RBI wants more say in appointments in PSU banks
Mumbai: The Reserve Bank of India (RBI) wants to have a greater say in the appointment of directors and CEOs of government-owned banks, which it has in private sector banks. The RBI has a great degree of control over the appointment of CEOs and directors of private sector banks through its "fit and proper" criteria, which is not applicable to public sector banks and wants the government to extend the "fit and proper status" guidelines to public sector banks.

The fit and proper guidelines involve the process of collecting information, exercising due diligence and constitution of a nomination committee of the board to scrutinise the declarations made by bank directors.

In the case of public sector banks, the appointment of the CEOs as well as their removal is decided only by the government and there is no legal provision for the RBI to insist on the 'fit and proper' status of directors nominated by the government or elected by shareholders to the boards of the public sector banks.

RBI also wants the government to set up a new 'Board' on the lines of Public Sector Enterprises Board, for recommending to the government the appointment of chairmen and managing directors and executive directors and directors for public sector banks.
Back to News Review index page  

Rupee flat
Mumbai: The rupee remained flat against the dollar and opened strong at 46.48/50 and ended at 46.50/51. On Tuesday, the rupee closed at 46.50.

The report of the Federal Open Market Committee indicated a pause in the upward movement in US interest rates which weakened the dollar against the global currencies like euro and yen said dealers.

The dealer said the movement of the rupee would now depend on the US Gross Domestic Product data, to be released in the evening.

Forwards: The six-month premium ended at 1.39 per cent (1.4 per cent) and the 12-month premium at 1.35 per cent (1.34 per cent).

Bonds: Bond prices ended 15 paise higher over Tuesday's close following the drop in US treasury yields.

The price of global crude, which fell to $69 per barrel, was another positive for the domestic bond market.

G-secs: The 7.59 per cent-10 year-2016 paper opened at Rs97.85 (7.91 per cent YTM) and ended at Rs97.81 (7.92 per cent YTM), up from Tuesday's close at Rs97.63 (7.95 per cent YTM). The 8.07-11 year-2017 paper opened at Rs100.75 (7.96 per cent YTM) and closed at Rs100.68 (7.97 per cent YTM), higher than Rs100.52 (7.99 per cent YTM) on Tuesday.

Call rates: Call rates remained unchanged between 6 and 6.1 per cent.

Reverse repo: In the first one-day reverse repo auction under LAF, the Reserve Bank of India received and accepted 21 bids amounting to Rs 25,785 crore and in the second one-day reverse repo auction, 41 bids for Rs 20,890 crore. There were no repo bids.

The CBLO market saw 275 trades aggregating to Rs16,630.50 crore in the 5.83-6.05 per cent range.
Back to News Review index page  

Andhra Bank to start life insurance biz
Hyderabad: Andhra Bank has `in principle' decided to foray into life insurance business. The bank's board has cleared the proposal for the bank's entry into life insurance by forming a joint venture with the Japanese life insurance major Dai Ichi Mutual Life Insurance Company and Bank of India. The proposal is subject to regulatory and statutory approvals, apart from fulfilment of certain other conditions, the bank informed the stock exchanges.

Dai Ichi Mutual Life is the second largest life insurance entity in Japan and is also the sixth largest player in the global life insurance industry in terms of written premium.
Back to News Review index page  

RBI disapproves revenue implications of SEZ policy
Mumbai: Reserve Bank of India has not liked the revenue implications of setting up Special Economic Zones (SEZ). The RBI says that though SEZs will act as growth catalysts, there are concerns that the zones could aggravate the uneven pattern of development by diverting resources from less developed areas.

The RBI said the revenue loss for the Government in providing incentives may be justified only if the SEZ units ensure forward and backward linkages with the domestic economy in its Annual Report 2005-06 released on Wednesday. Under the SEZ Act 2005, which came into force from February 2006, units will get income-tax exemption.

Referring to the fiscal policy and the FRBM (Fiscal Responsibility and Budget Management) rules, the RBI has pointed out that revenue and gross fiscal deficits slipped in 2005-06 over the levels in the previous year. Larger deficit cuts are a must to meet the FRBM targets in the next two years. It would require an improvement in tax revenues by widening of the tax base and trimming of tax exemptions, the report said.
Back to News Review index page