Rupee declines - securities slide
Mumbai: The rupee depreciated against the dollar a bit on account of oil related demand closing the day at 44.26/27, lower than Monday's 44.21.

Forwards market: There was a rise in premia, as a hike in the short-term rates implied tighter liquidity. The 6-month premium closed at 2.3 per cent (1.96 per cent) and the 12-month premium ended at 1.82 per cent (1.52 per cent).

G-Secs: The hike in the reverse repo rate and repo rate saw a 60-paise fall in the 10-year benchmark security. The 8.07 per cent - 11 year-2017 paper closed at Rs106.635 (7.31 per cent YTM). The 9.39-5 year-2011 paper ended at Rs111.40 (6.84 per cent YTM), down from Monday's Rs111.97 (6.72 per cent YTM).
Call rate: The inter bank rates closed at 7.25-50 per cent (7).

Repo: In the first one-day reverse-repo, the RBI received one bid for Rs40 crore and 32 bids for Rs15,170 crore in the repo auction. In the second one-day reverse-repo auction, the RBI received two bids for Rs310 crore and 13 bids for Rs4,145 crore in the repo auction.

CBLO market: there were 324 trades for Rs14,556.3 crore in the rate range of 6.28-6.50 per cent.
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RBI raises short term interest rates
Mumbai: As part of its third-quarter review of the annual statement on monetary policy for the year 2005-06, the Reserve Bank of India (RBI) has raised the short-term interest rate by 25 basis points or 0.25 percentage point, with immediate effect, to contain inflation within the projected range of 5 to 5.5 per cent.

It also raised the forecast for economic growth to 7.5 to 8 per cent in the current financial year and expressed optimism about maintaining the same Gross Domestic Product (GDP) growth in the next financial year.

The hike in the short-term interest rate is likely to result in further rise in lending rates of banks, making credit, including housing loans, costlier.

The central bank hiked the repo rate and reverse repo rate by 0.25 percentage point to 5.5 per cent and 6.5 per cent, respectively, as part of measures to rein in inflation.

It, however, kept the benchmark Bank Rate (at which it lends long term funds to commercial banks) unchanged at 6 per cent and the Cash Reserve Ratio at 5 per cent. "The GDP growth in the current fiscal is placed in the range of 7.5 to 8 per cent based on the current assessment of a pick up in agricultural output and in the momentum in industrial and services sectors,'' said Y. V. Reddy, RBI Governor, at a press conference here, while announcing the Third Quarter Review of Monetary Policy for 2005-06.

In the second quarter, the RBI raised the growth forecast to 7 to 7.5 per cent from 7 per cent at the beginning of the current financial year in April 2005.

The RBI stated that though it continue to pursue its medium term objective of reducing the CRR to the statutory minimum level of 3 per cent, "on a review of the current liquidity situation, it is felt desirable to keep the present level of CRR at 5 per cent unchanged."
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Chidambaram terms hike in repo rates as pre-emptive
New Delhi: Finance minister, P. Chidambaram, on Tuesday termed the Reserve Bank of India's (RBI) move to hike the reverse repo and repo rates as "pre-emptive" action aimed at keeping inflation under check and indicated that the rate hikes could be reversed as and when the external situation showed improvement.

"The RBI has hiked the repo and reverse repo rate by 25 basis points. This, I believe, is a pre-emptive action. The RBI wishes to be slightly ahead of the curve. As soon as the external situation stabilises and becomes clear, it could be reversed," Chidambaram told newspersons reacting to the RBI's third-quarter review of the Annual Statement on Monetary Policy for the year 2005-06.

The finance minister pointed out that the RBI has not changed its bank rate or cash reserve ratio and this was a clear indication that, in the medium to long term, the RBI wishes to keep rates stable (interest rates). He also said that the RBI has promised to provide adequate liquidity to banks and that the central bank has enough instruments at its disposal for this purpose.

Asked about the government's borrowing programme, he said that the government borrowings depended on the resource position and added that he does not see any change in the government borrowing programme as of now.
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India Inc welcomes RBI's move to hike repo rate
New Delhi: The apex bank's move to hike the repo rate to 6.5 per cent and the reverse repo rate to 5.5 per cent, while leaving the bank rate and the Cash Reserve Ratio (CRR) unchanged is in line with expectations, according to the Federation of Indian Chamber of Commerce and Industry (FICCI).

The Associated Chambers of Commerce and Industry of India (Assocham) too has welcomed the hike. However, the Chamber felt that reduction in Cash Reserve Ratio by 25 basis points would have further augmented the release of liquidity in the banking and the market.

