NEW DELHI: The ruling United Progressive Alliance (UPA) is to overlook the reservations of some of its allies on economic reforms-related legislation and press ahead in Parliament if it gets an assurance that sections of the opposition will vote with it.
So hinted Kapil Sibal, human resource development minister, at an interaction with reporters on Monday on how he thought the government would implement the assurance given by Finance Minister Pranab Mukherjee in the US to investors that three important legislations — on pensions and the secto regulator, amending the insurance laws and the banking laws — would be passed, if not in the current Budget session, then in the monsoon session.
“The Leader of Opposition in the Rajya Sabha, Arun Jaitley, has indicated publicly that the Bharatiya Janata Party would support the Insurance Bill,” Sibal said.
When reminded that it was not the BJP, but members of the UPA’s own alliance, such as the Mamata Banerjee-led Trinamool Congress, that was opposed, he said, “We will reach out to everyone.”
Other UPA ministers charged with parliamentary management said there had been some sort of ‘understanding’ between Banerjee and Mukherjee. Sibal’s statement and the government’s demeanour suggested it had decided to stare back at those using their veto power to stymie reforms in a government that has a precarious majority. Banerjee’s supporters said she was opposed to the pensions Bill, as it “places the hard-earned money of the common man at the disposal of private insurance agencies”.
Last month, BJP leader Yashwant Sinha had also indicated the BJP would help the government in getting the bills passed. “The finance minister (Pranab Mukherjee) has talked to our party and we said most of these (bills) have been pending since the BJP was in power. So, we will lend support to these bills, but you (government) need to put your house in order,” he had said at a meeting organised by Ficci, the business chamber.
Sinha, a former finance minister and chairman of Parliament’s standing committee on finance, said, “As far as these bills and any other future bills are concerned, the BJP will be ready to extend support to the government with some minor adjustments here and there… There will be no act on our part to stop the legislations, provided we work in a truly bipartisan spirit.”
The PFRDA (pensions) Bill, besides giving statutory backing to the sector regulator, will steer long-gestation funding for infrastructure sectors. More, it is to facilitate alternative sources of low-cost retirement savings, and ensure a market-linked safety net for workers in both organised and unorganised sectors. The banking amendment legislation, aiming to lift the 10 per cent cap on voting rights of investors, and raising the foreign direct investment limit from 26 per cent to 49 per cent in the insurance Bill, are the other two key reforms that need legislative backing. However the standing committee has suggested 90-odd amendments in the insurance Bill.
Minister for parliamentary affairs P K Bansal said Parliament was expected to take up the finance bill for approval on May 7 or 8. He said the three reform Bills would be introduced when the finance ministry wanted to list these.The guillotine on discussion on demands for grants in the Lok Sabha is being planned to be applied on May 3.
The Lok Sabha will have discussions on the grants of the ministries of health, urban development, commerce and industry, and home. The Rajya Sabha will have debates on the working of the ministries of civil aviation, coal, defence, and labour and employment.
The BJP has demanded a discussion on defence, where it intends to raise several contentious issues of the recent past related to the ministry. The opposition party wants Prime Minister Manmohan Singh to give a statement on defence preparedness.
