Rupee declines by 9 paise
Mumbai: The rupee declined by around nine paise on Tuesday due to strong demand for dollars from oil importers. The home currency opened at 40.78 and closed at 40.97 against Monday's close of 40.88.

According to dealers, month-end demand from importers will push down the rupee to 41.20.

Forwards: The six-month forward premia closed at 4.74 per cent (4.92 per cent) while 12-month premia ended at 4.12 per cent (4.25 per cent).

Bonds: Bond prices rose by around 23 paise and yields went down by three basis points on improving liquidity in the banking system. Total traded volumes on the order matching system increased to Rs3,550 crore (Rs2,030 crore).

G-secs: The 8.07 per cent - 10 year-2017 paper opened at Rs99.40 (8.16 per cent YTM) and closed at Rs99.67 (8.12 per cent YTM) against Monday's Rs99.44 (8.15 per cent YTM) against Rs99.32 (8.17 per cent YTM) on Friday.

The 7.38 per cent -2015 paper opened at Rs95.28 (8.18 per cent YTM) and closed at Rs95.38 (8.16 per cent YTM) against Monday's Rs95.25 (8.18 per cent YTM).

Call rates: The inter-bank call rates ended flat on Tuesday. The rate closed at 8.75 - 9 per cent as against the previous close of 8.50 - 9 per cent following the announcement of Market Stabilisation Scheme auction worth Rs 6,000 crore to be held on Wednesday.

Reverse repo: In the first one-day repo auction, RBI received and accepted 16 bids for Rs11,120 crore. There was no reverse repo bid in the first one-day auction. In the second one-day repo auction, RBI received and accepted 24 bids for Rs12,995 crore. In the second one-day reverse repo auction, RBI received and accepted one bid for Rs10 crore.
Back to News Review index page  

Central Bank of India to launch IPO in June
Mumbai: Central Bank of India plans to come out with its initial public offer (IPO) in June this year to raise funds for upgrading its technology platform, meeting Basel-II requirements and HR development. The bank recently restructured its capital structure of Rs1,124.14 crore into preference capital of Rs800 crore and equity capital of Rs324.14 crore. The money raised through the IPO should also help the bank to improve its capital adequacy to around 12 per cent, which currently is at 10.4 per cent.
Back to News Review index page  

HDFC to acquire Chubb's stake in insurance JV
Mumbai: Housing Development Finance Corporation (HDFC) plans to acquire the stake held by Chubb Global Financial Services Corporation of the US (Chubb Global) from its general insurance joint venture and seek a new overseas partner.

HDFC had expressed its intention to end its joint venture with Chubb Corporation a year ago, following differences over the style of running business.

HDFC owns a 74 per cent stake in the five-year-old company, while Chubb Corporation owns the remaining 26 per cent, the maximum foreign direct investment permitted by insurance laws.

Sources said several global players like Prudential of the US and Ergo, a part of Munich Re Group, have approached HDFC in the last six months.

The price of the buyout has not been disclosed but sources said as HDFC Chubb has been a loss-making company, the valuation will not differ from the face value of the capital.

The joint venture's capital is currently Rs125 crore, which prices the 26 per cent buyout at Rs33-35 crore.

HDFC, which leads in all its businesses — home loan, banking, asset management and life insurance — has lagged behind in its general insurance business owing to Chubb's low appetite for risk in the Indian market.
Back to News Review index page  

State Bank associates are set free by Lok Sabha
New Delhi: The Lok Sabha has passed a Bill allowing the State Bank of India to reduce holdings in its seven subsidiary banks to 51 per cent.

The Amendment Bill will allow SBI to reduce its stake in subsidiary banks to 51 per cent from the existing 55 per cent said Finance Minister P Chidambaram said replying to a discussion on the bill. However the government would not reduce its holding in any public sector bank to below 51 per cent and retain a majority of voting rights, the minister said.

The amendment is intended to bring SBI subsidiaries at par with national banks and to raise capital for meeting Basel-II requirements. The SBI group requires a capital infusion of Rs3,161 crore to meet Basel-II norms. This capital cannot be infused by the government Chidambaram said.

