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Rupee closes lower - securities range-bound
Mumbai: The rupee closed slightly lower against the US dollar on Wednesday ending trade at 43.65/66, slightly lower than Tuesday's close of 43.61.

Forwards market: The 12-month premium closed at 1.29 per cent (1.25 per cent) and the six-month premium ended at 1.39 per cent (1.36 per cent).

G-Secs: The 8.07 12-year 2017 paper fell to Rs108.30 during the day but finally recovered to close at Rs108.45/50 (6.99 per cent YTM). The 7.38 10-year 2015 benchmark paper closed at Rs103.48 (6.90 per cent YTM).

Call rates: were in the 5-5.10 range (5-5.10).

CBLO market: 198 trades, aggregating Rs8,821 crore, in the rate range of 4.89 to 5.15 per cent were realised.
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T-bills auctions `fully subscribed'
Mumbai: The auctions of the 91-day and 182-day Treasury Bills were fully subscribed, according to a release from the Reserve Bank of India.

The notified amount for the 91-day T-bills was Rs2,000 crore. The central bank received 42 competitive bids, amounting to Rs2,374.67 crore. Of this, the RBI accepted 39 bids. The cut off-price was Rs98.69.

The partial allotment percentage was 95.77 per cent from 18 bids. The weighted average price was Rs98.70.

The RBI also received and accepted two non-competitive bids, for an amount of Rs106.93 crore. The partial allotment percentage was 100 per cent and the devolvement on RBI was nil.

In case of the 182-day T-bills, the notified amount was Rs1,500 crore. The RBI received 44 competitive bids, amounting to Rs2,775 crore. Of these, it accepted 22 bids. The cut-off price was Rs97.38

The partial allotment percentage was 93.04 per cent from 15 bids. The weighted average price was Rs97.39.

There were no non-competitive bids for the 182-day T-bills.
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Maran: Indian Postal dept. should float banking arm
New Delhi: The Communications and IT Minister, Dayanidhi Maran, has said that the Department of Posts (DoP) should expand its financial services business and hive it off in to a standalone bank.

Currently, the postal network offers a number of financial services but passes on the entire money collected to the Finance Ministry for a fixed commission. If the DoP hives off the financial services arm as a full-fledged banking unit, then it will be able to keep the money collected and take investment decisions.

"The department should expand its Finance Mart network to spin-off the Post Bank," Maran said in a written address at the World Bank seminar on the future of India Post.

DoP has launched a number of financial services, including a money transfer facility through a tie-up with Western Union.

Financial services have been contributing 45 per cent of the department's revenues and they come as a relief at a time when the postal department is reeling under a budgetary deficit in excess of Rs1,400 crore.

"India Post should take advantage of the resurgence of mutual funds in the buoyant stock market for selling these financial products, using its vast network in rural and semi-urban areas," Maran said.

DoP is planning to offer services such as bill payment, life and general insurance, mutual funds and government securities under one roof through its Finance Marts. DoP will set up 160 Finance Marts during the year.

The Government has roped in global consultant KPMG to prepare a report on restructuring the postal network in the country. The mandate given to KPMG includes identifying new areas of business. KPMG will also review the pricing of postal products and services and the sustainability of loss-making and unpopular products.

Currently, the postal network has 40 products and services, many of which, like the mail services, have become obsolete with the availability of faster and more cost-effective modes of communication.
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United Western uses CMC's core banking solutions
Mumbai: United Western Bank has tied up with CMC, part of the Tata Group, for its core banking solutions.

About 90 per cent of United Western Bank's business is now covered by CMC's Total Concept Banking System - `TC/4©'. These branches are now connected online and centralised banking has been introduced in order to cover all the retail functions of the bank.

CMC is looking at core banking opportunities in the overseas market and has implemented TC/4© in all the branches of the National Bank of Bahrain.

TC/4© is not a single product, but represents a suite of banking and financial solutions such as integrated treasury, risk

management, Internet banking, tele banking and so on.

Carved out of TC/4© is a depository product that is implemented at national depositories in India, Bangladesh and Lebanon.
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Allbank Finance to undertake merchant banking and underwriting activities
Kolkata: The Allahabad Bank board has approved a new model of diversification for Allbank Finance, the bank's 100 per cent subsidiary, which is currently being given a new lease of life.

The company has applied to the Securities and Exchange Board of India (SEBI) for starting merchant banking and underwriting activities. The latter will constitute the core of its new-look business profile. It had earlier surrendered its NBFC licence to the Reserve Bank of India (RBI).

Allbank Finance is now likely to enter insurance broking after a fresh round of capitalisation, Allahabad Bank officials said.

The board had earlier decided that Allbank Finance would not be amalgamated with the parent outfit. Instead, various business strategies were considered - a move that has finally led it to apply for a merchant banking licence.

The subsidiary has also paved the way for a new HR policy, which will be put in place in about a year. IIM Calcutta, IIM Ahmedabad, and XLRI Jamshedpur have been mandated as HR consultants.
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SBI, Mumbai to finance contract farming
Mumbai: State Bank of India, Mumbai Circle, will be entering into a tie-up with Growell Agro Forestry Corporation to launch contract farming.

