KOLKATA: The government has ordered state-run banks to lower lending rates immediately even before the ink has dried on the Reserve Bank of India’s decision to cut interest rates, potentially adding to the corporate governance debate triggered by the imposition of its will on Coal India.
The direction from DK Mittal, secretary, financial services, may put many lenders in a tight spot as profitability and cost structures differ between banks, said two persons familiar with the development.
“With the reduction of CRR and repo rate, all lending rates be relooked at very quickly,” Mittal wrote to state-run banks’ chairmen. “Direct lending to agriculture has to be 13.5% and growth has to be 25% over 2011-12.”
The RBI has cut cash reserve ratio twice and bought government bonds, releasing more than 2 lakh crore into the system to ease liquidity pressures. It cut repo rate – the rate at which it lends to banks -by 50 basis points to 8% on Tuesday. A basis point is 0.01 percentage point.
“Micro management is not desirable when it becomes a routine,” said DK Dhingra, former executive director at state-run Uco Bank.
IDBI Bank, a relatively small lender compared with State Bank of India or Punjab National Bank, cut its benchmark lending rates by a token 25 basis points to 15% on Wednesday. But many big banks that raised deposit rates recently are still studying the market.
“It’s not acceptable that someone interferes on a daily basis,” said Ravi Trivedy, a consultant and former partner at KPMG. “The government or the Reserve Bank can frame the policy parameters. Once these are in place, one should allow the professional managers to take independent decisions. It’s a governance issue,” he said.
Bank chairmen say policy rate cut does not automatically lead to lower market interest rates since there are issues such as slow deposit growth, rising bad loans and an uncertain environment where inflation could rear its head again and upset all calculations. “I will be genuinely concerned about the deposits growth because bank deposits are getting crowded out because of other competing savings instruments,” State Bank of India Chairman Pratip Chaudhuri said after the rate cut.
“We had expected DTC to kick in, it would have been a level playing field for bank deposits and other competing instruments.” Deposit growth fell to a seven-year low of about 13% while loans grew 19%, pressuring banks to offer more for funds. Slow deposits growth is also leading to an-time-high loans-to-deposit ratio, a measure of demand-supply for funds, of over 75%.
“Market rates have moved up even as RBI’s policy stance was to keep rates stable,” says Morgan Stanley’s Chetan Ahya. “Indeed, we believe banks will struggle to pass on this easing in the form of cut in lending/deposit rates unless there is systemic improvement in liquidity conditions measured by loan-deposit ratios. For a systemic improvement in loan-deposit ratio, deposit growth would need to be higher than credit growth.”
The direction is likely to add fuel to the ongoing debate on whether the government is ignoring the interests of minority shareholders in public sector companies in its zeal to revive the slump in private investments.
The Children’s Investment Fund, an investor, is opposed to the state directive to Coal India to sigh fuel supply agreements that will compromise its profitability. The monopoly miner is being forced to sell fuel at lower than international market rates.
“I told state-run bank chairmen to revisit the lending rates as in some retail segments, their rates are higher than even private banks,” Mittal told ET. “So, they are losing customers. There is a need for lowering of lending rates and bankers have already agreed upon.”
But the profitability of banks, as measured by net interest margin, is still one of the highest with some banks having an NIM of more than 4%, considered high by global standards.
This allows banks to sacrifice some profitability to play a role in reviving growth.
“Direct monitoring is ideally not a good practice,” said Robin Roy, associate director for financial services at PwC India. “But in a system where monetary policy transmission is weak and where certain important sectors are starved from institutional credit, it has to be a push phenomenon.”
