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RBI hikes repo, reverse repo rates by .25 pc
Banks hint at hiking home loan rates
Industry worried over hike in interest rate, inflation
DoT can impose fine up to Rs 50 cr
India may go for bilateral trade pacts
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Visual radio launched in India
HPCL to invest Rs 900 crore
GMR Infrastructure
Tata Indicom offer
CORPORATE RESULTS
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RBI hikes repo, reverse repo rates by .25 pc
Mumbai, July 25
Following the increase, repo interest rates will be up by 25 basis points to 7 per cent and reverse repo rate to 6 per cent, according to the RBI Governor, Dr Y.V. Reddy, who presented the first quarter review of annual statement on Monetary Policy for 2006-07. According to the apex bank, real GDP growth during January-March 2006 is placed at 9.3 per cent as against 8.6 per cent in the corresponding quarter a year ago and real GDP growth for the year 2005-06 is revised to 8.4 per cent from 8.1 per cent. Inflation, measured by variations in the wholesale price index (WPI) on a year-on-year basis, rose from 4.1 per cent at end-March 2006 to 4.7 per cent as on July 8, 2006. The average international price of the Indian crude basket increased from $60.1 dollar per barrel in January-March, 2006 to $67.3 per barrel in April-June, 2006, and further to $71.4 per barrel in July 2006 (up to July 21). During 2006-07 so far, there has been a reversal of the phenomenon of consumer prices lagging wholesale prices, indicative of the increase in food prices which constitute a relatively larger share in the consumer price basket. On a year-on-year basis, money supply (M3) growth at 18.8 per cent by July 7, 2006, was higher than 13.8 per cent, net of conversion, a year ago and above the projected trajectory of 15 per cent indicated in the annual policy statement for 2006-07. The year-on-year increase in aggregate deposits at 20.7 per cent (Rs 3,72,977 crore) was significantly higher than 14.9 per cent (Rs 2,34,020 crore), net of conversion, a year ago. Following the increase in repo and reverse repo rates, housing and consumers loans are likely to cost more. The hangover of liquidity in the system, as reflected in the liquidity adjustment facility (LAF), the market stabilisation scheme (MSS) and the Central Government's cash balances with the RBI, which put together, averaged Rs 65,174 crore during January-March 2006 stood at Rs 91,231 crore as on July 20, 2006. Reflecting the easy conditions at the short-end of the market spectrum, interest rates in the call, market repo and collateralised borrowing and lending obligations (CBLO) segments of the money market eased while gilt prices declined in the secondary market for the government securities. Banks increased their deposit rates by about 25-100 basis points across various maturities between March 2006 and July 2006. A majority of public sector banks adjusted their deposit rates up to three-year maturity upwards by 25 to 50 basis points, while keeping the range of 6-7.25 per cent unchanged for deposits of over three years over the same period. The adjustments in deposit rates made by some private sector and foreign banks were somewhat higher, up to 100 basis points, particularly for deposit rates of over one-year maturity. Exclusive of LAF operations, banks' investments in government and other approved securities declined by Rs 1,328 crore during 2006-07 up to July 7, as compared with an increase of Rs 12,397 crore a year ago. Gross market borrowings of the Central Government at Rs 69,533 crore (Rs 60,282 crore a year ago) during 2006-07 so far (up to July 17, 2006) constituted 38.2 per cent of the Budget estimates while net market borrowings at Rs 34,572 crore (Rs 39,234 crore a year ago) constituted 30.4 per cent of the Budget estimates. India's foreign exchange reserves increased by $11.0 billion over their end-March, 2006, level to $162.7 billion as on July 14, 2006. The exchange rate of the rupee depreciated by 4.7 per cent against the dollar, by 8.4 per cent against euro, by 10.2 per cent against pound sterling and by 5.1 per cent against yen during 2006-07 so far (up to July 21, 2006). On the impact of global developments on India, Dr Reddy said, according to the World Economic Outlook of the International Monetary Fund (IMF) released in April 2006, global growth is expected to pick up from 4.8 per cent in 2005 to 4.9 per cent in 2006, before easing to 4.7 per cent in 2007. In major industrial countries, inflation appears to be on the upswing mainly on account of oil price increases. In addition, risks