FM, PM TALK TO ALLIES TO BUILD CONSENSUS ON REFORM AGENDA
The government has been working to put in place a mechanism by which it can keep its flock together. Allies particularly Mamata Banerjee-led Trinamool Congress has opposed many reform measures while the Nationalist Congress Party (NCP) have opposed steps such as the ban on exports of some farm products and the proposed Food Security Bill. “Core committee members of Congress like FM and PM are talking to allies and negotiating so that they are on board on the reform agenda,” said V Narayanaswamy minister of state in the Prime Minister’s Office (PMO). The strategy includes negotiations and offering various sops to get the government’s allies on board on the economic reform agenda. ET caught up with Mr Narayanswamy to discuss the government’s strategy as Parliament convenes on Tuesday. (For details log on to : http://economictimes.indiatimes.com/opinion/interviews/fm-pm-talk-to-allies-to-build-consensus-on-reform-agenda/articleshow/12845102.cms)
INDIA MAY GET OWN VERSION OF SOVEREIGN WEALTH FUND
NEW DELHI: The government plans to use disinvestment proceeds to set up its own version of a sovereign wealth fund (SWF) that will team up with state-run companies for acquiring overseas raw material and energy assets. A senior government official said about one-third of the proceeds from sale of government equity would be channelised into this fund, and it could also leverage its equity to raise debt, thereby increasing the corpus. “The thinking within the ministry is that disinvestment proceeds could be used in a more productive way… Creation of a sovereign fund is being actively considered,” said a senior finance ministry official. (For details log on to : http://economictimes.indiatimes.com/news/economy/finance/india-may-get-own-version-of-sovereign-wealth-fund/articleshow/12843358.cms)
RBI ALLOWS ALL FINANCIAL INSTITUTIONS TO USE CREDIT DEFAULT SWAPS
MUMBAI: All financial institutions could now hedge their underlying credit risk in corporate bonds using credit default swaps, the Reserve Bank of Indiasaid in a notification on Monday. Financial institutions include Export-Import Bank of India, National Bank for Agriculture and Rural Development, National Housing Bank and Small Industries Development Bank of India. Earlier, only commercial banks, primary dealers, non-banking finance companies, mutual funds, insurance companies, housing finance companies, provident funds, listed corporate and foreign institutional investors were permitted to use the credit default swap market. The central bank has permitted other financial institutions as users to deepen the credit default swap market. Ever since its launch, only two swap deals have been struck, indicating the shallowness of the corporate bond market. (For details log on to : http://www.business-standard.com/india/news/rbi-allows-all-financial-institutions-to-use-credit-default-swaps/472391/)
INDIAN BANKS FACE VICKERS HURDLE IN UK
MUMBAI: The radical reforms proposed by the British government’s Independent Commission on Banking may bring the curtains down on Indian banks’ derivative and proprietary trading businesses there. According to bankers, Indian lenders will not be keen to form a separate company for these businesses, as suggested by the Commission, as they are not large players in this space. The Commission, chaired by John Vickers, has proposed that banks in Britainring-fence their retail businesses from investment banking operations. The move is to secure retail depositors’ money in the event of a financial crisis. Banks, it says, should be allowed time till 2019 to implement the recommendations. (For details log on to : http://www.business-standard.com/india/news/indian-banks-face-vickers-hurdle-in-uk/472389/)
GOVT MAY PUT ONUS ON TAXMAN TO PROVE EVASION UNDER GAAR
NEW DELHI: In what could come as a breather to foreign investors jittery over the proposed General Anti-Avoidance Rules (GAAR), the government is considering putting the primary onus on proving instances of aggressive tax avoidance on the tax authorities. This will be a departure from the GAAR proposed in the Finance Bill as per which the burden of proof is on the taxpayer under the principle of “guilty until proven innocent”, unlike in criminal cases, where the accused is treated “innocent until proven guilty”. Sources said the finance ministry has decided to make this key change after discussions with FIIs. The taxpayer will be considered innocent till a strong case is made out against him. The onus for proving that an impermissible arrangement exists — in order to invoke provisions of GAAR — will be on the assessing officer. (For details log on to : http://www.financialexpress.com/news/govt-may-put-onus-on-taxman-to-prove-evasion-under-gaar/940499/)