Under this scheme, SBI will provide finance to cover 5,000 acres of wasteland and degradable land in Raigad, Thane and Ratnagiri, said a press release.

All the rural and semi-urban branches from these areas are participating in this project. SBI has set a target of financing 2,000 acres for the current year in these districts with a financial outlay of Rs1.5 crore to more than 750 farmers.

Similar tie-up arrangements are also being worked out at Nagpur for contract farming in Vidharbha region.
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BoB mulls JV for life insurance foray
New Delhi: Bank of Baroda (BoB) plans to foray into life insurance business through the joint venture route. Bank officials said that it is also looking to rope in a foreign partner, which could take a 26 per cent stake in the new venture.

Officials also said that the Bank of Baroda would tap the capital market with a public issue in September. The bank will offer 7.1 crore shares of face value of Rs10 each at a premium. The issue would be a book-built issue and the Government holding in the bank would come down from 66.83 per cent to 53 per cent after the issue.
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Kotak Life to hike capital base by Rs.100 crore
New Delhi: Kotak Life Insurance has said it plans to increase its paid-up capital by Rs100 crore over the next three years. The company now has a capital base of Rs260 crore.

According to officials, Kotak Life Insurance plans to break even in another three years. They also said that the company would like to increase its capital base by about Rs40 crore within the current fiscal. Kotak Life is a 74:26 per cent venture between Kotak Mahindra Bank and Old Mutual Plc.

The company registered a 198-per cent growth in first year premium income to Rs375 crore in 2004-05 and was looking to achieve Rs700 crore as premium income this year, officials said.
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Fitch downgrades DCB debt rating
Mumbai: Fitch Ratings has downgraded the national rating on Development Credit Bank Ltd's Rs160 crore subordinated debt programme to "A (ind)" from "A+(ind)", said a press release from the ratings agency.

The rating outlook was evolving, it added.

The downgrade reflects the delay in consummating DCB's business plan that sought to write off the legacy of non-performing loans of the bank and also diversify and grow its income streams. The slowdown in deposit accretion and the exit of a few top officials, including the Chief Executive Officer, has affected the performance in FY05, the release said.

DCB's promoter, the Aga Khan Fund for Economic Development , infused $32 million, equivalent to 45 per cent of DCB's equity in FY04. The infusion was necessary, as the bank had stepped up the loan loss provisions in FY05.
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UTI Bank to arrange funds for Sethusamudram project
Chennai: Sethusamudram Corporation Ltd, the special purpose vehicle for the Sethusamudram Ship Channel Project (SSCP), has appointed UTI Bank to handle the financial arrangements for the project.

Sethusamudram Corporation officials said that the UTI Bank, selected through a competitive tendering process, will be the `arranger' of funds, including the rupee and foreign currency loans and handle the public issue or private placement, if any.

The Prime Minister, Dr Manmohan Singh, would inaugurate the project in the first week of July, he said.

The Sethusamudram ship channel envisages dredging of a 167-km channel along the Palk Straits, Palk Bay and Adam's Bridge between Sri Lanka and India to connect the Bay of Bengal and the Gulf of Mannar. This would enable ships to take a shorter route between the two countries instead of having to sail around Sri Lanka.

Officials also said that shortly an agreement would be signed with the Suez Canal Authority, which would share its 145-year experience in construction and maintenance of a similar ship channel facility.

The entire cost of the SSCP is estimated at Rs2,427 crore, which includes the project cost of Rs2,233 crore and the balance constituting the financial cost and interest during the construction.

The equity component would be Rs971 crore with the Union Government taking a 51 per cent stake of Rs495 crore. The balance would be shared between the Tuticorin Port Trust and the Shipping Corporation of India, which would each contribute Rs50 crore and the other five partners, Chennai Port Trust, Ennore Port, Visakhapatnam Port Trust, Paradip Port Trust and the Dredging Corporation of India would bring in Rs30 crore each, officials said.

Through a public issue or private placement the Sethusamudram Corporation would raise Rs230 crore.

The debt component would be in the form of equal portions of rupee loan and foreign currency loan. The Cabinet has approved a proposal for extending the Government guarantee. The financial institutions have assured that financial closure could be taken for granted with the only issue being finalisation of the interest rate.
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Syndicate Bank bond issue raises Rs.500 crore
Bangalore: The public sector Syndicate Bank has mopped up Rs500 crore through the issue of unsecured redeemable, non-convertible taxable bonds.

The issue was priced at 7.40 per cent and has a tenure of 10 years.

The bonds have no call or put options. This pricing makes it about five basis points finer than the sovereign guaranteed state development loans placed by the RBI on Tuesday.

The private placement of the non-convertible bonds of face value of Rs10 lakh each was originally for Rs300 crore with a green shoe option of Rs200 crore, which aggregated to Rs500 crore.

A bank release said that the resources raised through the issue would comprise the bank's tier two capital and would further strengthen its capital adequacy ratio. As on March end 2005, the bank had a capital to risk weighted asset ratio of 10.70 per cent.
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