Rupee declines marginally
Mumbai: The rupee weakened by around six paise on Thursday on profit booking by traders. The rupee opened at 42.05/07 and touched an intra-day low of 42.20 and finally closed at 42.07, against the previous close of 42.01.

Dealers said the Reserve Bank of India was not seen in the market. They said the rupee is expected to touch 42.40 in the next week.

The six-month forward premia ended at 6.10 per cent (6.28 per cent) and the 12-month forward premia at 4.68 per cent (4.78 per cent).

Bonds: Bond prices remained unchanged on Thursday. Total traded volumes on the order matching system were Rs3,745 crore (Rs3,185 crore). Dealers said bond prices are expected to be jittery ahead of RBI's annual monetary policy review next week and banks are unlikely to take huge positions in the market ahead of the Credit Policy.

G-secs: The 8.07 per cent - 10 year - 2017 paper opened at Rs100.10 (8.05 per cent YTM) and closed at Rs99.95 (8.07 per cent YTM), against Wednesday's Rs99.96 (8.07 per cent YTM).

The 7.38 per cent - 8 year-2015 paper opened at Rs95.54 (8.12 per cent YTM) and closed at Rs95.42 (8.14 per cent YTM), against the previous close at Rs95.39 (8.15 per cent YTM).

Call rates: Call rates closed lower at 9.50-10 per cent on Thursday against the previous close of 11-12 per cent.

Reverse repo: In the first one-day repo auction, the RBI received and accepted 19 bids for Rs9,385 crore. There was no reverse repo bid in the first one-day auction. In the second one-day reverse repo auction, the RBI received and accepted two bids for Rs70 crore.

In the second one-day repo auction, the RBI received and accepted 15 bids for Rs6,275 crore.

CBLO: The CBLO market saw 359 trades aggregating Rs17,886.35 crore in the 7.50-8.10 per cent range.
Back to News Review index page  

Chidambaram wants banks to cut home and retail loans
Mumbai: Union Finance Minister P Chidambaram has asked public sector banks to go slow on home and other consumption loans to fight inflation.

He is also said to have urged banks to reduce high-cost bulk deposits within three months to ease the upward pressure on interest rates.

According to officials of public sector banks Chidambaram said 30 per cent year-on-year growth in credit was not sustainable and banks should restrict their lending to the retail sector as this tended to fuel inflation.

The banking sector's home loan portfolio has increased by about Rs63,000 crore and other retail loans such as personal loans and credit card receivables portfolios by about Rs46,000 crore in 2006-07.

The total increase in bank credit in 2006-07 was Rs4,16,115 crore, according to industry estimates.
Back to News Review index page  

More autonomy for SBI subsidiaries
New Delhi: A cabinet has cleared a Bill which will bring the seven subsidiaries of State Bank of India on par with other nationalised banks. Now the bill has to be introduced in Parliament.

The State Bank of India Amendment Bill will enhance flexibility and powers of the banks' boards and improving corporate governance.

The Bill, tabled in Lok Sabha in 2006 and referred to the Standing Committee on Finance, provides for adequate autonomy and independence to the boards of these banks to make regulations with RBI approval.

When the bill is passed, SBI's subsidiaries will be allowed to hold board meetings through video conferencing. An officer of the subsidiary bank will also be considered for the post of chairman of the Bank, which is at present not possible.

The Bill will put these arms of SBI on par with other nationalised banks in terms of private and preferential placement of equity shares. RBI is currently formulating the policy guidelines for this purpose.
Back to News Review index page  

Citigroup to invest $400 mn in property
Hong Kong: The property investment arm of Citigroup plans to invest $400 million of equity from a recently raised fund in India and $600 million in China, in hotels, technology parks, and housing estates.

Citigroup Property Investors closed a $1.29 billion Asia opportunities fund in February, of which 40 per cent was allocated to projects it had already started.

Citigroup has teamed up with seven Indian developers, including unlisted Nitesh Estates for a $100 million luxury hotel in Bangalore, and Gera Developments, for a $125 million housing project in Pune.

The fund is also building serviced apartments with US developer Portman Holdings and India's biggest mortgage lender Housing Development Finance Corp, and technology parks in Bangalore and in Noida, on the outskirts of New Delhi.

The Citigroup fund would be involved in around $2 billion worth of property projects in India.

Since India eased rules on inward investment in its construction sector in early 2005, foreign property funds, especially from the United States, have flocked to the country.
Back to News Review index page  

Micro, small, medium enterprises redefined by RBI
Mumbai: In a notification the Reserve Bank of India has modified the definitions for micro, small and medium enterprises such as small road and water transport operators (owning a fleet not exceeding 10 vehicles), retail trade (with credit limits not exceeding Rs10 lakh), among many others.

It has defined these micro enterprises as an enterprise where the investment in equipment does not exceed Rs10 lakh; a small enterprise is one where the investment in equipment is more than Rs10 lakh but does not exceed Rs2 crore; a medium enterprise is that where the investment in equipment is more than Rs2 crore but does not exceed Rs5 crore.

While for enterprises engaged in the manufacture or production, processing or preservation of goods, a micro enterprise is one where investment in plant and machinery does not exceed Rs25 lakh.

In a medium enterprise, the investment in plant and machinery can be more than Rs5 crore but does not exceed Rs10 crore.
The existing provisions of the interest on Delayed Payment Act, 1998, to Small Scale and Ancillary Industrial Undertakings, have been strengthened under the MSMED Act. The agreement between seller and buyer shall not exceed more than 45 days.
If the buyer fails to make payments to the supplier, he shall be liable to pay compound interest with monthly rests on the amount from the appointed day or, on the date agreed on, at three times the bank rate. In case of a dispute on amounts due, a reference shall be made to the Micro and Small Enterprises Facilitation Council, set up by State governments.
Back to News Review index page