Rupee weakens
Mumbai: The rupee weakened against the US dollar for the second day in a row on Wednesday, as demand for the US currency from oil companies continued. But the overall weakening of the dollar prevented the rupee from depreciating further. The rupee opened at 46.54/56 and touched 46.57/5750 on account of oil buying. It closed at 46.52/53 lower than the previous close of 46.49/50. The intra-day recovery of the rupee was on account of global currencies like euro and pound appreciating against the dollar, said dealers.

Forwards: The forward premia were slightly lower with the six-month premium closing at 1.32 per cent (1.38 per cent) and the one-year closing at 1.3 per cent (1.33 per cent). The rupee is likely to move in a range of 46.40-46.70 said dealers due to month-end demand, said dealers.

Bonds: Bond prices went up by around 35 paise as concerns about the pressure on liquidity were quelled.

G-secs: The 7.59 per cent-10 year-2016 paper opened at Rs97.11 (8.03 per cent YTM) and ended at Rs97.34 (7.99 per cent YTM), up from Tuesday's close at Rs97.09 (8.03 per cent YTM). The 8.07 per cent-11 year-2017 paper opened at Rs99.91 (8.08 per cent YTM) and closed at Rs100.20 (8.04 per cent YTM), higher than Rs99.85 (8.09 per cent YTM) on Wednesday.

Call rates: Call rates were between 6.05 and 6.15 per cent against the Tuesday's rates of 6.00-6.10 per cent.
In the first one-day reverse repo auction under the LAF, the Reserve Bank of India received and accepted 18 bids amounting to Rs20,030 crore and in the second one-day reverse repo auction, 23 bids for Rs9,475 crore. There were no repo bids.
The CBLO market saw 257 trades aggregating to Rs15,527.70 crore in the 5.81-6.09 per cent range.
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RBI nominees to stay on PSB boards
New Delhi: The Government has said that a Reserve Bank of India nominee would remain on public sector bank boards. The Finance Minister, P. Chidambaram, said "an additional amendment" has been made in the Banking Companies (acquisition and transfer of undertakings) and Financial Institutions Laws (amendment) Bill 2005 to ensure that a RBI nominee continues to remain on the board of public sector banks. Public sector banks have been allowed to raise capital through the issuance of preference shares by a public issue or preferential allotment or private placement route to shore up their capital to meet the fast-expanding credit needs in the economy.

The proposed move to allow public sector banks to issue preference shares comes close on the heels of the Government and the RBI's efforts to facilitate such banks to raise capital through newer instruments for meeting credit needs.

Public sector banks have already been permitted to use hybrid instruments (such as upper tier-II bonds) and innovative perpetual debt.

The amendments also stipulate that a preference shareholder would have a right to vote only on resolutions that directly affects the rights attached to his preference share.
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Mumbai tax collections up 150 pc in April-July
Mumbai: Tax collections in Mumbai rose up by 150 per cent (between April and July 15, 2006), over the corresponding period of last year, said K. Venkatramani, Mumbai's newly-appointed chief commissioner of Income-Tax. With the annual target set in the current fiscal for the region being Rs69,000 crore, the department has netted income-tax worth Rs11,400 crore as on July 15, 2006, he added. The chief commissioner said corporate tax collection has gone up by nearly 400 per cent over the corresponding period of last year.

The I-T Department (Mumbai) conducted 404 surveys last year, netting an additional income of Rs455 crore. As a result of the TDS surveys, the department collected an additional sum of Rs 18,000 crore.

He said there was a shortage of manpower in the income tax department which is holding talks with the board and the Government to settle this issue. As per I-T records, 9,47, 646 assessees have filed returns out of a total of 26,22,487 (all non-corporate assessees) I-T payers in Mumbai. The city has added 30,458 assessees this fiscal.

The department is said to have settled 56,765 refund claims disbursing a sum of Rs7,560 crore (April 1 to July 31, 2006 figures).
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RBI limits banks` investments in VCFs
Mumbai: The Reserve Bank of India has put a limit on the amount of investment banks can make in venture capital funds (VCFs). The limit has been set at 10 per cent of the bank's respective net worth.

The banking regulator has also asked banks to take its prior approval for making "strategic" investments in VCFs. It said strategic investments would mean a bank's investment exceeds 10 per cent of the equity/unit of a VCF.

Further, investments in VCFs have been clubbed under the umbrella limit which specifies that investment of banks in any financial services entity, financial institutions, stock and other exchanges should not exceed 20 per cent of its paid up capital and reserves.

The investments in shares/units/bonds of VCFs will be assigned a risk weightage of 150 per cent for measuring the credit risk during the first three years when they are maintained under the "held to maturity category" ( HTM).
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