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Rupee firmer - securities weak
Mumbai: The rupee gained marginally against the dollar on Friday, closing at 43.48/49, up from Thursday's 43.51/51.

Forwards market: The 12-month premium closed at 0.85 per cent (0.92 per cent) and the 6-month at 0.86 per cent (0.92 per cent).

G-Secs: In the bond market, the 7.55-5 year-2010 paper closed at Rs103.90 (6.58 per cent YTM), down from Thursday's Rs103.95 (6.57 per cent YTM). The 7.27-8 year-2013 paper closed at Rs102.45 (6.87 per cent YTM). On Thursday, it had closed at Rs102.57 (6.85 per cent YTM). The 7.38-10 year-2015 paper was dealt at Rs103 (6.96 per cent YTM).

Call rates: The inter bank rates opened at 4.95 per cent, but closed at 2.5 per cent (4.75-5) on account of reporting Friday.
Reverse repo auction: The RBI received and accepted 62 bids amounting to Rs47,980 crore.

CBLO market: 252 trades at Rs9,294.35 crore were realised.
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RBI: 12 and 29 year papers to raise Rs.8,000 crore
Mumbai: The Reserve Bank of India proposes to raise Rs8,000 crore through the auction of two government securities on August 11.

Of this, Rs5,000 crore will be raised through the sale of 8.07 per cent 2017 12-year paper, while Rs3,000 crore will be raised through sale of 7.5 per cent 2034 29-year paper, said a RBI press release.

Both the auctions will be conducted through multiple price method.
Up to five per cent of the notified amount of the sale of the stocks will be allotted to eligible individuals and institutions as per the scheme for non-competitive bidding facility in the auction of G-Sec for both auctions.

Results will be announced on the same day and payment by successful bidders will be during banking hours on August 12. The stocks will qualify for the ready forward facility.
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RBI to strengthen co-op banks
Hyderabad: The Reserve Bank (RBI) has ruled out the merger of co-operative banks with major public sector banks, saying it would instead assist these banks to better their performance using emerging technologies in the sector.

"The task force on urban co-operatives, which has been set up with state governments, is working on modalities to strengthen the co-operative sector," RBI governor Y.V. Reddy told reporters on the sidelines of a meeting with officials of the Andhra Pradesh government and representatives of urban co-operative institutions.

"The problem of dual control of the urban co-operative movement by states and the RBI will be left behind. We will coordinate with each local government to resolve the problem," he said.

The RBI governor said of the five states approached by the apex bank, only two, Andhra Pradesh and Gujarat had responded and signed an agreement.

He admitted that many co-operative banks, which were under the control of politicians, had been mismanaged and about Rs3,200 crore was misappropriated. In Andhra Pradesh while the chief of the Charminar Bank committed suicide, chairman of Krushi Bank had fled the country.

CEOs of five other banks are in jail.

The task force comprising nominees of the RBI, urban cooperative banks and state governments will monitor the process of rehabilitation and strengthening of the banks and also enhance their capabilities, besides training and lending technology, Reddy added.
Back to News Review index page   Market and financial sector chiefs stress need for a deeper debt market
Hyderabad: Chiefs of banks, stock exchanges, depositories, and credit rating agencies have stressed the need to deepen the debt market, especially the corporate debt segment, in order to effectively address the problems of the financial institutions and markets over the next 15 years.

Addressing a symposium at the Indian School of Business (ISB) on Friday, the Crisil Managing Director and CEO, R. Ravimohan, favoured pushing the subordinated debt instruments with more innovative options. These instruments, with longer tenures of up to 15 years and flexible repayment options, were needed to augment funds required for the major infrastructure projects in the country.

Ravimohan was of the view that the repayment capabilities of the infrastructure projects would significantly improve with the availability of long-tenured subordinated debt. Further, such instruments would enable the entrepreneurs to pay back the debt at the earliest.

The NSE Managing Director and CEO, Mr Ravi Narain, said that the current household financial savings at less than two per cent of the total financial market funds were highly inadequate for healthy growth of financial institutions and markets in the country.

Stating that the financial markets were currently growing in isolated boxes, the NSE chief stressed the immediate need for free and smoother flow of assets from different baskets. Towards this, he favoured an integrated regulatory framework comprising regulators of both securities and money markets.

According to the Citigroup-India CEO, Sanjay Nayar, the country's debt market is currently underdeveloped and requires longer tenure bonds. He also favoured the setting up of a project guarantee institution towards infrastructure financing in the country. He said that huge opportunities exist for such debt instruments in the market thanks to its growing household savings levels.

The UTI Bank Chairman and Managing Director, Dr P. Jayendra Nayak, advised the Indian financial services system to improve its technology to aggressively reach out the potential customers across the country instead of focusing only on the urban population.

Not comfortable with the multiple regulatory systems governing the Indian financial services market, he said that such a system would lead to the unhealthy practice of regulatory arbitrage.
Back to News Review index page   Canara Bank picks Flexcube for core banking solution
Bangalore: Canara Bank has picked up i-flex Solutions' Flexcube for its core banking solution (CBS), which will be implemented by IBM.

Speaking to reporters here on Friday after signing the CBS deal, M.B.N. Rao, Chairman and Managing Director of Canara Bank, said that in the first phase 1,053 branches would be selected for implementation of the core banking solution.

The size of the deal is estimated to be Rs250 crore, inclusive of both phase one and two. He added that hardware costs for the CBS alone would be in the region of Rs100 crore, which would entirely be implemented by IBM.

The CBS programme of Canara Bank is intended to provide electronic banking facilities to customers, including those in the semi-urban and rural branches. For the banks' customers this would imply fast credit dispensation, tele-banking solutions, call centre operations and access to the banks' products including insurance products. CBS will also enable anytime and anywhere banking with additional services such as multi-city cheques, convenient and cost effective remittance, real-time funds transfer across all CBS branches.
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IRDA eases norms for survey of flood losses
Hyderabad: As a special case in view of the recent floods in Maharashtra and Gujarat, the Insurance Regulatory and Development Authority (IRDA) has decided to temporarily raise the limit of losses required to be surveyed by a licensed surveyor and loss assessor for settlement of claims.

In a circular, the IRDA Chairman, C.S. Rao, said that the limit has been increased to Rs50,000 from the existing Rs20,000 for the recent floods in Maharashtra and Gujarat alone.

The enhanced limit would be in force for a period of two months from Wednesday.

"The insurers may utilise the services of in-house surveyors for assessing losses up to Rs50,000. This special dispensation is given to insurers to ensure expeditious disposal of claims and for mitigating hardships to policyholders," the IRDA Chairman said.
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KVB revises FCNR, NRE deposit rates
Chennai: The Karur Vysya Bank has revised the FCNR dollar rates upwards.

For 1-2 year deposits, the bank offers 4.05 per cent against 3.71 per cent. For 2-3 years, the interest rate has been fixed at 4.18 per cent (3.81 per cent) and for 3-4 years 4.24 per cent (3.83 per cent). The interest rate on deposits for 4-5 years has been fixed at 4.29 per cent. For exact five year deposit, the bank is offering interest rate of 4.31 per cent.

On NRE deposits, the bank has increased the interest rate for one year and below two years at 4,80 per cent (4.50 per cent), for two years and below three years 4.90 per cent (4.60 per cent) and for above three years 5 per cent against 4.60 per cent, according to a bank release.
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