Rupee up; bonds unchanged
Mumbai: The rupee gained against the dollar as it followed the euro.

The rupee opened at 46.02, up from Monday's close at 46.11/12 and touched an intra-day high of 46 and remained range-bound during the day to finally close at 46.09.

Forwards: In the forward market, the 12-month premium closed at 0.72 per cent (0.9) and the 6-month ended at 0.89 per cent (0.72).

Bonds: In the bond market, prices were flat and the volumes were thin. The prices opened lower and the sentiment was negative due to the liquidity crunch and the higher call rates. However, they recovered to close at the same level as Monday.

G-secs: The 8.07 per cent-12 year-2017 paper opened at
Rs106.22 (7.24 per cent YTM) and closed at Rs106.297 (7.23 per cent YTM), slightly higher than Monday's Rs106.26 (7.2373 per cent YTM). The 10.25 per cent-16 year-2021 paper opened at Rs125.93 (7.405 per cent YTM) and ended at Rs126.08 (7.39 per cent YTM), lower than Monday's close at Rs126.15 (7.38 per cent).

Call rates: The call rate closed at 5.80-90 per cent (5.75-80) but touched an intra-day high of 6.25 per cent. In the first one-day reverse repo auction, the Reserve Bank of India received and accepted five bids amounting to Rs560 crore. In the second auction, it received and accepted two bids for Rs 380 crore.

CLBO: There were 303 trades for Rs12,911.05 crore in the range of 5.53-6.25 per cent.
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Parliament panel approves lifting voting right cap in private banks
New Delhi: The banking sector is getting further liberalised. A parliamentary standing committee has approved the removal of the 10-per cent voting right cap on the shareholders of private sector banks and setting the way for permitting proportionate voting rights to shareholders.

However, this would not alter voting rights in public sector banks since the government-owned banks are governed by the provisions of Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and 1980 and the SBI Act, 1955 and SBI (Subsidiary Banks) Act, 1959.

The committee pointed out that in its earlier report on the Banking Regulation Amendment Bill, 2003, it had given a similar opinion on lifting the voting right cap.

However, the committee has said "the Reserve Bank of India would ensure that the legal and regulatory mechanism is adequate and complied with strictly so that no scope is left for possible misuse of the provisions."

In another recommendation, the committee has given its green signal to permit banks to issue preference shares with the rider that the RBI should lay down clear guidelines on the extent to which the banks would be allowed to issue such shares.
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Six banks vie for three Singapore licences
Chennai: Under the Comprehensive Economic Cooperation Agreement between India and Singapore, three banks from each country will be given full-fledged banking licences in the other country.

Six Indian banks that have a presence in Singapore, including Indian Bank, Indian Overseas Bank, Bank of India (BoI), UCO Bank, State Bank of India (SBI) and ICICI Bank, have begun lobbying for the three licences.

This is because these banks face restrictions in operations in Singapore. SBI and ICICI Bank have only what is known as ABU (Asian Banking Union) licence, which allows them to deal in only US dollars.

Three others — Indian Bank, IOB and UCO — have a licence that allows them to operate in Singapore dollars also. Only one bank, BoI, has both licences.

None of these banks is allowed retail banking and cannot, issue ATM cards or participate in local electronic payment systems.

A full-fledged banking licence would allow them to get into retail banking too, which is said to be lucrative. Thus, all the six banks are in the race for the proposed three licences.

The Monetary Authority of Singapore (MAS) will finally decide which, if any at all, of the Indian banks should get the licence. The banks would be expected to meet with certain basic qualifying criteria such as balance sheet size, compliance status, IT prowess and capitalisation.
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