RBI LOOKING INTO WINDOW-DRESSING BY BANKS
MUMBAI: Year-end window-dressing is the norm in public sector banks. Figures pertaining to deposits and loans are inflated to show ‘growth’. This is done by the simple expedient of taking on more deposits and lending more for a very short period, around the balance-sheet date of March 31. After the books are closed both deposits and loans are returned and status quo returns. Fiscal 2012 was no different. Although one thought it could have been. A couple of weeks ago, the Finance Ministry had let it be known that annual deposit and loan growth would no longer be considered for performance appraisal of the top brass of public sector banks. Banks and the Finance Ministry have a memorandum of understanding that lays down various parameters against which performance is benchmarked. If banks meet their targets, bank chairmen become entitled to a bonus. This has often led to a chase for ‘growth’. (For details log on to : http://www.thehindubusinessline.com/todays-paper/article3329302.ece)
FINMIN ON THE LOOKOUT FOR BASU’S SUCCESSOR
NEW DELHI: The Union finance ministry today initiated the process for appointing a successor to its chief economic advisor, Kaushik Basu, who is on a six-month extension till August. The ministry has sought applications for appointment of a CEA on deputation or contract, for a three-year term or till age of retirement, whichever is earlier. The monthly pay is fixed at Rs 8,000. The last date for sending applications is May 18. The educational and other qualifications and experience required include essentially a Master’s degree in economics or equivalent and six years’ experience in economic research, providing economic advice and evaluation of economic reforms. This includes administrative experience. The desirable requirements are a doctorate in economics and published research work in refereed international and national journals of repute in the area of economics. (For details log on to : http://www.business-standard.com/india/news/finminthe-lookout-for-basus-successor/471877/)
GST ROLLOUT LIKELY IN 2013-14: MODI
NEW DELHI: Even as the Centre has refrained from stating as to when the goods and services tax (GST) will come into effect, chairman of empowered committee of state finance minister Sushil Modi has expressed the hope that the indirect tax reform initiative could be launched by the beginning of the next financial year. “Things will move very fast in the coming days as the standing committee on finance will start discussing the Bill (Constitution Amendment Bill) after the Budget session concludes on May 24. I hope that the Bill could be introduced is cleared by Parliament and also rectified by some of the state assemblies by March 31, 2013,” Modi said after the meeting of the panel to clear ground for GST rollout. He said that both the Centre and states are for early rollout of the proposed indirect tax regime and identified passage of the Bill by Parliament as the main hurdle in the implementation of GST. (For details log on to : http://www.financialexpress.com/news/gst-rollout-likely-in-201314-modi/938756/)
US TRADE BODIES URGE GEITHNER TO TAKE UP TAX ISSUES WITH MUKHERJEE
NEW DELHI: UStrade associations have urged treasury secretary Timothy Geithner to take up with finance minister Pranab Mukherjee some contentious tax proposals that could adversely affect American investments in India. Mukherjee will meet Geithner in Washingtonon Thursday during his USvisit to attend annual spring meetings of the World Bank and IMF. Some of Mukherjee’s Budget proposals, including retroactive tax collection, general anti-avoidance rule (GAAR), and a tax on indirect stock transfers, have irked the foreign investors. Foreign institutional investors have criticised these tax proposal, even as the government maintained that honest FIIs will not be targeted. In a letter to Geithner, the associations said these tax will have a significant negative effect on member companies operating in India, their customers and shareholders, and investment in India. Such amendments are inconsistent with the India-US economic and financial partnership, they said. (For details log on to : http://www.financialexpress.com/news/us-trade-bodies-urge-geithner-to-take-up-tax-issues-with-mukherjee/938761/)
ECB NORMS FOR POWER COMPANIES EASED; RBI TO ISSUE GUIDELINES IN 7 DAYS
