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Jalan:
No repo rate cut
New Delhi: The Reserve Bank has expressed the hope
that favourable market conditions with soft interest rates
and excess liquidity will enable the government to borrow
Rs 7,000 crore more next month. While maintaining the
soft interest bias will continue, governor Bimal Jalan
ruled out a repo rate cut as of now. “Market conditions
are good. If the government needs more money, it can be
raised,” he told reporters on here Friday. Dr Jalan
earlier met finance minister Jaswant Singh. The yield
on 10-year government papers are at the lowest level,
at about 5.75 per cent, while there is excess liquidity
in the financial sector.
Taking
advantage of this situation, RBI on behalf of the government
plans to raise Rs 21,000 crore during the first three
weeks of July as against the scheduled Rs 14,000 crore.
The central bank plans to auction bonds worth Rs 12,000
crore through three long-dated papers on July 1, as against
the original schedule of Rs 9,000 crore. Dr Jalan termed
this as an “anticipation” that the government
requires more funds than was laid down in the borrowing
schedule. The governor dismissed the additional borrowing
as a measure to suck excess liquidity from the system,
saying “it is not a liquidity drain.” The Centre’s
gross borrowings stood at Rs 50,001 crore till June 13,
as against Rs 55,001 crore during the same period last
year, which was an indication of fiscal prudence.
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Indian
Bank tops interest spread lList
New Delhi: Indian Bank has topped the list of increase
in interest spreads: the difference between ‘interest
earned’ and ‘interest expended’. In the
one year period between 2001-02 and 2002-03, it achieved
a 52.60 per cent increase in interest spread, from Rs
531 crore to Rs 810 crore. This is followed by Punjab
National Bank (PNB) (35.29 per cent), Vijaya Bank (32.57),
Corporation Bank (26.70 per cent), Indian Overseas Bank
(IOB) (25.92 per cent) and State Bank of Indore (25.65
per cent). The total interest earned by the above number
of banks increased by 6.34 per cent to Rs 1,01,746 crore
during 2002-03, from the level of Rs 95,675 crore during
2001-02. On the other hand, interest expended of the 24
PSBs also increased marginally by 1.09 per cent to Rs
66,199 crore during 2002-03, from the level of Rs 65,480
crore during 2001-02. In 2002-03, the top five PSBs in
terms of interest spreads are SBI (Rs 9,977 crore), PNB
(Rs 3,202 crore), Canara Bank (Rs 2,233 crore), Bank of
Baroda (BoB) (Rs 2,103 crore) and Bank of India (Rs 2,036
crore). But in 2001-02, the top five were SBI (Rs 9,081
crore), PNB (Rs 2,367 crore), BoB (Rs 1,879 crore), Bank
of India (Rs 1,840 crore) and Canara Bank (Rs 1,820 crore).
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HDFC
to double number of ESOS, halve grant price
Mumbai: The compensation committee of HDFC
had decided to double the number of employees stock options
(ESOS) vested but not exercised, that are granted on October
17, 2002, and halve the grant price to take into account
the impact of the issue of bonus shares. The grant price
in respect of options granted on December 15, 1999, which
were not exercised as on November 30, 2002, was reduced
to Rs 128.50 per option and the grant price of options
granted in October 2002, was reduced to Rs 302 per option.
At the extra-ordinary general meeting of HDFC held on
December 2002, the shareholders approved the issure of
bonus shares to the existing shareholders in the ratio
of one equity share of Rs 10 each for one equity share
of Rs 10 each held.
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SBI
scraps medical benefit scheme for retired employees
Kolkata: As a measure of severe cost control, the
country’s biggest public sector commercial bank,
State Bank of India (SBI), has decided to discontinue
SBI Retired Employees Medical Benefit Scheme. An internal
circular issued by SBI’s deputy managing director
and corporate development officer’s office stated,
the bank’s staff and officers retiring from July
1, 2003 onwards would not be entitled to benefits under
the scheme. However, SBI has clarified that those retiring
before June 30 would be entitled to the benefits and retired
employees already enjoying the scheme will continue to
do so. Under the Scheme, retired employees enjoying the
pension scheme will be entitled to medical reimbursements
up to Rs 2,00,000 provided they forego one month’s
pension. A circular dated June 19 stated, the bank’s
actuaries have found that the fund bearing the medical
expenses of retired employees is under great pressure
since many more have retired under the voluntary retirement
scheme (VRS) launched in 2001.
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IFC
to lend $200 million to HDFC in 2 tranches
Mumbai: Housing Development Finance Corporation
Limited has signed a loan agreement for $200 million (about
Rs 930 crore) in two tranches with International Finance
Corporation Washington, the private sector development
arm of the World Bank Group.
