Rupee declines
Mumbai: The rupee declined by around 19 paise as local and Asian stock markets turned weak. The rupee opened at 44.34, touched an intra-day high of 44.50/53 to finally close at 44.49, against the previous close of 44.30/31 on Friday.

In forwards, the 6-month closed at 3.70 per cent (3.56 per cent) and the 12-month ended at 3.04 per cent (3 per cent).

Bonds: Bond prices closed about 44 paise higher after the Government, on Friday, cancelled the auction of the Rs5,000- crore Government paper leaving Rs4,000 crore to be raised on January 12. Total traded volumes on the NDS order-matching system improved to Rs7,420 crore (Rs2,450 crore).

G-secs: The 8.07 per cent 10-year 2017 benchmark paper opened at Rs104.10 (7.48 per cent YTM) and closed at Rs104.12 (7.48 per cent YTM) against Friday's close of Rs103.68 (7.54 per cent YTM).

The 7.59 per cent nine-year 2016 opened at Rs100.55 (7.5 per cent YTM) and closed at Rs100.63 (7.49 per cent YTM), against Friday's close of Rs100.27 (7.54 per cent YTM). According to a bond dealer, the yields on the 10-year benchmark could fall to between 7.40 per and to 7.37 per cent during the week.

Call rates: The inter-bank call rate closed higher at 8 - 8.10 per cent (7.60-7.80). Market participants expected the pressure on call rates with the cash reserve ratio hike of 0.25 percentage point coming into effect on Saturday. The increase in CRR drained Rs6,750 crore from the system.

Reverse repo: In the first one-day repo auction under LAF, the RBI received and accepted 17 bids for Rs6,080 crore. In the second one-day reverse-repo auction, the apex bank accepted and received six bids for Rs170 crore and in the repo auction, it received and accepted 22 bids for Rs10,045 crore.

CBLO: The CBLO market saw 355 trades aggregating Rs19,174.05 crore in the 7.14-7.70 per cent range.
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Andhra Bank looks for partner for life insurance
Kolkata: Andhra Bank is in the look out for a partner to start a life insurance venture after talks with Japanese insurance major, The Dai-ichi Mutual Life Insurance, failed due to differences over shareholding pattern.

Bank officials said Andhra bank would not participate in the venture if its shareholding goes below 26 per cent.

Bank of India, Union Bank of India and the Dai-ichi Mutual Life Insurance have already signed an agreement to float a life insurance joint venture in India.

Bank of India would hold majority 51 per cent stake in the venture, Union Bank 23 per cent and Dai-ichi 26 per cent — the maximum permitted to a foreign partner under Government regulations.

Andhra Bank is also open to acquisition opportunities in the Indian Banking industry.
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ICICI Pru Life to increase capital base
Mumbai: ICICI Prudential Life Insurance has increased its capital base by Rs230 crore to Rs1,815 crore.

This is the third equity infusion this fiscal and the total increase this year has been Rs630 crore.

The two partners, ICICI Bank and Prudential Plc, have contributed to the capital infusion based on their 74:26 per cent equity stake respectively.
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Bharti, AXA sign agreement for general insurance
Mumbai: Bharti Enterprises and French insurer AXA have signed a memorandum of understanding to establish a joint venture company in the domestic general insurance business. Bharti Enterprises will hold a 74 per cent equity stake in the JV while AXA will have the rest of the 26 per cent, said a press release.

The joint venture will be headquartered in Bangalore, and is expected to commence operation in the second-half of 2007, subject to IRDA, FIPB and other statutory approvals.

The joint venture would tap into AXA's leading technology and expertise, while Bharti would bring its strong local market knowledge, branding, and India-wide retail distribution network.

AXA has major operations in Western Europe, North America and the Asia-Pacific. In Asia, AXA provides general insurance protection to individual, SME and corporate customers. Bharti's life insurance venture with AXA recently commenced national operations.
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RBI eases project, service exports norms
Mumbai: The Reserve Bank of India has simplified the procedures for project and service exports, such as deployment of temporary cash surpluses and inter-project transfer of machinery and funds.

These measures will provide more flexibility to exporters. The RBI said that the measures were subject to monitoring by banks. Exporters will now be allowed to use the machinery or equipment used for a turnkey or construction abroad, for executing a contract in another country.

Currently, exporters are required to dispose of the equipment, machinery, vehicles purchased abroad or arrange their import into India after completion of the contracts. If it has to be used for another overseas project, the market value should be recovered from the second project.

Under the modified procedures, the RBI has permitted exporters to deploy their temporary cash surpluses, generated outside India, in instruments such as deposits with overseas branches or subsidiaries of a bank in India, a triple `A' rate short term paper abroad, including treasury bills and other monetary instruments with a maturity or remaining maturity of one year or less.
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Banks want RBI approval for short selling government securities
Mumbai: Banks are asking for permission from the Reserve Bank of India for short selling of government securities that are not yet issued by the RBI in the first place.

Banks are seeking this facility under an arrangement where the RBI invites bidders to quote for securities that would soon be issued, but the bids themselves could be made on a `when issued' basis and hence the expression, `when-issued' market.

Nine securities have been auctioned till date and the total traded volumes in the when-issued market stood at Rs1,025 crore.

Volumes have varied between a low of Rs5 crore and a high of Rs295 crore per security. But in the actual auction for these securities, the RBI managed to sell securities worth Rs4,000-5,000 crore.

According to sources, banks have held several discussions with the RBI and the Fixed Income Money Market and Derivatives Association for permission to go "short" (only depository participants can go short) in the when-issued market. Market participants say that giving banks the right to go short will increase interest in the `when-issued' market.
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