BASEL-III TO PUT PRESSURE ON BANK EARNINGS: RBI
MUMBAI: Earnings of banks are likely to come under pressure due to the higher capital requirements for the implementation of new global risk mechanism, Basel III norms, Reserve Bank deputy governor Anand Sinha said. “There is going to be pressure on banks’ earnings, not only in Indiabut across the world. That’s why, Basel-III implementation has been made longer, so that there will be least disruption,” he said. “However, if you have to do the same activity with significantly higher capital, there will be pressure on return on equity (RoE),” Sinha told reporters on the sidelines of a workshop on ‘Strengthening Microfinance Institutions’. He also said the banks would have to increase productivity in order to protect their RoE. Basel-III norms, proposed to be implemented from the beginning of 2013 till 2017, require the equity capital of a bank to be not less than 5.5% of risk-weighted loans, as per the draft guidelines issued by RBI. In reply to a question on whether MFI’s should be allowed to take small deposits, he said: “After all, whatever legislation passes, we have to work with that. But, RBI’s position has been that deposit-taking should be limited to banks.” (For details log on to : http://www.financialexpress.com/news/baseliii-to-put-pressure-on-bank-earnings-rbi/940755/)
SBI CUTS DEPOSIT RATES 25-100 BASIS POINTS
MUMBAI: Within a month of raising its retail deposit rates, State Bank of India (SBI) has largely rolled those back. It has cut those rates by 25-100 basis points, following the changed policy stance of the Reserve Bank of India, which led to a reversal of the earlier rising interest rate regime. The new rates take effect tomorrow. SBI had raised retail deposit rates on March 28 by 25-100 bps. After the revision, the peak rate would be nine per cent, for deposits less than Rs 15 lakh, maturing between a year and less than three years. Earlier, SBI was paying 9.25 per cent for similar maturities. The reduction in deposit rates were sharp for the short-term buckets, as the bank will now pay 7.25 per cent for less than Rs 15 lakh for seven days to 179 days, from the earlier eight per cent. For more than Rs 15 lakh and less than Rs 1 crore, the peak rate will be nine per cent for deposits maturing between three and 10 years. (For details log on to : http://www.business-standard.com/india/news/sbi-cuts-deposit-rates-25-100-bps/472422/)
SBI UNLIKELY TO CUT LENDING RATES SOON, SAYS CHAIRMAN
MUMBAI: State Bank of India (SBI) said on Monday it would not cut base rates in near future. Country’s largest lender, however, pruned retail deposit rates by 25 to 100 basis points. The bank has one of the lowest base rates in the industry at 10%. Last week, while ICICI Bank had lowered its base rate by 25 basis points to 9.75%, Punjab National Bank (PNB) and Bank of Baroda (BoB) too dropped their base rates by 25 basis points to 10.5%. “A cut in the base rate would be lower loan rates across products and we don’t necessarily want an equal transmission across products. Since our home loans are already competitively priced at 10.25%, we want to bring down the cost of loans for the SME sector and auto products that are priced between 15 and 16%,” SBI chairman Pratip Chaudhuri told a television channel. Chaudhuri added that rather than drop the base rate, the bank was attempting to reduce spreads for customers to bring down rates to around 14-15% levels. (For details log on to : http://www.financialexpress.com/news/sbi-unlikely-to-cut-lending-rates-soon-says-chairman/940752/)
STATE BANK OF MYSORE Q4 NET DOWN 29%
NEW DELHI: State Bank of Mysore (SBM), an associate of SBI, recorded 29% decline in its net profit at R116.15 crore for the fourth quarter ended March 31, 2012. The bank had registered a net profit of R163.83 crore in the same quarter in the previous fiscal, SBM said in a BSE filing. Total income of the bank rose to R1,525.16 crore in the January-March quarter as compared with R1,218.3 crore in the same period previous fiscal, it said. The bank earned an interest of R1,340.02 crore for the fourth quarter ended March, 2012, compared with R1,060.80 crore in the same period a year ago. For the financial year ended March, 2012, SBM’s net profit slipped by 26% to R369.15 crore, compared with R500.6 crore in the previous fiscal. Total income of the bank rose to R5,594.82 crore for the year ended March, 2012, compared to R4,534.2 crore during the previous fiscal, it said. (For details log on to : http://www.financialexpress.com/news/state-bank-of-mysore-q4-net-down-29/940749/)
STATE BANK OF PATIALA NET GROWS 19%