loom large in the form of lagged second order effects of oil price increases, geopolitical tensions, the probability of disruptive adjustment of current account imbalances and the cooling global housing market. A large number of central banks have raised their official interest rates, inter alia: the US Federal Reserve, the European Central Bank, the Bank of Japan, the Bank of Canada, the Reserve Bank of Australia, the People's Bank of China, the Bank of Korea and the Banco Central de Chile. Some central banks have kept their policy rates steady as for instance, the Bank of England, the Bank Negara Malaysia, the Bank of Thailand and the Monetary Authority of Singapore. A few central banks have also eased monetary policy such as the Banco de Mexico, the Bank of Indonesia and the Banco Central do Brasil. Global imbalances, emanating mainly from the twin deficits of the US and reflected in misalignment of major currencies, have continued to widen during 2006 in an environment of rising interest rates worldwide and prospects of contraction of liquidity in the global financial markets. Making an overall assessment of the policy, Dr Reddy said there were several positive factors in domestic developments during 2006-07 so far, inter alia: reasonably robust corporate performance, pick-up in investment activity, strong demand for bank credit, growth in new order books, increase in capacity utilisation, ample liquidity, stabilisation of inflation since mid-June and strong export growth. He also said some developments in the first quarter of 2006-07 do suggest the need to remain on guard against the emerging risks: incomplete catch-up of domestic POL product prices with the possible permanent component of international prices; growth in non-food bank credit and monetary aggregates higher than the projections; and contrasting liquidity conditions in the government securities market vis-a-vis money markets. He said the RBI would continue to ensure that appropriate liquidity was maintained in the system so that all legitimate requirements of credit are met, particularly for productive purposes, consistent with the objective of price and financial stability. Towards this end, the RBI will continue with its policy of active demand management of liquidity through open market operations (OMO), including MSS, LAF and cash reserve ratio (CRR), and using all policy instruments at its disposal flexibly, as and when the situation warrants. The Mid-term Review of the Annual Policy Statement will be undertaken on October 31, 2006, instead of October 17, 2006, and the third quarter review on January 30, 2007, instead of January 23, 2007, as indicated in the Annual Policy Statement of April 2006.
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Banks hint at hiking home loan rates
New Delhi, July 25 "We have little choice other than hiking the home loan rates," LIC HF CEO S.K. Mitter said. "I cannot have a shrinking margin... we will review lending rates within a few days," OBC Chairman K.N. Prithviraj said, hinting that a rate hike acorss the board, including home loan rates, could be considered. He said the 0.25 per cent hike in short-term rates is going to increase the cost of funds for the banks. "There is no way banks can adjust, as we have to protect the net interest margin," he added. Punjab National Bank's retail head U.S. Bhargav said banks used to depend on the low-cost funds from the RBI, with that gone, banks have two options left either to increase low-cost deposit mobilisation or hike lending rates. He said PNB Board would meet on July 31 to review the lending rates, including home loan rates. Meanwhile, the Boards of country's top two lenders SBI and ICICI Bank were reviewing the RBI's decision. Indications are that both banks will pass on the rate hike to customers as cost of funds are going up. Yes Bank, a new generation private bank, has announced that it will raise its prime lending rate (PLR). LIC Housing Finance said interest rates are on the rise for the last 12-15 months and may affect the volume of lending. An ICICI Bank official said: "We were anticipating a rate hike by the RBI. The bank will take a call on the rates soon." Indications are that the bank may raise home and auto loan rates. Private sector IndusInd Bank Managing Director Bhaskar Ghose said the RBI's decision would have an impact on short-term loan rates, "which could go up by 25 bps". IndusInd Bank will take a decision on its rates within a week, he said. IDBI chief Nageshwar Rao felt that the market had already factored in the rate hike. "However, we need to watch the market situation for a few more days," he said.
