Rupee strengthens
Mumbai: The rupee closed higher against the US dollar on Friday to end at 44.19, higher from Thursday's close of 44.25/26.

Forwards: The one-year premium closed at 1.65 per cent (1.77 per cent) and the six-month premium closed at 2 per cent (2.3 per cent).

G-Secs: The 8.07 per cent-11 year-2017 paper closed at Rs105.40/41(7.34 per cent YTM) against Thursday's close of Rs104.82 (7.42 per cent YTM). The 10.25 per cent -15 year-2021 paper closed at Rs125.3 (7.45 per cent YTM)

Call rate: The inter bank rates closed at 6.5 per cent (6.75 per cent) though deals were done at 7.10 per cent in the early session of trade.

Repo: In the first three-day reverse repo auction, RBI received one bid for Rs1,000 crore and 13 bids for Rs3,060 crore in the repo auction. In the second three-day reverse-repo auction, RBI received six bids worth Rs1,505 crore and seven worth Rs2,055 crore in the repo auction.

CBLO: There were 414 trades for Rs17,201.65 crore in the 5.25-6.50 per cent.
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Forex reserves up US$37mn on inflows into equity market
Mumbai: The foreign exchange reserves of the country gained by US$37mn for the week ended January 27 on the back of inflows into the domestic equity market.

According to the Reserve Bank of India's Weekly Statistical Supplement, foreign exchange reserves touched US$139.481bn for the week ended January 27, up from $139.444bn in the previous week.

The forex reserves had fallen by US$66 million in the previous week.

The foreign currency assets, which rose by US$35mn to touch US$133.281bn, mainly contributed to the rise. Foreign currency assets expressed in dollar terms include the effect of appreciation or depreciation of non-US currencies such as the euro, sterling and yen.

Gold and SDR remained unchanged at US$5.274bn and US$5mn respectively.

The reserve position in the IMF, however, increased by US$2mn to touch US$921mn.
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Dena Bank not to use new instruments to raise capital
Mumbai: Dena Bank plans not to use any of the new instruments allowed by the Reserve Bank of India (RBI) to raise capital in the current financial year. The bank's capital adequacy ratio (CAR) will be above the minimum level of 9 per cent after meeting its credit growth in the last quarter, officials said.

The state-owned bank's CAR is 9.82 per cent and the government holding in the bank has reached the threshold limit of 51 per cent.

The bank was waiting for the RBI to announce the details on hybrid capital instruments to improve its CAR.

Earlier the bank was looking at selling non-performing assets to increase its capital.

The bank has tied up with Small and Medium Enterprises Rating Agency of India (SMERA) to improve the quality of credit in the SME portfolio and increase credit flow in the sector.
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RBI norms nullify banks' securitisation plans
Mumbai: Banks active in securitisation of loan assets, have put off plans to sell some standard assets as the Reserve Bank of India's (RBI) guidelines have nullified the incentive they enjoyed.

The guidelines on securitisation, issued yesterday, have undone the practice of upfront profit booking on sale of assets through securitisation and also no longer provide the incentive of release of capital for creating fresh loan assets, bankers and analysts said.

Banks hitherto provided for capital adequacy to the extent of their subscription to junior subordinated portion of securitisation issues as part of credit enhancement.

Banks provide anywhere between 5 per cent and 35 per cent as credit enhancement depending on the underlying assets. Credit enhancement is the highest in home loans as the risk of -payments by borrowers and on account of interest rates is the biggest.

In 2004-05, banks securitised assets worth Rs22,300 crore, which is 176 per cent higher than in the previous year. In the first nine months of the current year, ICICI securitised Rs11,000 crore of loan assets.

Securitisation is a process by which banks and non-banking finance companies (NBFCs) sell loan assets to a special purpose vehicle (SPV) in return for an immediate cash payment.

The biggest hit will be taken by ICICI Bank, which accounts for almost half of the securitisation that happens in India.

The other banks active in securitisation are Citibank, HDFC Bank and IndusInd Bank.
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Pakistan banks apply for licenses for offices in India
Mumbai: Habib Bank, the largest private sector bank of Pakistan has applied for branch licence in India after the central banks of the two countries inked a pact to re-establish banking ties.

Habib Bank and the National Bank of Pakistan had approached the Reserve Bank of India with permission to establish operations few months ago.

Initially, the bank plans to focus on trade finance to boost export and import between to the two countries. At a later date, the bank could look at project finance and consumer finance, subject to regulatory norms.

Habib Bank inaugurated its operations in August 1941 with the bank's first branch in Bombay. Following formation of Islamic Republic of Pakistan in 1947, the bank shifted its head office to Karachi.

The bank was nationalised in 1974. It was privatised in 2004, wherein the Aga Khan Fund for Economic Development got rights to acquire 51 per cent stake in Habib Bank with an investment commitment of US$389 million. The balance stake is held by the Pakistan government.

IDBI to float venture, pvt. equity funds
Mumbai: The Industrial Development Bank of India (IDBI) plans to launch venture and private equity funds as part of its plan to become a financial conglomerate. The bank is awaiting clearance from the Reserve Bank of India (RBI) for this.

IDBI Capital will also spearhead the government-owned bank's foray into venture and private equity funds, IDBI sources said. The bank is also giving finishing touches to its four-year business plan that envisages a compounded annual growth rate of 18-20 per cent in the bank's balance sheet size.

The asset base of IDBI is about Rs81,000 crore. The management will discuss plans with the field staff and firm up details over the next few days.
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