MUMBAI: The aggregate business of State Bank of Patialahas reached R1,43,300 crore mark with business growing over 19% in 2011-12. The Bank also plans to open 70 new branches during 2012-13 of which 20 would be in Punjaband 10 each in Haryana and Himachal Pradesh and rest across the country. Last year the bank opened 51 new branches and now has a network of 1,055 branches spread over 20 States and UnionTerritories. AK Basu, the acting managing director of the State Bank of Patiala, releasing the financial results, said deposits recorded a growth of 17 % year on year. Gross credit has posted a growth of over 23% to cross the R64,000 crore mark. The higher volumes and better profits have resulted in a higher average business per employee of R9.34 crore as against R8.86 crores during the previous year and also higher net profit per employee of R5.87 lakh as against R5.20 lakh during the previous year. (For details log on to : http://www.financialexpress.com/news/state-bank-of-patiala-net-grows-19/940751/)
ALLAHABAD BANK, UCO, UBI CUT LENDING RATES
KOLKATA: Three Kolkata-based lenders have reduced their respective base rates following a government order after Reserve Bank of Indialowered its short term policy rate by 50 basis points. Allahabad Bank and Uco Bank has announced to cut the base rate by 25 basis to 10.50% while United Bank of Indiahas lowered it by 15 bps to 10.45%. Base rate is the minimum lending rate for banks and one percentage point is equal to 100 bps. The new rates for Allahabadand Uco Bank will come into effect from May 1 while UBI’s new rates becomes effective from Monday. Uco Bank has also slashed its housing and car loans by up to 175 bps to boost its retail lending portfolio. It cut housing loan interest rates by 175 bps across all tenures and car loan rates by 125-175 bps. The government wants state-run banks to make retail loans cheaper and compete with private lenders. (For details log on to: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/allahabad-bank-uco-ubi-cut-lending-rates/articleshow/12843776.cms)
HDFC BANK SET TO OPEN RURAL ONE-MAN BRANCHES
MUMBAI: HDFC Bank, the second largest private sector lender in the country, is set to open one-man branches in rural centres. The move will help the bank meet priority sector commitments and aid its financial inclusion drive. “We have already started it on a pilot basis in some villages. These branches will be operated by a single person. They will be open for a few hours in a day or for a few days in a week, depending on the local requirements,” a senior executive said on Monday. The branches would initially provide the basic banking services, such as cash deposits and withdrawals, fund transfers and loans to locals. ICICI Bank, the largest private sector bank in India, is adopting a similar model to expand its reach in rural centres. According to bankers, this strategy will also help reduce dependence on Business Correspondents (BC). A BC is someone who works closely with an institute to promote, expand and advance the growth of the institute. (For details log on to : http://www.business-standard.com/india/news/hdfc-bank-set-to-open-rural-one-man-branches/472424/)
HDFC BANK PARTNERS WELLS FARGO FOR US-INDIA REMITTANCE SERVICE
MUMBAI: HDFC Bank on Monday said it had partnered Wells Fargo for remittance services between Americaand India. This would allow Indians residing there to remit money to their beneficiaries’ HDFC Bank savings accounts in India. Wells Fargo has 6,000 branches in the US, while HDFC has 2,544 branches in India. “While we are a major player in the Gulf-India remittance market, this alliance will help us consolidate in the US-India sector, which has been growing exponentially. Given our reach and the web-based nature of the service, this will allow people to send money back home in one of the safest and fastest possible ways,” said Harish Engineer, executive director at HDFC Bank. Wells Fargo has a similar partnership with ICICI Bank in India. (For details log on to : http://www.business-standard.com/india/news/hdfc-bank-partners-wells-fargo-for-us-india-remittance-service/472425/)
HDFC, WELLS FARGO JOIN HANDS FOR NRI SERVICES
HDFC Bank and theUSmortgage lender Wells Fargo have joined hands to enable NRIs in theUnited Statesto remit money to their beneficiary’s HDFC Bank savings account inIndia. The new service aims to cash in on the Wells Fargo’s number of banking locations among US banks and HDFC Bank’s over 2500 branches inIndia. HDFC Bank said that it is already a preferred remittance channels for NRIs residing in The Gulf. “Indiahas consistently been the top recipient of remittances with the largest chunks coming from The Gulf and theUSaccording to the World Bank and this is evident by high customer demand as well,” said Daniel Ayala, executive vice-president and head of Wells Fargo’s Global Remittance Services.
