PSU banks to float IPOs next fiscal
New Delhi: The government is planning to list Central Bank, United Bank of India and Indian Bank, on the stock exchanges in the coming fiscal in order to help them raise capital to meet capital adequacy norms under Basel-II requirements. The three banks are completely government owned.

Government sources said the government is also planning to clean up the balance sheets of these banks, by writing off their accumulated losses against their equity capital. Some of these banks are considering converting a part of their equity capital into preference shares for higher pricing of their IPO.

This will help improve their earnings per share as they can then charge a higher premium. The finance ministry is also planning to write off Indian Bank's accumulated losses of more than Rs3,800 crore against its paid-up capital of Rs4,594 crore.
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Tight liquidity leads banks to Nabard
Kolkata: Tightness in inter-bank liquidity has led many commercial banks to the doors of the National Bank of Agriculture & Rural Development (Nabard) asking for its refinance facility. The West Bengal circle of Nabard has seen a whopping 325-per cent jump in its refinance activities against investment credit for both farm and non-farm sectors of Rs225 crore over the past one year compared to Rs53 crore in the whole of the previous fiscal.

During FY06, Nabard's Kolkata circle has provided investment credit refinance of Rs598 crore to all credit agencies operating in the state against Rs474 crore in FY05.

Nabard offers refinance to commercial banks, state cooperative banks, state land development banks and regional rural banks for their farm loans to the agri sector. Investment credit is crucial for activities like minor irrigation, land development, farm mechanisation and waste land development.

Nabard officials however, are not complaining. They say this helped the agri bank to meet the circle's investment credit refinance target for this fiscal without any problem.

Investors are also flocking to Nabard counters for investing in capital gains bonds before the end of the current fiscal as this scheme may not be available with Nabard from FY07.

In the Union budget for FY07, finance minister P Chidambaram has proposed to bar Nabard, Small Industries Development Bank of India and National Housing Bank from issuing capital gains bonds, which carry tax breaks under Section 54EC of the Income Tax Act.
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ICICI Bank to recast assets portfolio
Mumbai: ICICI Bank has decided to bring down the share of retail loans to around 40 per cent of its total loan assets in the next couple if years from about 65 per cent at present.

The bank's retail loan book has swelled the most as the banking sector's lending for home purchases and personal needs has exploded in the last couple of years.

The bank now wants to bring about equilibrium in its loan portfolio. Bank sources said the bank aimed at having about 40 per cent retail loan assets and around 25 per cent international assets. The remaining will be corporate, agriculture, SME and other loan assets.

The bank wants to focus on the infrastructure sector as it expects companies in the expansion mode to start accessing funds from the banking sector from 2006-07 and investments in infrastructure to increase.

ICICI Bank had retail loans of Rs78,500 crore on December 31, 2005, about 65 per cent of its total loan portfolio.

Home loans were as much as 50 per cent of retail loans, automobile loans around 30 per cent and the balance included personal loans and credit cards.
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PM asks RBI, FM to bring in full capital a/c convertibility
Mumbai: Prime Minister Manmohan Singh said India should move towards full capital account convertibility. He said the finance minister and the Reserve Bank of India should revisit the subject as the country has grown internally and externally over the last two decades.

He said the cautious approach towards opening of the capital account was warranted, as capital flows are known to exhibit a highly cyclical pattern Dr Singh said.

Singh said there was a need to build foreign exchange reserves higher than the import cover criterion. Based on the trade data for February, India's reserves of $144 billion as on March 10 cover 13 months of imports.

Singh also said the country's current account gap-after three years of surpluses-was not a cause for concern. The current account deficit was still in a comfort zone and can be easily financed through normal capital inflows, he said.

The current account gap during April-September 2005 was $13 billion, much higher than the $0.5 billion a year ago, according to the latest RBI data.
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