NEW DELHI: Government has allowed power companies, such as NTPC and Reliance Power, to use 40% of the funds raised through external commercial borrowings (ECBs) route for refinancing rupee debt, raised from Indian financial institutions and banks. The rupee refinancing window would be allowed only if the balance 60% ECB funds is used for financing new power projects. The RBI will issue guidelines on it in the next seven days after which this window will be opened to the sector, a finance ministry official said. The Budget 2012-13 has proposed to expand the scope of end use sectors and activities that raise money using the ECB route. While aviation sector has been allowed to tap ECB to meet their working capital requirements with a ceiling of $1 billion, power companies have been allowed to use the route to part finance rupee debt of existing power projects. The facility to raise oversees loans for the rupee debt has been kept under the approval route. The government has not set any sectoral limit for the power sector under the overall ECB limit. (For details log on to : http://www.financialexpress.com/news/ecb-norms-for-power-cos-eased;-rbi-to-issue-guidelines-in-7-days/938754/)
PROBABILITY OF RATE HIKE PERSISTS: RBI
MUMBAI: A day after announcing annual credit policy, RBI governor D Subbarao on Wednesday said any hike in interest rates in future will depend on inflation. “The probability of hiking rates is not zero but it is small, just as the probability of easing interest rates further is also not zero but modest,” Subbarao said during a conference call with analysts. After a gap of three years, the Reserve Bank on Tuesday lowered interest rates by 0.50% to arrest declining growth. The economic growth slowed to a 3-year low of 6.9% in 2011-12 on account of factors like high commodity prices, slowdown in domestic demand and RBI’s tight money policy. The RBI had hiked policy rates 13 times since March 2010 to control inflation which had remained close to the double digit mark for most part of 2011. The overall inflation for March eased to 6.89%, lower than RBI’s projection of 7%. (For details log on to : http://www.financialexpress.com/news/probability-of-rate-hike-persists-rbi/938570/)
IDBI CUTS PRIME LENDING AND BASE RATES BY 25 BASIS POINTS
MUMBAI: State-owned IDBI Bank on Wednesday announced a cut of 25 basis points in its base rate to 10.5% a day after Reserve Bank of India (RBI) reduced the repo rate by 50 basis points. The bank also lowered the benchmark prime lending rate by 25 basis points to 15% simultaneously. The bank also announced cut in fixed deposit rates anywhere between 10 to 50 bps across various buckets. The first bank to pare lending rates after the policy announcement, the bank said it hopes to see higher loan growth in the infrastructure space. The bank has taken this step, keeping in view the recent policy measures announced by RBI and the emerging market conditions expected to arise out of the transmission of these monetary measures, it said. (For details log on to : http://www.financialexpress.com/news/idbi-cuts-prime-lending-and-base-rates-by-25-bps/938543/)
SBT CUTS DEPOSIT RATES, EYES LENDING SIDE TOO
THIRUVANANTHAPURAM: State Bank of Travancore (SBT) has revised downwards the interest rates for domestic/NRO (non-resident ordinary) term deposits across various maturities. This is a prelude to cutting down lending rates ‘as early as in next 15 days,’ a top official told Business Line on Wednesday. “Basically, we have been just lucky to find that our liquidity is quite comfortable to venture out in this manner,” the official said. The surprise cut in repo was a bonus. The bank has chosen to ‘go the distance’ when others are only talking about a deposit rate cut. The base rate too will be reviewed very soon. “The only thing here is that we need to comply with RBI prescriptions to zero in on cost of funds. It will take slightly longer.” (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article3329383.ece)
BANK OF INDIA TO RECRUIT 3,149 CLERKS
CHENNAI: Highest vacancies are in Jharkand (485), Uttar Pradesh (423) and Madhya Pradesh (401). The cut-off marks vary from State to State. The bank has fixed 131 as the cut-off marks for general category candidates in the North-Eastern States. While for States such as Haryana and Delhi, it has fixed higher cut-offs of 181 and 176, respectively. The bank has specified that candidates with 50 per cent in their 12th standard exam or a graduation degree are eligible to apply. State-wise and category-wise vacancies are mentioned in the detailed advertisement on the bank’s Web site. The minimum age requirement is 18 years, while the maximum is 28 years. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article3329378.ece)
ORIENTAL BANK OF COMMERCE MAY CUT INTEREST RATES FURTHER
NEW DELHI: The Oriental Bank of Commerce (OBC) is likely to go in for a simultaneous cut in deposit and lending rates following the 50 basis points cut in the repo rate on Tuesday, its Chairman and Managing Director, Mr S. L. Bansal, has said. Only last week, ahead of the Reserve Bank of India’s credit policy, OBC had gone in for some reduction in base rate and deposit rates in certain maturities. The base rate was reduced by 10 basis points to 10.65 per cent. “I am assuring you that our interest rates will further come down….When? You will have to wait,” Mr Bansal told Business Line here on Wednesday, a day after the RBI policy announcement. (For details log onto : http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article3329382.ece)
