Rupee declines
Mumbai: The rupee declined by around 10 paise on Monday on dollar buying by PSU banks. The rupee opened lower at 44.90/91 and touched a high of 44.85 before ending at 44.90/91 against Friday's close of 44.82.

Forward premia was lower by about 10 points with the six-month premium at 1.86 per cent (1.98 per cent) and the one-year at 1.74 per cent (1.84 per cent).

Bonds: Bond prices dropped by around nine paise due to tight liquidity. Total traded volume on the order matching system decreased to Rs3,445 crore (Rs2,585 crore).

Dealers said bonds opened 25 paise lower tracking the US yields, which had fallen by 10-12 basis points last Friday.

G-secs: The 7.59 per cent 10-year 2016 paper opened at Rs99.49 (7.67 per cent YTM) and closed at Rs99.56 (7.65 per cent YTM) against Rs99.65 (7.64 per cent YTM) on Friday. The 8.07 per cent 11-year 2017 paper opened at Rs102.62 (7.69 per cent YTM) and closed at Rs 102.86 (7.66 per cent YTM) against Friday's Rs 102.95 (7.64 per cent).

Call rates: Call rates ruled unchanged between 6.9 per cent and 7 per cent.

Reverse repo: In the first one-day reverse-repo auction under LAF, the RBI received and accepted three bids amounting to Rs5,105 crore. There were no repo bids. In the second one-day reverse-repo auction, it accepted and received eight bids for Rs1,995 crore.

CBLO: The CBLO market saw 438 trades aggregating Rs24,761.95 crore in the 5.9-7 per cent range.
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Banks asked to rebalance credit portfolio
Bangalore: With credit availability to the physical infrastructure sector, going down the Union Ministry of Finance has begun persuading banks to rebalance their lending portfolios.

This entails shifting from some sectors to infrastructure lending, where term credit is required.

The Finance Ministry is extremely dissatisfied with the current phase of high non-food credit, largely fuelled by retail credit in the form of housing and real estate.

Retail credit portfolios of banks are currently estimated at close to 30 per cent of non-food credit and portfolios have grown by close to 100 per cent on a year-on- year basis for some of the banks.

Pricing of retail credit is also favourable as housing finance is currently priced between 9.5 and 10.5 per cent depending on the tenure with the only collateral being the underlying physical asset. However, in the case of infrastructure the pricing is much higher.

This is despite the fact that along with physical infrastructure, even the project cash flows are assigned, which in turn are backed by funded sub-sovereign guarantees.

The Finance minister P Chidambaram has warned chairmen of public sector banks (PSBs) that the current pace of increase in credit was not sustainable in the face of lagging growth in deposits.

He has told chairmen of over 15 PSBs to moderate credit growth to the "overheated" sectors (like housing and personal) and instead focus on lending to small and medium enterprises (SMEs) and agricultural sector.

Chidambaram said deposit growth should be in the range of 25-30 per cent to sustain a credit growth of around 30 per cent. Deposits are currently growing at around 20 per cent.
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HDFC Bank parts with Chubb: ties-up with Bajaj Allianz
Mumbai: HDFC Bank has decided to end its four-year-old bancassurance partnership with group firm, HDFC Chubb General Insurance Company. HDFC Chubb is 74 per cent owned by Housing Development Finance Corporation (HDFC), the promoter of HDFC Bank.

HDFC Bank has finalised a new bancassurance partner in Bajaj Allianz General Insurance Company, sources in the bank said. The bancassurance alliance is likely to be announced soon.

HDFC Bank expects to earn commission income of Rs50 crore per annum from selling Bajaj Allianz's products, against just Rs5 crore now through it alliance with HDFC Chubb.

Bajaj Allianz will get access to HDFC Bank's customer base of over 10 million across 531 branches spread over 228 cities across India.
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MetLife ties up with UTI Bank
New Delhi: MetLife India Insurance Co has entered into a bancassurance tie-up with UTI Bank. Earlier MetLife has entered into bancassurance tie-ups with J&K Bank, Karnataka Bank and Dhanalaxmi Bank.

Officials said the bancassurance tie-up with UTI Bank will complement MetLife's 10,000 strong agency force. The tie-up will give MetLife a national footprint as UTI Bank currently has 465 branches and more than 2,000 ATMs. UTI Bank will have 550 branches and 2,500 ATMs by March 2007.

MetLife's market share among the life insurers today stands at 0.2 per cent.
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SBI may raise more tier-II capital
New Delhi: State Bank of India plans to raise another Rs1,000 crore to Rs2,000 crore as tier-II capital during the current fiscal to fund business growth, according to its chairman, O.P. Bhatt who said that credit growth for the bank stood at 25 per cent during the current year. Bhatt also said that deposits were growing at 17 per cent.
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