Mumbai, January 24
The Reserve Bank of India is expected to raise interest rates at its third quarter monetary policy review tomorrow with the review of macro-economic developments released by the central bank today warning of rising inflation.

In its review released today, RBI noted that inflation would remain high even as the country's economy reports robust, broad-based growth.

"Since a lower inflation regime is essential for sustainable high growth, containing inflation becomes the dominant policy objective in the current environment," RBI said in its review. With the apex bank noting that downside risks to growth have receded even as inflation looms, analysts here expect rate hikes between 50 to 75 basis points tomorrow.

According to the RBI, agriculture sector is showing signs of robust growth as well. " Satisfactory kharif production and higher rabi sowing point to stronger contribution of the agriculture sector to overall GDP growth in 2010-11," RBI said. The review also noted that industrial production exhibited near double- digit growth even as the services sector continued to remain buoyant.

The apex bank noted that global economic growth remained uneven across regions and durability of recovery in the advanced economies remain uncertain.

The RBI also warned that it was worried about the current account deficit. It noted that the trade deficit widened even as exports expanded faster than imports. "The shift in the composition of capital flows, particularly the sharp jump in portfolio inflows and significant decline in net FDI inflows, however, raise questions about the sustainability of the external sector in the medium-term," RBI said.

The review noted that the RBI injected large primary liquidity to ease the liquidity pressures without diluting its anti-inflationary focus.

"The liquidity conditions tightened significantly to the point of imposing constraints on growth in the terminal months of 2010.

The severe tightness in liquidity was caused by both frictional factors associated with unusually large surplus balances of the Government and structural factors as reflected in stronger credit growth relative to deposit growth as well as higher demand for currency," RBI said.

Chandigarh, January 24
Come April and you will have to shell out extra money as service charges for all cheque collections. Be it for local clearing, outstation cheques or speed clearing, the RBI has now allowed banks to review their service charges.

The apex bank has also given the freedom to banks to decide on the service charges for outstation cheque collection and for cheque collection under speed clearing, in case the amount is over Rs 1 lakh. As of now, customers are paying Rs 150 as service charges on these transactions of over Rs 1 lakh.

In its directions to all commercial banks, regional rural banks and cooperative banks, the RBI, however, has said that though it is granting greater freedom to banks to determine charges for larger value transactions, it is subject to “such charges being levied in a fair and transparent manner”.

With RBI continuing its policy for mandating charges for small value transactions, relating to savings account customers, it has allowed for just Re 0.50 increase for the drawee bank (to Rs 1.50 for clearing at MICR and to Re 1 for cheque truncation). But in case of charges to be levied for outstation cheque collection, customers will now also have to pay less service charge (of Rs 25) for cheques amounting to Rs 5,000. For cheques of value between Rs 5,000 and Rs 10,000, the customer will have to pay Rs 50 as service charges. At present, customers were supposed to pay Rs 50 as service charges for all such transactions through cheques up to the value of Rs 10,000.

The move is aimed at hastening the migration of transactions to the electronic mode. “Given the advantages of using electronic modes, especially for large value transactions, RBI has been taking concerted steps of increasing the acceptability and reach of electronic transactions.

New Delhi, January 24
Canadian manufacturer of the BlackBerry smart phone Research In Motion (RIM) has said that it has delivered the technology to monitor contents on its messenger service and that the telecom operators in the country would have to connect to this new solution to give the security agencies the excess.

Reports said that RIM has written to the Department of Telecom (DoT) asking it to issue a directive to the operators to connect to its new automated service. RIM faces a deadline of January 31.

It apparently installing and testing a new service, to be made available before January 31, which will automatically render lawfully intercepted BlackBerry Messenger (BBM) messages in a format readable by Indian agencies.

In a letter to Telecom Minister Kapil Sibal, RIM Vice President (Industry, Government and University Relations), Robert E Crow, said, "It is our understanding, however, that the carriers (service providers) require an explicit directive from the Government of India before proceeding."

He added, “It would be to the benefit of all involved for the Government to now issue a directive that will allow the operators to complete their connection to the new automated service and thereby satisfy the Indian government’s final outstanding request regarding BBM.”