HDFC NET PROFIT UP 30.3% YOY
MUMBAI: HDFC Bank on Wednesday reported a strong set of numbers that surpassed analysts’ expectations, posting a 30.3% year-on-year (yoy) increase in net profit to R1,453 crore for the quarter ended March 2012. The bottomline was helped by an increase in loan growth and lower provisions for loan losses. The HDFC Bank stock closed at R536.9, up 1.14% on the Bombay Stock Exchange. The bank’s net interest margin (NIM) was up 10 basis points (bps) sequentially at 4.2%. HDFC Bank executive director Paresh Sukthankar said, “The growth in retail advances with higher yields and the improvement in current account-savings account (CASA) ratio supported our NIMs. Our CASA ratio stood 48.4%, up from 47.7% in the previous quarter.” (For details log on to : http://www.financialexpress.com/news/hdfc-net-profit-up-30.3-yoy/938535/)
FIXED DEPOSITS TURN SAFE AND GOOD INVESTMENT
MUMBAI: For investors looking out for a safe haven this is the best time to invest in fixed deposits. A sudden cash crunch in end-March had forced banks to hike deposit rates with many offering returns close to double digit. Now almost as suddenly Reserve Bank of Indiahas brought down the repo rate by 50 basis and also doubled emergency funding limits for banks. HDFC Bank has said that it has already reduced return on wholesale deposits and would shortly be bringing down deposit rates. “We will be revising our deposit in the next few weeks and lending rates should follow almost simultaneously” said Paresh Sukhtankar, executive director, HDFC Bank. IDBI Bank has already brought down its deposit rates. Other banks like ICICI Bank have said that RBI’s move to bring down repo rate will result in interest rates on deposits and loans coming down. (For details log on to : http://timesofindia.indiatimes.com/business/india-business/Fixed-deposits-turn-safe-and-good-investment/articleshow/12720644.cms)
RATE CUT WILL HELP BANKS GROW THEIR LOAN BOOK, SAYS J&K BANK CHIEF
COIMBATORE: For Jammu & Kashmir Bank, one of the country’s ‘old’ private banks, a cut in interest rates has come in handy. This is because it seeks to expand its corporate and SME lending outside its home State. Terming the cut as “an act of rebalance towards checking inflation,” the Chairman of Jammu & Kashmir Bank, Mr Mushtaq Ahmad, told Business Line that it would help banks, (such as his), which had immense regional and pan-India lending opportunities, grow its loan book. ‘We will pass on the benefit of the cut to borrowers,’ he added. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article3329377.ece)
FIRSTRAND BANK ENTERS INTO RETAIL, COMMERCIAL BANKING OPERATIONS IN INDIA
MUMBAI: South Africa-based financial services group, FirstRand Bank today entered into retail and commercial banking operations in Indiawith opening of a branch in the city. The bank has its presence in the country for last three years and deals in investment and corporate banking space. “We are excited to start retail and commercial banking in India, which represents the first new market outside of Africafor these operations. We see Indiaas an exciting business opportunity and this expansion is key to our ling-term growth strategy,” Chief Executive Officer of FirstRand Ltd, Sizwe Nxasana told reporters here. He also said that the branch would help in facilitating greater economic, trade and investment flows between two countries. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/firstrand-bank-enters-into-retail-commercial-banking-operations-in-india/articleshow/12717230.cms)
SPAIN’S SURGING BAD LOANS CAST NEW DOUBTS ON BANK CLEANUP
MADRID: Spain’s surging bad loans are spurring doubt on whether the government can persuade investors that it can clean up the country’s banks without further damaging public finances. Non-performing loans as a proportion of total lending jumped to 8.16% in February, the highest level since 1994, from less than 1% in 2007, according to Bank of Spain data published on Wednesday. The ratio rose from 7.91% in January as 3.8 billion euros of loans soured in February, a 110% increase from the same month a year ago. That takes the total credit in the economy that the regulator lists as “doubtful” to 143.8 billion euros. Defaults are rising and credit is shrinking at a record pace as 24% unemployment corrodes the quality of loans built up in the country’s credit boom and saps the appetite of banks to make new ones. Doubts about the extent of Spain’s non-performing loans problem is hurting bank stocks and driving up the government’s borrowing costs on investor concern that the expense of propping up ailing lenders may add to the debt burden. (For details log on to : http://www.financialexpress.com/news/spains-surging-bad-loans-cast-new-doubts-on-bank-cleanup/938567/)
