IOB to merge with Bharat Overseas
Mumbai: Chennai-based Bharat Overseas Bank (BhOB) is likely to merge with Indian Overseas Bank (IOB). This is likely to be the first merger after finance minister P Chidambaram appealed to bankers to acquire size.

The merger is inevitable due to RBI's guidelines that debar any single entity from holding more than 5 per cent in a bank.

BhOB is owned by seven banks including Indian Overseas Bank (30 per cent), Bank of Rajasthan (16 per cent) Vysya Bank (14.66 per cent), Federal Bank (10.67 per cent), Karur Vysya Bank (10 per cent), South Indian Bank (10per cent) and Karnataka Bank (8.67 per cent).

IOB being majority shareholder is most eligible among the stakeholders in BhOB for its acquisition. BhOB was established in 1973 to take over Indian Overseas Bank's Bangkok branch, added the source.
Back to News Review index page  

Bank of Baroda looks to fund local cos in overseas markets
New Delhi: Bank of Baroda (BoB) is planning to increase its funding of overseas acquisitions by Indian companies and will provide syndicated loans and working capital to Indian firms looking at foreign acquisitions.

The bank has now signed a MoU with the Export-Import Bank of India for financing foreign deals. The RBI has recently permitted commercial banks to fund overseas buyouts by Indian companies.

The Exim Bank is said to be assessing nearly half-a-dozen such proposals, that, if financed, would take its exposure to about Rs800 crore by the end of this fiscal.

Recently, BoB finalised a deal with Fiji Sugar, though the details are not yet known and is looking at financing Essar Steel for a deal in Africa, according to sources in the bank.
Back to News Review index page  

IMD redemptions likely to tighten liquidity
Mumbai: The outflow of US$7.3bn or Rs33,000 crore on account of redemption of the State Bank of India's (SBI) India Millennium Deposits on December 29 may put a strain on liquidity. The existing situation is already tight due to slack government spending and outflows of an estimated Rs20,000 crore due to advance tax payments.

The Reserve Bank of India has said the SBI will pay the central bank nearly Rs33,000 crore for buying the foreign currency needed to redeem IMDs. SBI will use about Rs22,000 crore of treasury bills maturing around the same time to redeem IMDs.

SBI will receive Rs11,000 crore from several banks, particularly foreign banks, which had taken loans from the country's largest bank against IMDs sold in November 2000. Cash surpluses have dwindled due to last week's tax payments and traders expect a bulk of this will come back to the banking system in the next few days by way of government spending.

To provide some comfort, the central bank has called off the MSS auctions scheduled for December 28. It has announced the auction of 91-day and 182-day treasury bills, both for a notified amount of Rs500 crore, under the regular auction calendar.

This implies a release of Rs1,552 crore from the MSS account since the 91-day t-bills issued earlier under MSS on September 28 would redeem on December 30.

This also implies a release of Rs1,000 crore from the MSS account since the 182-day t-bills issued earlier under MSS on June 29 would redeem on December 31. Inflows into the Indian money market in December from interest payments and redemptions of government securities and treasury bills are estimated at Rs30,480 crore.

Due to IMD redemptions, money market traders said that SBI could tap the domestic market and this could lead to dearer cash. Call rates are likely to hover in the 6-6.50 per cent levels and could scale greater heights, depending on the demand for funds, say dealers. Money market players anticipate a further dip in inflation. Yet, they feel that the pressure on liquidity will outweigh the marginal gains from the fall in inflation.
Back to News Review index page  

Union Bank hikes term deposit rates
Mumbai: The Union Bank of India has hiked the interest rates on domestic term deposits of varying maturities with effect from December 16. For deposits of 15 days and above, the rate has been increased by 25-75 basis points.

For one year to less than five years, in respect of deposits of Rs15 lakh and above, the rates have been increased by 75 basis points to 6.5 per cent.
Back to News Review index page  

Bank of India gets yen credit line
Mumbai: Bank of India has set up a credit line of 5 billion yen from Japan Bank of International Cooperation (JBIC) and will provide the loan to Indian importers for acquiring capital goods and services from Japan under JBIC line of credit.
Back to News Review index page