The PHD Chamber of Commerce and Industry has that the move would help maintain economic growth and contain inflation in the country.
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PFRDA: New pension system likely to have sizeable subscriber base
Kolkata: The Pension Fund Regulatory and Development Authority (PFRDA) says that the number of people interested in joining the new pension system in the near term would be atleast 20-30 million, and with an almost equal number keen to sign up in the next couple of years, the new system will soon have a sizeable base of subscribers.

According to D. Swarup, chairman of the PFRDA, so far, 15 States have joined the system, with Maharashtra being among the latest, and others are expected to follow suit in the foreseeable future, he added.

The pension regulator is currently trying to address a few major issues, including those related to the structure of pension fund management companies, central record-keeping and the number of players who will be allowed to offer their services.

"We will not be tied down by the number of fund managers," Swarup told newspersons while referring to an earlier proposal to limit the number to six. Another proposal on allowing the current crop of asset management companies to act as pension fund managers is yet to be finally considered.

As for mandating a central record-keeping agency, the PFRDA is aware that a number of players are interested. These include the depositories, National Securities Depository Ltd and Central Depository Services (India) Ltd. No decision on the matter has been taken so far.
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Federal Bank set to take over Ganesh Bank
Kochi: After Having obtained the necessary clearances from the Government, Federal Bank will now take over the Ganesh Bank of Kurundwad on Wednesday.

Ganesh Bank of Kurundwad has a network of 32 branches: 24 in Maharashtra and eight in Belgaum, north Karnataka. With this amalgamation, Federal Bank's branch network in these States will increase to 65.

Federal Bank, which has 330 branches in Kerala and 127 branches spread over other States, has been looking at opportunities to grow inorganically. It has been looking at various avenues to expand its branch network outside Kerala, and expand its channels of delivery.

The RBI had put Ganesh Bank of Kurundwad under moratorium on January 7, as its networth had turned negative. Ganesh Bank was also unable to come up with any credible plan to raise fresh capital and its banking operations were frozen.
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IDBI Q3 net at Rs.119-cr
The Industrial Development Bank of India Ltd (IDBI) has reported a Q3 net profit of Rs119 crore this fiscal. The Q3 financial results, however, are not comparable with those of the year-ago period on account of its merger.

In the nine-month period, IDBI has earned a net profit of Rs360 crore.

During the quarter, IDBI's interest earned stood at Rs1,251.73 crore and total income was Rs1,548.16 crore. Net non-performing assets (NPAs) were down at 1.36 per cent as of December 2005 compared to 1.74 per cent as of March 2005.
IDBI's deposits increased by 60 per cent to Rs21,884 crore at the end of December 2005 from Rs15,103 crore as of March-end 2005. Low-cost current account and savings account deposits accounted for 31 per cent of the total deposits as of December-end 2005. Advances grew by around 14 per cent (annualised) to Rs50,075 crore by December-end from Rs45,414 crore as of March-end.

IDBI's capital adequacy ratio (CAR) stood at 15.9 per cent at the end of Q3.

The bank is likely to finalise details pertaining to its life insurance foray before the end of this fiscal. It is also planning to set up an asset management company to enter the mutual fund business in association with its wholly owned subsidiary - IDBI Capital Market Services Ltd.
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Corpn. Bank net down at Rs.115-cr
The Corporation Bank has reported a 28.83 per cent decline in net profit at Rs115.07 crore for the third quarter ended December 31, 2005 against Rs161.69 crore for the quarter ended December 31, 2004.

The total income increased 1.41 per cent to Rs783.48 crore from Rs772.52 crore.

For the nine-month period ended December 31, 2005, the bank reported a net profit of Rs344.19 crore, a 16.8 per cent growth against Rs294.59 crore in the corresponding period last year.

The bank's total business increased by 27.7 per cent from Rs51,787 crore for nine months ended December 31, 2005 against Rs40,541 crore for the same period last year.
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Union Bank net at Rs229.08-cr
Union Bank of India has registered a four-fold rise in net profit at Rs229.08 crore for the third quarter ended December 31, 2005 compared to Rs59.07 crore for the quarter ended December 31, 2004. The total income increased 11.64% to Rs1,652.50 crore for the third quarter this fiscal from Rs1,480.18 crore in the quarter last fiscal.
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Allahabad Bank net up
Allahabad Bank registered a 40.84% rise in net profit at Rs224.30 crore for the third quarter ended December 31, 2005 compared to Rs159.25 crore for the same quarter December 31, 2004. Total income has increased 22% to Rs1095.58 crore in the third quarter of the current fiscal from Rs897.79 crore in the corresponding quarter last fiscal, the bank informed the Bombay Stock Exchange.
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