New Delhi, January 24
Hero Honda Motors Ltd today said that it has executed a final binding licencing agreement with Honda Motor. The agreement will pave the way dissolution of the 26-year-old partnership between the two.

The agreement, which was signed last week, pertains to the existing and new products that it will offer in the Indian market once the Japanese firm exits the joint venture.

One of the most successful Indian partnerships with the Japanese auto major has the Hero Group and Honda Motor Co, each holding a 26 per cent stake and the rest with public shareholders.

The agreement is according to the Memorandum of Understanding (MoU) approved by their respective boards of directors on December 16, 2010, the company said.

Under the agreement, the Hero Group will buy Honda Motor's 26 per cent stake in Hero Honda for an undisclosed sum.

As part of the deal, Honda's entire stake will be bought in a phased manner by two or more qualified promoters of the Indian partner at a discount. Estimates put the Japanese auto major’s stake in the joint venture at around $2 billion.

Under the separation deal, Hero Honda will continue to pay royalty at the current levels to Honda. The royalty paid on average in 2009-10 stood at 2.3-3 percent of sales. In addition, Hero Honda will be able to export two-wheelers and develop its own R&D capabilities.

The two-wheeler maker will change its name from ‘Hero Honda’ to a new original name.

The agreement also enables Hero Honda to continue producing, selling and servicing its current products. Honda will also grant new licenses for new products that will be produced and sold under the new brand name.

In 2004, the Hero Group and Honda had extended their agreement for 10 years. Under it, the Japanese partner would continue to provide technology to the JV. It was to come up for renewal in 2014.

Mumbai, January 24
ICICI Bank Ltd, India’s second-largest lender, beat quarterly profit estimates on growing demand for credit in the country and rising fee income, but climbing interest rates are a worry for the sector’s growth.

Net profit rose to Rs 1,440 crore ($316 million) in the quarter that ended on December 31, its fiscal third quarter, from Rs 1,100 crore a year earlier. Net interest income rose 12 per cent to Rs 2,310 crore. On a consilidated basisi, profit jumped 77.5 per cent to Rs 2,039 crore.

ICICI Bank and its rivals State Bank of India and HDFC Bank are seeing a surge in loan demand and asset quality improvement in an economy growing at 8.5 per cent, the fastest pace among major Asian economies after China.

“The sector is likely to see some margin pressure going forward as the impact of higher deposit rates in the last quarter start to have an impact,” said Binay Chandgothia, chief investment officer at Principal Global Investors in Hong Kong. Principal owns shares of the top three Indian banks including ICICI in its portfolio.

“The RBI will keep hiking rates in the short-term and that will slow down the nominal economic growth next year, impacting credit growth,” Chandgothia said. — Reuters

Hyderabad, January 24
Contrary to public perception that the agitation for Telangana has dented Andhra Pradesh capital Hyderabad’s reputation as one of the country’s leading information technology destinations, companies are still bullish on the city. Software companies have registered an increase of 48% in land taken on lease this year. This fiscal (2010-11) is also likely to be one of the best years for Hyderabad’s software sector.

“The talk of Telangana has not affected the growth of IT industry. In January last year, there was an agitation. That was the time when global players like Facebook, JP Morgan, United Health Group came to Hyderabad. It was like a shot in the arm for us,” state IT Secretary K Ratnaprabha said.

“In 2008-09, software exports stood at Rs 32,509 crore. It went up to Rs 33,482 crore the following year. This year, we are expecting to cross 35,000 crore,” the official said.

“AP has not lost its charm. People know what it offers. Honeywell has its base in Bangalore but when they decided to expand, they came to Hyderabad and they are going to announce their R & D center here,” Ratnaprabha said.

The tier-II Centers are also growing. The coastal city of Visakhapatnam accounted for software exports worth Rs 786 crore, up from Rs 500 crore last year. An IT Special Economic Zone has been established at Vijaywada.

“It is true that the investors had lots of concerns. Many companies who are on 24*7 operations cannot afford to have a downtime of two or three days continuously. They had lot of apprehensions but fortunately the government gave us confidence,” said J A Chowdhary, co-chairman, Ficci, Andhra Pradesh.

