, gk raman, managing director, sfl said the company has shown a 25 per cent growth in hire purchase and loan disbursements.

bonds to protect banks from rate swings: crisil
mumbai: the domestic banking system is sitting on unrealised appreciation of rs 63,900 crore on its investment portfolio, with the sharp fall in interest rates over the last few years. a study released by credit rating and information services of india ltd (crisil) on thursday indicated this potential and estimates that this would provide a cushion to withstand an interest rate shock of up to 241 basis points (bps). interest rates have slumped by about 600 bps in the last four years, which has led to a significant rise in the prices of outstanding dated stocks. given the soft interest rate outlook, the cushion seems to be adequate to protect banks from an interest rate shock, at least in the short term. crisil's chief rating officer and executive director roopa kudva said: "we do not expect any material change in interest rates over the one-year time horizon and hence there is low likelihood of erosion in banks' investment portfolio."