Rupee declines
Mumbai: The rupee weakened against the dollar on Thursday because of demand from importers. Dealers said the Reserve Bank of India's buying dollars had pushed the home currency down to 44.74/75.

The rupee opened at around 44.75 and closed at around the same level of 44.73/74 against the previous close of 44.69/70.

In forwards, the six-month premium closed at 2.18 per cent (2.28 per cent) and the one-year closed at 2.03 per cent (2.03 per cent).

Bonds: Bond prices fell for the second day on profit booking. Total traded volumes on the order matching system were Rs4,795 crore (Rs5,600 crore). The 10-year yield on Thursday fell to 7.43 per cent from 7.67 per cent on November 3.

G-secs: The 7.59-10 year-2016 paper opened at Rs101.20 (7.41 per cent YTM) and closed at Rs101.07 (7.43 per cent YTM), down from Wednesday's Rs101.28 (7.39 per cent YTM). The 8.07-11 year-2017 paper opened at Rs104.68 (7.40 per cent YTM) and ended at Rs104.57 (7.42 per cent YTM), lower than Wednesday's close at Rs104.78 (7.39 per cent YTM).

Call rates: Call rates ruled lower between 6.1 per cent and 6.2 per cent against Wednesday's 6.15-6.25 per cent.

Reverse Repo: In the first one-day reverse-repo auction under LAF, the RBI received and accepted six bids for Rs1,590 crore. There were no repo bids. In the second one-day reverse-repo auction, the RBI accepted and received 24 bids for Rs16,875 crore.

CBLO: The CBLO market saw 322 trades aggregating to Rs19,185 crore in the 5.92-6.07 per cent range.
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Reserve Bank revises NBFC norms
Mumbai: The Reserve Bank of India (RBI) has revised guidelines for systematically important non-deposit taking non-banking finance companies (SI-ND-NBFC), defined as one with an asset size of Rs100 crore and more as per their last audited balance sheet. According to the new guidelines the SI-ND-NBFCs shall maintain capital risk weighted asset ratio of 10 per cent, which is otherwise referred to as capital adequacy requirement.

Earlier, the draft had restricted their borrowing up to 10 times their net-owned funds, which has been revoked in the revised draft. The new guidelines will be made applicable with effect from April 1, 2007.

At present, there are 148 SI-ND-NBFCs with an asset size of Rs1,72,000 crore, of which 80 per cent are investment companies as per the RBI data.

Bank finance to a single NBFC, as per the new draft, has been capped at 10 per cent of the bank's capital funds and this limit stands raised to 15 per cent in case the NBFC is onlending to infrastructure sector. Further the aggregate exposure of a bank to all NBFCs should not exceed 40 per cent of the bank's capital funds. The bank exposure includes both lending and investment, including off-balance sheet exposures.
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Interest rate hike expected by bankers
Mumbai: Bankers expect the Reserve Bank of India (RBI) to hike interest rates in its January 2007 quarterly review following the high GDP growth in the second quarter of 2006-07.

The GDP grew at a higher-than-expected rate for the second quarter in a row, strengthening signals that the RBI will raise rates for the fourth time in a year to fight any likelihood of the economy overheating.

Finance Minister P Chidambaram talk about greater comfort if WPI dropped close to 4 per cent from 5.30 per cent earlier this month is seen as a sign of concern in the finance ministry over inflation and unexpected growth.

The news of GDP growing at a higher-than-expected rate in July-September 2006 also turned the government bond market a little nervous.

This led to bond prices falling by up to 20 paise and the yield on the benchmark 10-year bond rising by 3 basis points to 7.43 per cent.
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Vijaya Bank plans acquisition, alliances
Bangalore: State-run Vijaya Bank that has mostly a South India presence plans to acquire a bank with branches in the west and north India to consolidate its position in the banking sector. The public sector bank is in talks with other banks for forming a strategic alliance, and also plans to open branches in Dubai and Hong Kong, Prakash Mallya, chairman and managing director of the bank said today. He said the bank had entered into strategic alliances with IOB, Indian Bank and Oriental Bank of Commerce and may enter into a couple more he said.

The bank has sought approval from the Reserve Bank of India to open branches in Dubai and Hong Kong and a representative office in China.
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L&T acquires 9.99 pc stake in City Union Bank
Chennai: L&T has acquired a 9.99 per cent stake in City Union Bank for Rs45 crore. The board of directors of the bank has approved a preferential allotment of 26.65 lakh shares to L&T at a price of Rs169 a share.

The bank had a net worth of close to Rs320 crore, close to the RBI's stipulation of Rs300 crore and the current year's operations will take the net worth to around Rs350 crore.

According to officials the bank has been growing at a CAGR of 25 per cent each year and the new funds would help the bank sustain the momentum.
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