NEW ALLEGATION OF INSIDER TRADING AGAINST GUPTA
NEW YORK: USprosecutors have added a new allegation of insider trading against India-born former Goldman Sachs director Rajat Gupta, who will face trial in May on charges of passing confidential information to convicted hedge fund founder Raj Rajaratnam. In an April 9 letter to Judge Jed Rakoff of the Southern District of New York, made public on Monday, the prosecutors said they have informed Gupta’s lawyers of a “new tip” about consumer goods major Proctor and Gamble’s organic sales forecast that he allegedly passed on to Rajaratnam in 2008. The government has added in its Bill of Particulars information which alleges that “Gupta disclosed to Rajaratnam, and their known and unknown co-conspirators, material, non-public information relating to P&G’s organic sales growth forecast for the October-December quarter prior to P&G’s announcement on December 11, 2008.” (For details log on to : http://www.financialexpress.com/news/new-allegation-of-insider-trading-against-gupta/938545/)
LIFE INSURANCE PROPOSALS TO CONTAIN AGENT’S RECOMMENDATION ON SUITABILITY
HYDERABAD: All life insurance policy proposals will soon carry an agent’s recommendation on the ‘suitability’ of the product for the buyer. The recommendation will have details such as why a particular policy is suggested to the customer and the required level of protection required. It will be the obligation of insurers, agents or brokers to determine the suitability of an insurance plan for the buyer. The recommendation and certification by the agent will be a part of the standard proposal form for all life insurance policies to be introduced by the Insurance Regulatory and Development Authority. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article3329380.ece)
INSURER LIABLE IF POLICY HOLDER NOT INFORMED ON CANCELLATION
NEW DELHI: Consider this: An insurance company cancelled the policy as the cheque given by the owner of the vehicle for the stipulated premium got dishonoured. But meanwhile, the vehicle met with an accident before the intimation of cancellation of the policy to the insured. Can the company be absolved of its liability to pay the compensation to the third parties? The Supreme Court has ruled that the companies cannot be absolved of its responsibility and are liable to pay compensation to the third parties in such situations. A bench comprising Justices RM Lodha and HL Gokhale said, “Where the policy of insurance is issued by an authorised insurer on receipt of cheque towards payment of premium and such cheque is returned dishonoured, the liability of authorised insurer to indemnify third parties in respect of the liability which that policy covered subsists”. (For details log on to : http://economictimes.indiatimes.com/personal-finance/insurance/insurance-news/insurer-liable-if-policy-holder-not-informed-on-cancellation/articleshow/12723850.cms)
FIRST YEAR LIFE PREMIUM MOP-UP DOWN IN FY12
HYDERABAD: First year premium underwritten by life insurance companies during the year ending March, 2012, declined 5.7 per cent in the case of public sector Life Insurance Corporation (LIC) to Rs 81,514.49 crore and 16.91 per for all the private sector life insurers to Rs 32,718.25 crore. In 2010-11, LIC and private insurers collected Rs 86,444.72 crore and Rs 39,381.3 crore in first year premium, respectively. The combined negative growth of first year premium underwritten by both LIC and private players is -10.79 per cent. However, the business of non-life companies continued to grow in 2011-12 with the private sector posting a 25.01 per cent growth in first year premium to Rs 24,230.36 crore, compared with Rs 19,382.68 crore in the previous year. The same for the public sector companies grew 21.88 per cent to Rs 34,113.79 crore (Rs 27,990.1 crore). (For details log on to : http://www.business-standard.com/india/news/first-year-life-premium-mop-up-down-in-fy12/471862/)
LIFE INSURERS TO HAVE SIMILAR APPLICATION FORMS
MUMBAI: The Insurance Regulatory and Development Authority (Irda) has asked life insurers to have a standard format in application forms that clients have to fill in before purchasing a product. The regulator issued an exposure draft on April 16, proposing regulations relating to prescription of a standard proposal form for individual policies in life insurance. Irda has suggested a proforma of the proposal form in the draft and has asked life insurers to include a section on need analysis and soundness of the agent’s recommendation to help customers with need-based buying. Irda floated the idea of a standard application form to address mis-selling, so that it ensures all customer needs are known to the insurance company before issuing a policy. (For details log on to : http://www.business-standard.com/india/news/life-insurers-to-have-similar-application-forms-/471861/)