RBI NOTIFIES BANK OF BARODA AGGREGATE SHAREHOLDINGS
The Reserve Bank ofIndiaon Monday notified that the aggregate share holdings in Bank of Baroda by Foreign Institutional Investors (FIIs)/Non Resident Indian (NRIs)/Persons of Indian Origins (PIOs) under the Portfolio Investment Scheme (PIS) have gone below the prescribed threshold limit stipulated under the extant FDI Policy.
INSURER HAS TO COMPENSATE THIRD PARTY EVEN IF PREMIUM CHEQUE BOUNCES
Where an insurance company issues third-party insurance cover to the owner of a vehicle on the basis of cheque payment, it will be liable to compensate the third-party’s claim if the latter meets with an accident, even if the cheque for the premium amount is dishonoured. Only if the insurance company has cancelled the policy following such dishonour and has intimated the owner before the accident, can it reject such a claim. This verdict of the Supreme Court in United India Insurance vs Laxmamma is bound to result in insurers pulling up their socks and not issuing the policy until the premium cheque has actually been encashed on presentation. The owner of the vehicle took an insurance policy for a year by paying the premium through a cheque, on the basis of which the insurer issued a policy, including third-party liability, under the Motor Vehicles Act that mandates third-party insurance. But the cheque bounced. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article3346930.ece)
BAJAJ ALLIANZ GEN INSURANCE APPOINTS TAPAN AS MD, CEO
Private insurer Bajaj Allianz General Insurance said it has appointed Tapan Singhel as the managing directer and CEO. Singhel has been the chief marketing officer and will be taking over from Hemant Kaul, who has been relocated toSingapore, Bajaj Allianz said in a statement. “We are confident that Singhel, who has been with the company since its inception, will be able to sustain its success going forward,” Bajaj Allianz Director and Bajaj Finserv managing director Sanjiv Bajaj said.
MAHINDRA FINANCE Q4 PAT UP 45% YOY
MUMBAI: Mahindra Finance, the non-banking financial services company (NBFC) of auto major Mahindra & Mahindra, on Monday reported a net profit of R228 crore for the fourth quarter ended March 31, up 45% year on year (yoy). Ramesh Iyer, the managing director of Mahindra Finance, said, “We have been able to maintain our profitability as we passed a significant portion of our interest rate increases to customers. Also our asset quality has improved with falling gross NPA levels over the previous year.” Iyer said that the NBFC’s gross NPA at the end of March 2012 stood at 3% while the net NPA was 0.6%. He added that there would be no need to raise capital this year as the capital adequacy ratio (CAR) position of Mahindra Finance stood at a comfortable 18%. (For details log on to : http://www.financialexpress.com/news/mahindra-finance-q4-pat-up-45-yoy/940754/)
CAN FIN HOMES TARGETS 80% LOAN GROWTH THIS YEAR
HYDERABAD: Can Fin Homes Ltd is targeting 80 per cent growth in loan disbursals at Rs 1,500 crore during the current financial year. “We plan to achieve this by expansion of our reach, by adding 20 branches during the present financial year and aggressive marketing,” Mr C. Ilango, Managing Director, Can Fin Homes Ltd, told Business Line here on Monday. The housing finance arm of Canara Bank disbursed Rs 859 crore as on March 31, 2012, which is 81 per cent more than in the previous year. The total outstanding loan portfolio stood at Rs 2,677 crore (Rs 2,198 crore). (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article3346929.ece)
RELIANCE MF SCHEMES EMERGE AS TOP THREE PERFORMERS FOR Q1-2012
NEW DELHI: Mutual funds are considered a better investment option due to relatively better safety of capital, but they have also scored over the direct stock market investments in terms of returns to investors. As per a performance analysis of stock market benchmarks and mutual fund equity schemes, as many as 50 large equity MF schemes, with an average asset size of at least Rs 1,000 crore, have given better returns than the market barometer Sensex during the first quarter of 2012. While the stock market benchmark index Sensex gained 12.6 per cent during the January-March 2012 quarter, the surge was higher for a total of 50 MF schemes and the top three performers belonged to Reliance Mutual Fund. The returns were over 20 per cent for this period for as many as 11 such funds, including five Reliance MF schemes. (For details log on to : http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/reliance-mf-schemes-emerge-as-top-three-performers-for-q1-2012/articleshow/12837567.cms)