The
agreement was signed by HDFC executive director Renu S
Karnad and general manager-treasury Conrad D’Souza
and IFC principal investment officer Anita Marangoly George
in New Delhi on Thursday, HDFC said in a release on Friday.
The loan from IFC is obtained in two tranches. Loan A
of $100 million is lent directly by IFC as a multilateral
tranche and Loan B of $100 million is a syndicated tranche.
Loan A has bullet maturity at the end of 8 years and carries
a rate of interest of $6-month Libor plus 100 basis points.
Loan B of $100 million will be syndicated by IFC and placed
with leading international banks. The syndication process
will be completed shortly, HDFC said. The main objective
of the loan is to broadbase the medium to long-term funding
sources for HDFC and also to reduce the overall cost of
funding. The proceeds of the loan will be utilised for
lending to individuals across the country for residential
housing.
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Bharat
Overseas, Sundaram Fin in pact for back office work
Chennai: Bharat Overseas Bank Ltd has tied
up with Sundaram Finance Ltd for sourcing the `ATM card
application processing work' from the latter. Sundaram
Finance officials told that the BOBL deal was `very tiny'
in terms of volume, for the NBFC's new BPO division, but
represented a breakthrough into the banking industry.
"We are very happy that the banking industry is thinking
in terms of outsourcing this kind of activity," P.S.
Raghavan, who heads Sundaram Business Services, the BPO
division of Sundaram Finance, said. Sundaram Business
Services is in talks with "a couple of non-banking
finance companies" for handling their accounting
work.
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IFCI,
TFCI take over assets of Pushpa Builders
New Delhi: IFCI Ltd and Tourism Finance Corporation
of India have jointly taken over the assets of Pushpa
Builders Ltd on account of default of loans. The assets
acquired include a hotel project under implementation
in the 5-star category with 86 rooms including 10 suites.
Pushpa Builders Ltd was sanctioned two loans of Rs 1.6
crore and Rs 2.4 crore jointly by IFCI and TFCI in 1990
for setting up a hotel project at Lucknow. The project
included a shopping plaza under which number of shops
have been constructed and rented out. The company has
been in default to the institutions since the beginning.
A demand notice under Securitisation Act claiming an amount
of Rs 33.39 crore as on August 23, 2002, towards the dues
was issued on October 7, 2002. Despite the lapse of 60
days of notice period the company did not pay the above
amount. Thus, the decision was taken to attach the properties.
Hardicon Ltd, the consultancy organisation, promoted by
IFCI, IDBI, ICICI, and SFCs/banks has been appointed as
the agent for preservation and protection of the assets.
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APSFC
posts Rs 2.3 cr net
Hyderabad: The Andhra Pradesh State Finance Corporation
has made a turnaround and posted a net profit of Rs 2.35
crore after a lapse of 9 years in 2002-03. The corporation,
which has a loan portfolio of Rs 1,100 crore, had incurred
a loss of Rs 13.13 crore in 2001-02. Recovery of dues
to the tune of Rs 409 crore, swapping of high cost loans
with low cost loans and overall improvement in performance
have accrued profits to the organisation, the APSFC chairman,
M. Gopalakrishna, and the managing director, Ratan Prakash
Watal, told newspersons here on Friday. They said that
APSFC had attained a lead position among all SFCs in the
country by sanctioning loans to the tune of Rs 420 crore,
making disbursements of Rs 301 crore and registering 21
per cent increase in recovery of dues during the last
fiscal. Following this, the Small Industries Development
Bank of India (SIDBI) proposed to extend a package of
concessions including a two-per cent reduction in the
interest rate on refinance borrowings.
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RBI
to remain closed on June 30
Hyderabad:
The Reserve Bank of India (RBI)'s Hyderabad office will
remain closed on June 30 for public transactions on account
of bank's annual closing of accounts, a press release
said. However, the Hyderabad Bankers' Clearing House managed
by the RBI and the MICR cheque-processing centre managed
by Bank of India will work on June 30, it added.
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HDFC
Mutual Fund to come up with pension
products
Kolkata: The country's No. 2 asset management company,
HDFC Mutual Fund, has proposed to be an early bird in
pensions when the sector is actually opened up by the
government, with inputs from its overseas partner, Standard
Life. HDFC MF hopes to emerge as a strong pension provider
in a business which, according to indications, may be
opened up for only six players. The recently-mooted pension
regulatory authority is expected to work out the norms
for this segment. "Yes, we plan to come up with pension
products and related services'', said Milind Barve, managing
director of HDFC MF, adding that the fund house hopes
to apply for a licence as soon as it is feasible. Pension
products are expected to have a large market in India,
a country in which the need for social security is being
felt more acutely than ever. "There will be challenges...
especially in the context of legislative changes and the
vast unorganised sector that has almost nothing to look
forward to after retirement,'' Barve said
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