BHARTI AXA AIMS TO DOUBLE ITS BUSINESS IN SOUTH BY YEAR END
MUMBAI: Private insurer Bharti AXA General Insurance is planning to double its business in the southern region by the end of the ongoing calendar year. “The company is planning to double its business in the southern region by the end of the calendar year 2012,” the company said in a release today. The general insurer, which has a premium collection to the tune of Rs 774 crore during April-February period, receives around 23 percent of the total premium from the southern region of the country. According to the company, while western region contributes around 36 percent of the total premium, northern zone provides 35 percent and eastern zone’s share stands at six percent. (For details log on to : http://economictimes.indiatimes.com/personal-finance/insurance/insurance-news/bharti-axa-aims-to-double-its-business-in-south-by-year-end/articleshow/12719227.cms)
TVS LOGISTICS PLANS TO SELL 20% STAKE TO KKR FOR $55 MILLION
NEW DELHI: Chennai-based TVS Logistics Services Ltd, a TVS group company, plans to divest a near 20% stake to leading private equity firm, KKR & Co, for around $55 million. This will be the logistics services company’s second round of private equity funding in the last four years. In 2008, the company had raised $25 million in 2008 from Goldman Sachs and TVS Capital Funds Ltd, a venture capital arm of the TVS Group. A person with direct knowledge of the transaction said the funds invested by KKR will be used by the company to scale up its supply chain management operations, as it prepares for an IPO. “The money will be used for acquisitions as well as expand to new geographical areas. The company intends to strengthen its footprint in the domestic as well as global market,” he said. After the deal is concluded, the TVS group will owns a just below 60% stake in the company while the balance will be split between the three private equity firms. A formal announcement is expected shortly. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/tvs-logistics-plans-to-sell-20-stake-to-kkr-for-55-mn/articleshow/12724257.cms)
TATA CAPITAL TIES UP WITH JAPAN’S CTLC FOR EQUIPMENT LEASING BUSINESS
MUMBAI: Tata Capital today said it has entered into a partnership with Japanese leasing business company Century Tokyo Leasing Corporation (CTLC) for collaboration in the equipment leasing business market. The Tata group company has signed a letter of intent with the Japanese firm and will benefit from the CTLC’s strong technical know-how in the equipment leasing space, it said in a statement issued here. The company claimed the equipment leasing market is a Rs 20,000 crore opportunity expanding at up to 30 percent annually and is likely to benefit as the investments on infrastructure increase. “Globally, leasing and renting are the principal forms of asset creation. In India, the share of equipment leasing in asset building is only five to six percent. This signifies a huge untapped potential in the segment,” Tata Capital’s Managing Director Praveen P Kadle said. (For details log onto : http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/tata-capital-ties-up-with-japans-ctlc-for-equipment-leasing-business/articleshow/12718264.cms)
GLOBAL VENTURE CAPITAL FUNDING IN SMART GRID FALLS
Although a number of state utilities in Indiaare planning to invest in smart grids in their distribution areas, the global funding scene for such grids remains dull. “The lackluster venture capital (VC) investing trend in smart grid continued into this year with a weak first quarter of $62 million going into 10 deals, compared to the last quarter with $66 million in ten deals. Funding amounts and deals are staying flat after peaking in 2010,” a report by Mercom Capital Group, said. “VC funding in the last year has been on a steady decline. There seems to be a disconnect in smart grid between consumer interests & awareness, and the market offerings of smart grid technologies and products,” said Raj Prabhu, managing partner at Mercom Capital Group. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/global-venture-capital-funding-in-smart-grid-falls/articleshow/12716518.cms)
MUTHOOT ARM TEAMS UP WITH AXIS BANK FOR PREPAID CARDS
KOCHI: Muthoot Vehicle and Asset Finance Ltd has signed an agreement with Axis Bank for launching Muthoot shopping/utility prepaid cards. This prepaid card can be used at all merchant outlets on Axis Bank PoS (Point of Sale) / EDC machines. Mr George Alexander Muthoot, Managing Director, MVFL, said that this comprehensive programme targeting the common man is a secure, efficient and cost-effective payment system. The prepaid card will be available at all Muthoot branches and can be reloaded from any of them for a maximum amount of Rs 10,000 at any given time. Initially the card will be introduced in Kerala and later on the other States also. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article3329381.ece)