Of the seven subsidiaries, the SBI has 100 per cent stake in State Bank of Hyderabad, State Bank of Patiala and State Bank of Saurashtra.
Back to News Review index page  

Irda sets conditions for ULIP policy holders
Mumbai: The Insurance Regulatory Development Authority (IRDA) has said that while policyholders in the unit linked insurance plans (ULIPs) can remain invested in the policy for a short period after maturity they cannot withdraw any amount or engage in fund management activities.

Hence, the policy holder will not have the option of switching funds, either to equity or debt or withdraw the amount. The decision to continue with the scheme after maturity will purely be the option of the policyholder.

While the permission has been granted for a short period of a week to a fortnight after the maturity of the scheme, no independent fund management activity will be allowed since the product does not give any insurance cover.

Officials stated that the option would enable policyholders, who are not satisfied with the net asset value (NAV) during maturity, to hold on for a better NAV.

Earlier, policyholders could remain with the scheme for five years after maturity and were entitled to partial withdrawal of funds, which have been plugged by the new clarification.
Back to News Review index page  

Banks to issue monthly bank statements for free
Mumbai: Following the diktat from the Reserve Bank of India (RBI) commercial banks have begun issuing passbooks and account statements to the customers every month without charging any fees. The banks earlier issued quarterly account statements. This step is expected to increase the costs of operations of both private and foreign banks.

A customer wanting monthly account statements had to pay anywhere between Rs100 and Rs250.

According to industry estimates, the cost of a transaction at bank branches ranges from Rs40 to Rs55 and hence, the banks are not encouraging customers to go back to the passbook culture.

A senior private sector banker said the cost of sending one statement is Rs12-Rs15. If the banks have to send statements every month, the expenditure will increase three-fold to Rs154-Rs180 from the current Rs48-Rs60 per customer.

This would wipe out the gains on an account where the minimum balance of Rs5,000 is being maintained. Banks have a 3 per cent margin (Rs150) on every account with a minimum balance of Rs5,000. But this gain fades considering the facilities provided by banks.
Back to News Review index page  

RIL to raise $2 billion via 10-year loan
Mumbai: The Mukesh Ambani controlled Reliance Industries will raise $2 billion through a 10-year overseas syndicated loan for funding its oil and gas exploration in the D6 block of the Krishna-Godawari basin, said company officials. The officials said the company was able to get a cheaper rate of Libor (London inter-bank offered rate) plus mid-60s basis points for the syndicated loan lower than the rate from the US bonds market.

The D6 was among the blocks awarded to a consortium of Reliance Industries (stake 90 per cent) and NIKO (10 per cent) under the NELP I round of bidding. Currently, the JV is developing India's first deep water gas production facility for the Dhirubhai 1 and 3 fields, targeting the first gas in the second half of 2008.

The $2 billion syndicated loan is arranged by a consortium of 14 banks including Citi, ABN-Amro, Standard Chartered, HSBC, ICICI Bank and DBS. The full commitment by banks for the loan is expected to be completed this week, said industry sources.
Back to News Review index page  

Legatum Global acquires majority stake in Share Microfin
Mumbai: Legatum Global Development, a part of Dubai-based investment firm Legatum Inc has announced Rs 100 crore ($25 mn) investment to buy the majority stake in Share Microfin, a microfinance institution based in Hyderabad.

At the same time microfinance firm Aavishkaar Goodwell India Microfinance Development Company is also investing $2 million in Share Microfin.

These investments would enable the latter to reach an additional five million customers over the next five years officials said here.

This transaction represents the largest equity investment till now in the global microfinance sector and will allow Share to rapidly expand its operations, reaching a large number of India's unbanked rural communities.

Share operates in southern states disbursing loans at an interest rate of 20 per cent per annum. But now the MFI (microfinance institution) is planning to foray into northern region as well with UP, Jharkhand, West Bengal and Uttarakhand on its agenda.

Share is currently the largest microfinance institution in India and sixth in the world. Over the past three years, Legatum has made a significant commitment to India investing over $1 billion to support the development of the country's financial services sector. It has also invested in two technology companies, Fino and A.Little.World, for supporting their back-end operations.
Back to News Review index page