Chandigarh, January 24
Punjab can get its fiscal position on track only by slashing its huge subsidy bill. The government must not raise debts and must take measures to bring in more fiscal prudence.

In a note sent to the Punjab chief minister Parkash Singh Badal, D S Rawat, secretary general of Assocham suggested that the state must focus on divestment of loss making public enterprises. Currently, many public enterprises do not even recover a fraction of their capital cost and depreciation.

The industry body has also recommended that the state reprioritise its public expenditure towards public investment, rather than doling out subsidies. It has recommended that the state step up its public investment in agriculture, while slashing subsidies.

The note mentions that the economy could grow only at a compound rate of 5.3 per cent against 8.7 per cent in last nine years, till March 2010. Rawat said the state’s financial health was characterised by insufficient revenues to meet revenue expenditure, inadequate investment on infrastructure, stagnating social sector expenditure and pre-emption of high-cost borrowed funds for financing current expenditure.

BRIEFLY

Reliance to launch 3G services in J&K
Jammu: Reliance Communications on Monday became the first cellular operator in Jammu and Kashmir to launch 3G services. Senior officials of the company led by Ataul Haque, Circle Head, Wireless Business, RCom, demonstrated the 3G services to be launched here. — TNS

Motorola launches dual-SIM phone
New Delhi: Handset-maker Motorola Mobility India on Monday launched the country's first Android-powered dual-SIM touch screen smartphone, priced at Rs 31,999. The Android-powered Milestone XT800 is a dual-SIM (CDMA-GSM) smartphone equipped with 3.7-inch touch display, 5-megapixel camera and expandable memory up to 32GB, Motorola said. — PTI

Stake in East India Company
London: Mahindra Group has acquired a minority stake in the East India Company, the global luxury brand owned by Indian-origin entrepreneur Sanjiv Mehta who relaunched the company here in August 2010. Anand Mahindra, MD of the Mahindra Group, said: The company, however, did not divulge the value of the deal or other details. — PTI

Godrej Industries net up 39 pc
New Delhi: Diversified business house Godrej on Monday reported 38.74 per cent jump in its consolidated net profit for the quarter ended December 31, 2010 at Rs 60.77 crore. The consolidated total income during the third quarter of this fiscal increased by 18.72 per cent to Rs 1,024.17 crore from Rs 862.66 crore in the year-ago period. — PTI

Birla Corp net falls
Kolkata: The net profit of Birla Corporation Limited has declined 38 per cent during the third quarter ended December 31, 2010 to Rs 70 crore, as compared to Rs 112.29 crore in the same period last fiscal. The turnover of the company also decreased 11.51 per cent during the third quarter at Rs 546 crore as against Rs 617.84 crore in the corre sponding previous quarter. — PTI

Idea Cellular
Mumbai: Telecom major Idea Cellular on Monday said its consolidated net profit stood at Rs 243.05 crore for the third quarter ended December 31, 2010. Its total income stood at Rs 3955.61 crore for the reported quarter as against Rs 3149.47 crore for the same quarter last year. — PTI

Zojirushi Corp to enter India
Chandigarh: Japanese kitchen appliances maker Zojirushi Corporation has tied up with Salora International Ltd. for foraying into the Indian market. In the initial phase, the company will launch five categories of products under the thermoware range. — TNS

Asian Paints
New Delhi: Asian Paints on Monday said its net profit rose by 15.61 per cent to Rs 206.60 crore for the third quarter ended December 31, 2010. Net sales of the company rose to Rs 1,754.22 crore in the October-December, 2010, quarter from Rs 1,277.71 crore in the same period of the previous fiscal. — PTI

Indian Bank
Mumbai: Indian Bank on Monday reported 11.3 per cent increase in its net profit to Rs 491.29 crore for the quarter ended December, 2010, against Rs 441.38 crore in the year-ago period. The bank's total income rose by 14.38 per cent to Rs 2,640 crore in the October-December 2010-11 quarter from Rs 2,308 crore in the corresponding period of the previous year. — PTI