FIIs RAISE STAKES IN TOP INDIAN BANKS FOR JAN-MAR QUARTER
MUMBAI: In what can now be called a prescient move, foreign institutional investors (FIIs) raised their stakes in Indian banks in the quarter ended March 2012. Not surprisingly, the BSE Bankex gained 32.32% compared with a rise of 25.82% in the benchmark Sensex. However, investors appear to have stayed with the best names in the industry; shareholding patterns of top banks like SBI, HDFC Bank, Axis Bank on the National Stock Exchange (NSE) show that both the number of FIIs as also the proportion of equity they held in Indian banks rose sequentially over the December 2011 quarter. While the quarter was a difficult one for banks given the acute shortage of liquidity and the spike in yields, the Reserve Bank of India (RBI) infused some R80,000 crore of liquidity through a 125 basis points cut in the cash reserve ratio. (For details log on to : http://www.financialexpress.com/news/fiis-raise-stakes-in-top-indian-banks-for-janmar-quarter/938614/)
FUND MANAGERS SWITCH JOBS TO SURVIVE CYCLICAL DOWNTURN IN PE BUSINESS
MUMBAI: Many private equity fund managers are switching jobs as they fail to survive cyclical downturns and try hand at entrepreneurship. Some move to rivals or start their own fund, others start their own business. “PE is a cyclical business and many fund managers don’t survive cyclical downturns,” says PR Srinivasan, chief executive officer at PE fund Exponentia Capital. Srinivasan, a former managing director at Citi Venture Capital, left the firm to start his own fund. His plan to raise funds is in the works. Manish Kheterpal, a director with American PE Providence Equity Partners, which manages over $23 billion globally and owns stake in Idea Cellular, India’s fifth largest mobile telphony company, quit the firm in January and has plans to build a business in the education sector. (For details log on to : http://www.financialexpress.com/news/fund-managers-switch-jobs-to-survive-cyclical-downturn-in-pe-business/938653/)
TRUSTEES FEAR COMING UNDER TAKEOVER CODE
As a falling market forces promoters of companies to pledge more shares for their borrowings, trustees who hold and enforce stocks on behalf of financiers are faced with a strange question: Are they exposed to the takeover code? In a recent letter, Sebi has told IL&FS Trust Company (ITCL) – a leading trustee in the financial market – that it will be governed by the code. This would mean that a trustee may be required to make an open offer if the number of shares of a company it is holding breaches the threshold limit. While banks and public financial institutions are exempted from the takeover code, non-banking finance companies that have emerged as dominant players in promoter funding cannot escape open offers. Like banks, many NBFCs lending against shares hire the services of trustees. The Sebi communique came after IL&FS sought a clarification from the capital market regulator. (For details log on to : http://economictimes.indiatimes.com/markets/regulation/trustees-fear-coming-under-takeover-code/articleshow/12723478.cms)
AMFI LOBBIES WITH FINANCE MINISTRY FOR MANDATE TO RUN RGES IN PLACE OF ELSS
MUMBAI: Association of Mutual Funds (Amfi) in Indiais lobbying with the finance ministry to secure an exclusive mandate to implement the Rajiv Gandhi Equity Scheme (RGES), a tax-efficient investment plan for retail investors that was introduced in the Union Budget. A permission to allow the domestic mutual funds to handle the proposed equity scheme will help the industry replace its existing tax-saver product – equity-linked savings scheme – which will lose its tax-saver status under the Direct Taxes Code (TDS) regime. The mutual fund industry body, which represents 44 Indian asset management companies, is making the pitch for executing the RGES as it caters to small retail investors who are investing in the markets for the first time. “Amfi has written to both the finance secretary and Sebi chairman requesting them to route RGES through mutual funds. It is under consideration of the government… we also have Sebi’s backing in this regard. Sebi also believes, the best way for first-time investors to invest in stock markets is through mutual funds,” said Amfi chief executive HN Sinor. (For details log on to : http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/amfi-lobbies-with-finance-ministry-for-mandate-to-run-rges-in-place-of-elss/articleshow/12723232.cms)
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