Money market: Rupee ends lower - gilts lackluster
Mumbai: The rupee closed around five paise lower on Friday, at Rs43.72/73 against the dollar driven down by a strong dollar buying by state-run banks.

Forwards market: The six-month premium closed higher at 1.65 per cent (1.61 per cent), while the 12-month premium closed at 1.40 per cent (1.43 per cent).

G-Secs: G-Secs remained in a tight range in a flat market. The 10-year benchmark paper, 7.38 per cent 2015 paper closed at Rs106.68/70 (6.49 per cent YTM).

Call rates: Remained unchanged at 4.80-4.85 per cent, the dealer said.

CBLO market: 131 trades aggregating Rs4,860.2 crore was put through in the rate range of 4.25 per cent to 4.70 per cent.
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Economic Survey: Revitalise bond markets
New Delhi: The Economic Survey has asked for a policy framework which should revitalise the bond market and enable it to replicate the success of the equity market.

"A strategy has to be chalked out for the development of the bond market. The bond market has yet to find the policy framework through which the success of the equity market can be emulated," says the survey.

It has pointed out that the significant drop in turnover, despite the steady growth of the market size through large-scale public debt issuance, in the recent period was a striking manifestation of the weaknesses of the design of the bond market.

The survey noted that bond market turnover in 2004 was at the levels seen in 2001 even though the bond market capitalisation had doubled, fuelled by a high volume of issuance. The bond market had not yet obtained exchange-traded futures and options, which could play a major role in price discovery, risk management and liquidity.

On the equity market, the survey observed that, in the coming months, "considerable investment appears to be in the pipeline, reflecting confidence by domestic and foreign investors in the economic outlook."
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Economic Survey: Pick-up in non-food credit to continue
New Delhi: The Economic Survey has predicted that the strong pick-up in non-food credit would continue in the near future.

"With the growth of manufacturing recording an increase of 9 per cent in April to December 2004, the highest after 1995-96, the higher growth of non-food credit is likely to continue," the Survey has said. The rising trend in the ratio of non-food credit to aggregate deposits of the banks also suggests continued buoyancy in credit pick-up.

"The rising trend in the ratio of non-food credit to aggregate deposits of the scheduled commercial banks suggests a further likely increase in the demand for bank credit in the coming months," the Survey says.

The document also hinted that there was further scope for reduction of lending rates of banks. It has said that the widening interest spreads "establishes that banks have not fully passed on the benefit of falling interest rates to their customers." It has said that despite the RBI's efforts, lending rates of banks have exhibited considerable downward rigidity.

"The RBI has been making consistent efforts to make lending rates of banks more transparent and to align them with deposit rates. The introduction of benchmark prime lending rates (BPLR) has, to an extent, addressed the problem of downward rigidity of lending rates. The widening spreads suggests that further efforts are needed to tackle the problem of downward rigidity of lending rates," the Survey says.

On the term-lending front, the Survey has pointed out that with the era of development financial institutions (DFIs) coming to a close, the banking sector needs to step up its efforts to meet the term financing requirement of industry.

It has also urged the banks to align the lending rates to the small and medium sector with the rates offered to large industries.
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SBI's 'midcorp experiment' a success
Chennai: The State Bank of India's creation of a separate set up for focused lending to companies whose turnover falls between Rs25 crore and Rs350 crore, termed the "midcorp experiment'', has been termed a success.

At present, SBI's outstanding advances from the midcorps are about Rs48,000 crore, about 25 per cent of the bank's corporate book. Since October, lendings to midcorps have been going up by Rs1,250 crore a month, bank officials have said.

Bnak officials said that the midcorps' focus was based on a study done by the bank previously, which revealed that all over India, there are 6,100 companies that fall in the Rs25 crore-Rs 350 crore bracket. Of these, 1,900 were SBI's customers, and the bank now intends to target the other 4,200.

Accordingly, the bank has taken four steps. First, it has named `relationships managers' for midcorp companies, whose job is only to liaise with the borrowers. Second, it has created separate cells to deal with loans to these companies. Third, it has empowered managers at these cells with powers to sanction loans up to Rs 50 crore. Finally, it has strengthened credit delivery systems, simplifying transactions.

Earlier, speaking at a meeting on export credit organised by the Federation of Indian Export Organisations, Mr Gupta noted that SBI would be acquiring two banks abroad shortly - one in Asia and another in Africa.
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IndusInd Bank retail credit set to reach new highs
Kochi: IndusInd Bank is poised to take retail credit to 60 per cent of its total credit portfolio. The bank has said that while most banks had been concentrating on home loans to build up their retail credit portfolio, IndusInd Bank had been focusing on two and three-wheeler loans, which had traditionally been the forte of NBFCs and into which few banks had made inroads.

Its merger with Ashok Leyland Finance had thrown up new opportunities and a corpus of Rs2,200 crore of automobile finance to IndusInd Bank. During the first ten months of the current year, this had already grown to Rs3,200 crore. The net NPA of the sector was less than one per cent and the segment was poised to grow by 20-25 per cent in the next four to five years, bank officials said.
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Vijaya Bank declares 15 per cent interim
Bangalore: Vijaya Bank has declared an interim dividend of 15 per cent (Rs1.5) per share of Rs10. The bank, which tapped the capital market in 2002 and 2003, has a Government holding of 53.8 per cent.

The bank has an overall business base of Rs34,000 crore.
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