Rupee gains 30 paise to close at 5-year high
Mumbai: Buoyed by up-gradation of India's foreign currency rating by Standard & Poor's, the Rupee surged to an over five-year closing peak of Rs43.40/42 per dollar.

The Rupee gained a massive 30 paise from Tuesday's close of Rs43.70/71. Resumption of heavy foreign fund inflows also gave the Rupee strong support on the back of sliding global oil prices to $47 a barrel. The closing level has not been seen since early December 1999.

Forwards Market: The six-month forward closed on Wednesday at 1.84 per cent as against 2.36 per cent previously. The one-year forward also came off to end at 1.56 per cent (1.70 per cent).

G-Secs: The Government securities market moved up three to four basis points overall. The benchmark 10-year 7.38 per cent paper finished at 6.68 per cent, against the previous close of 6.72 per cent.

Call Money: Rates ended at 4.60-4.65 per cent in a liquid market.
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S&P upgrades foreign currency rating
Mumbai: Standard & Poor's upgraded its long-term foreign currency rating on India by one notch to `BB+' with a stable outlook. The agency also affirmed the long-term local currency and short - term ratings at `BB+'. The `BB+' rating is still below investment grade, though only one notch.

The upgrade on the foreign currency reflects India's improved external position and growth prospects, the agency said in a press release.

India's external position - stronger than all other sovereigns in `BB' rating category - is resilient and likely to be maintained in the coming years, the agency noted. The country's foreign exchange reserves mitigate the risk of volatility in external and domestic confidence. "The strong growth in export earnings, particularly from the service and manufacturing sectors, as well as non-debt foreign capital inflows should alleviate the impact of rising imports. India's external debt and debt service burden is expected to fall in the years ahead," the agency said.

S&P is the third international credit rating agency to upgrade India in the past year. Moody's Investors Service upgraded India's foreign currency debt to `Baa3', or investment grade, from `Ba1' in January 2004. Fitch Ratings also upgraded India's foreign debt in January 2004 to `BB+' from `BB'.

S&P said that India's economic prospects are good with GDP growth likely to hover at 6.5 - 7 per cent in the medium term. The service sector is dynamic, while the industrial sector is benefiting from gradual deregulation, trade liberalisation and modest improvements in infrastructure. The business environment is likely to improve in the coming years, sustaining private investment and economic growth. The banking system has also improved with reforms; it can now support a higher economic growth while reducing the contingent risk on the Government, the release said.

S&P also raised its long-term foreign currency rating on the Export - Import Bank of India by one notch top `BB+', in line with the upgrade on the sovereign credit rating.

The stable outlook on the ratings reflect the expectations that the pace of the fiscal correction, further improvements in the external sector and lifting India's potential growth rate substantially will be gradual.

The principal risk to India is generated by a weak profile, especially its high deficit and debt, and serious fiscal inflexibility, which is one of the worst among the rated sovereigns, the release said.

Following this upgrade, S&P also raised its long-term foreign currency counter party credit ratings on State Bank of India and ICICI Bank to `BB+' from `BB'. The short-term foreign currency 'B' ratings on SBI and ICICI Bank were affirmed. The outlook on both banks is stable, the agency said in a related press release.
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RBI: Norms for merger of UCBs
Mumbai: The Reserve Bank of India will consider proposals for merger and amalgamation among urban co-operative banks (UCBs) provided the net worth of the acquired bank is positive, and in cases of banks with negative worth the acquirer bank should assure the protection of deposits of all the customers of the acquired bank.

In its guidelines for mergers between UCBs, the central bank has said that merger proposals will also be considered in cases where the net worth of acquired bank is negative, but the acquirer bank on its own assures to protect deposits of all the customers of the acquired bank.

While considering such proposals, RBI said it will confine itself to the financial aspects of the merger and to the interests of depositors as well as the stability of the financial system.

A co-operative bank can merge only with another co-operative bank situated in the same State or with a co-operative bank registered under Multi State Co-operative Societies Act, according to RBI.
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Indian Bank Q3 net falls
Chennai: Indian Bank has made a net profit of Rs74.42 crore in the quarter ended December 31, compared with RS184.89 crore in the corresponding quarter of last year. Provision for wage arrears (Rs124 crore) and market risk and other contingencies (Rs30 crore) were the main reasons for the fall in net profit.

The bank made a net profit of Rs228.52 crore in the first nine months of the current year against Rs301.76 crore in the corresponding period last year. In the same period, the bank made an operating profit of Rs757.88 crore against Rs484.06 crore in the same period last year.

The rise in the operating profit was despite a sharp fall in income from treasury operations - to Rs12.45 crore in the first nine months of the current year from Rs230.77 crore in the same period last year.

The bank recovered Rs205 crore of bad and doubtful loans. At the end of December 2004, the bank's NPAs stood at 1.48 per cent, lower than 2.71 per cent at the beginning of the financial year.
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MetLife India launches new plans
Bangalore: Metlife, a private sector life insurance company, has launched its unit linked plans, Met Advantage and Met Smart. Met Advantage is a pension plan while Met Smart is a permanent insurance plan.

Met Advantage offers up to six investment options to suit policy holder's risk and return profile. The investment portfolios for the unit linked plans would be constructed by Deutsche Asset Management, the company has said.

During the last calendar year, the company earned a premium of Rs64 crore, which includes both new premiums as well as renewals. This year, it is targeting a premium of at least Rs121 crore.
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IIEL in joint venture with Henry Butcher
New Delhi: SREI Infrastructure Finance Ltd-sponsored Indian Infrastructure Equipment Ltd (IIEL) has signed an agreement for a strategic joint venture with GoIndustry Henry Butcher to provide infrastructure and industrial asset auction and valuation services in the country.

The joint venture christened Henry Butcher International Valuers and Auctioners Pvt Ltd proclaims to be the country's first ever auctioning of infrastructure and industrial assets.

This unique format of asset disposal will be attractive to financial institutions, banks, Government bodies and companies in the private and public sectors whose primary objective is to obtain the highest realisation for their assets.
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Lakshmi Vilas Bank: Rights issue and bonds to hike capital
Coimbatore: The Karur-based Lakshmi Vilas Bank Ltd has resolved to enhance both tier I and tier II capital by March 2006, in its bid to augment capital funds in order to comply with Basel II norms.

According to the bank, the board has resolved to offer equity shares on a rights basis at 7:10 ratio and issue unsecured, subordinated bonds for a total value of Rs30 crore. The equity issue is to be priced at Rs55 per share, at a premium of Rs45. The bank would garner Rs44.31 crore as addition to tier I capital through this rights issue.

The 8.25 per cent unsecured bonds would have a maturity period of 67 months.

The capital adequacy ratio as on September 2004 stood at 12.4 per cent. The bank said that the capital infusion plans, when put in place, would ensure a minimum CAR of 12 per cent.
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