Rupee at seven month high
Mumbai: The rupee strengthened to a seven-month high on Monday riding on the back of large foreign investment inflows and a weakening dollar. The rupee closed at 44.80/81 against the dollar, stronger by 23 paise over the previous close at 45.0300/0350.

Forwards Market: The six-month annualised forward premium closed at 0.59 per cent (0.40 per cent) while the 12-month forward premium ended at 0.67 per cent (0.45 per cent).

G Secs: Up by about 20 paise, with the benchmark 7.38 per cent 2015 paper closing at Rs101.25 per cent at a yield of 7.22 per cent. The 7.55 per cent 2010 paper closed at Rs103.15 at a yield of 6.86 per cent.

Call Rates: The rates were in the range of 4.75-4.85 per cent.

CBLO Market: 137 trades worth Rs5,851.40 crore were transacted in the rate range of 4.70-5.25 per cent.
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RBI report: Interest rates unlikely to decline further
Mumbai: The Reserve Bank of India has alerted banks that interest rates may have bottomed out and are unlikely to decline any further during the financial year 2004-05.

In its report on the `Trend and Progress of Banking in India, 2003-04', it said, "Over the past few years there has been a steady decline in interest rates largely reflecting sustained reduction in inflation rates and expectations. Such reductions in interest rates occurred in an environment where the credit growth remained sluggish. Consequently, there was a favourable impact on banks' balance sheets in terms of increased operating profits from treasury operations."

The enhanced treasury incomes enabled banks to make larger loan loss provisions due to which the net NPA ratios declined from 5.5 per cent in 2001-02 to 2.9 per cent by 2003-04.

However, there does not appear to be any further scope for similar trends to be observed during 2004-05, and in future, an increasing portion of banks' incomes would emanate from the traditional business of lending, the RBI said.
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RBI report: NPAs of Scheduled Commercial Banks on the decline
Mumbai: The asset quality of scheduled commercial banks (SCBs) has shown a remarkable improvement in 2003-04, according to the RBI report on `Trends and Progress of Banking in India' released on Monday.

The central bank has noted that the gross non-performing assets (NPAs) of SCBs has declined in absolute terms for a second year in succession, despite the switchover to the 90-day delinquency norm, effective March 2004.

Gross NPAs of scheduled commercial banks declined by 5.6 per cent in 2003-04, against a decline of 3 per cent in 2002-03. Due to significant provisioning, the net NPAs declined substantially by 24.7 per cent during 2003-04 against a decline of 8 per cent in 2002-03, the report said.

The decline in NPAs is evident across bank groups. During 2003-04, reductions outpaced additions in the NPAs account. For SCBs, the decline in NPAs was accompanied by the decline in doubtful and loss assets by 8.8 per cent and 15 per cent respectively, the central bank has observed.

The ratio of net NPAs to net advances of SCBs declined from 4.4 per cent in 2002-03 to 2.9 per cent in 2003-04. All bank groups witnessed a decline in the ratio of net NPAs to net advances in 2003-04.

Among bank groups, the old private sector banks had the highest net NPAs ratio at 3.8 per cent, followed by public sector banks, new private banks and foreign banks.
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RBI report: Retail exposures may impact asset quality of banks
Mumbai: The Reserve Bank of India has expressed concerns over the implications of the rapid rise in retail lending by banks. In its report on `Trends and Progresses in the banking sector', released here, RBI has cited several limitations to the surge in retail lending.

It said the increase in retail loans may impinge on bank credit for investment activities, thereby affecting economic growth. It will also increase indebtedness of households, which have implications for sustainability of private consumption and saving in the medium to longer horizon.

Retail lending, as a key profit driver for banks, has been behind the growing retail portfolio of banks, which constituted 21.5 per cent of total outstanding advances as on March 2004. The housing loans which form 48 per cent of total retail portfolio, had the least gross impairment at 1.9 per cent while consumer durables segment had the highest gross asset impairment at 6.3 per cent, said the report.

The RBI had put in place risk containment measures in its mid-term review of annual policy, 2004-05; and had increased the risk weight from 100 per cent to 125 per cent in the case of consumer credit, including personal loans and credit cards.

The retail thrust has become synonymous with mainstream banking for many banks over the last few years, said RBI in the report. While, new generation private sector banks have invested in creating and sustaining a retail brand, the public sector banks have also increasingly become active in retail loan area, the report added.

While ICICI Bank accounts for nearly 30 per cent of the domestic retail growth, State Bank of India's retail segment constitutes 20 per cent of its total advances. As per the report, in 2003-04 retail lending of SBI grew by Rs8,803 crore against an increase of Rs6,641 crore in 2002-03.
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IFCI operating profit for H1 at Rs. 64-crore
New Delhi: IFCI Ltd has reported an operating profit of Rs64.18 crore for the first six months of the current fiscal, against an operating loss of Rs99 crore during the corresponding period in the previous fiscal. IFCI is presently in the midst of the restructuring exercise.

The operating profit for the quarter ended September 30, 2004, has been Rs90.42 crore against an operating loss of Rs62.93 crore in the second quarter of the last fiscal.

The institution has cut its net loss to Rs88.32 crore for the six months period as against Rs1,350 crore in the previous year. For the quarter ended September 30, the net loss has been Rs40 crore against Rs1263.78 crore.
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New deposit rates from IOB
Thiruvananthapuram: The Indian Overseas Bank (IOB) has announced new interest rates on domestic and non-resident ordinary (NRO) deposits.

The new rates, to be effective from Monday, are as follows (in percentage figures): Seven days to 14 days - 3.50; 15 days to 179 days - 4.75; 180 days to 270 days - 5.00; 271 days to less than one year - 5.25; one year to less than three years - 5.75; and three years and above - 6.00.
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