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Industry worried over hike in interest rate, inflation
New Delhi, July 25 In fact, the rising international crude oil prices, besides food commodities and metal prices in the global market, will also put an additional burden on the Indian economy. Expressing concern, Mr Saroj Kumar Poddar, President, FICCI, said: “the RBI has taken the decision to hike the interest rate at a time when the economy is on roll and there are no signs of overheating of the economy. It should have taken more pro-active steps for encouraging growth.” The industry has expressed fears that the scarcity of credit in the market for housing, personal loans and the manufacturing sector could bring down the growth rate of GDP since the supply would be more than demand in these sectors leading to inflation. Meanwhile, talking to reporters outside Parliament, Finance Minister P. Chidambaram said the RBI decision to hike the interest rates was aimed at managing short-term risks and was in line with other economies. “The whole exercise is to contain inflation,” the minister said, adding that “I am not surprised at this increase. The RBI Governor has said he would ensure that productive sectors would not be denied credit.” FICCI said the move would affect the operational costs of Indian business and particularly hit the small and medium sector. In the face of rising interest costs, the larger corporates could raise equity capital or debt funds from abroad but the small and medium sector will be left with no options. Lamenting the RBI decision, Assocham President Anil Agarwal said: “though the present GDP growth is led by robust growth in investments yet the cost of money would have its impact on growth scenario, thus posing a possible risk to the vibrant economic growth.” The RBI should not be unduly worried about growth in retail credit as the level of NPAs in the sector was as low as 2 per cent, he said. Prof Bibek Debroy, Secretary-General, PHDCCI, said the chamber felt the increase in these rates would encourage banks to revise upward the prime lending rate and deposit rates. “Taking into consideration the buoyancy in manufacturing, and service sectors, the positive business confidence, the RBI should have avoided the increase in reverse repo rate as the benign inflation is under control. After the hike in reverse repo rate, the RBI may have to take measures in near future to increase the bank rate as the reverse repo rate and bank rate are pegged at 6 per cent,” he said.
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DoT can impose fine up to Rs 50 cr
New Delhi, July 25 “We are waiting for the operators’ reply on the issue. A maximum penalty of Rs 50 crore can be imposed on the operator for violating the subscriber verification process,” officials said. The DoT said a Rs 50 crore penalty per circle could be imposed if licence conditions were found to be violated. Now all operators ‘both GSM and CDMA’ have time till July-end to individually reply to the government why action, including a penalty imposition, should not be taken against them for violation of the licence agreement. The issue has now taken a different turn as the industry is divided on how this verification process should actually take place. While the Tatas insist on a 100 per cent verification process, cellular operators want a 10 per cent sample base to be verified to arrive at a conclusion for the entire subscriber base. With the DoT awaiting the operators’ reply, the Home Ministry is understood to be against any sampling method of verification. It, too, wants a 100 per cent verification in keeping with security reasons. — PTI
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India may go for bilateral trade pacts
New Delhi, July 25 Talking to reporters here today, Commerce Minister Kamal Nath said: “For the time being, there is nothing on table. The talks can begin only after November when the elections are over in the USA. We are looking at economic co-operation agreements with the European Union. We are looking at co-operation agreements with Japan, ASEAN and other countries.” Appreciating the support of 25 countries in the EU to the Indian stand at WTO, he said: “India will look forward to bilateral agreements with the EU as well. In mid-October, a meeting is expected to be held in Helsinki (Finland) on trade agreement.” On a trade agreement with the USA, he said:“ the bilateral trade between the two countries has grown manifold, and we would continue to work for increasing it.” Earlier, he made a statement in the Lok Sabha that India has taken a stand to save the livelihood of millions of farmers, and the government will not make any compromise on national interest. Meanwhile, in an apparent setback for India, the Asean group of South-East Asian nations have suspended free trade talks with India. Malaysia’s Trade and Industry Minister Rafidah Aziz said in Kuala Lumpur that the talks had become “difficult” and accused India of being reluctant to open its markets. Mr Nath said he was confident the failure of the Doha round of talks would not hit India’s economy, currently growing at about 8 per cent a year. “The USA wants access to its subsidised agricultural products in India and other developing countries without cutting its huge farm subsidies.”
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Visual radio launched in India
New Delhi, July 25 Visual radio allows listeners to tune in to local FM radio via the receiver on their Nokia devices while simultaneously receiving interactive information and graphics that are synchronised with radio broadcast through cellular network onto the screen of the handset. Listeners can enjoy engaging and content, participate in radio station promotions, poll, contests and interact with radio jockeys and special guests. Radio Mirchi becomes the first FM radio station to offer this interactive content. Visual radio handsets were already available in the country with applications, but Hutch is the first mobile service provider to offer this, Hutch Marketing Head Naveen Chopra said. Nokia’s visual radio handsets are available within the price range of Rs 6,000-Rs 25,000 and as per service charges, Mr Chopra said in case of post-paid connections, there will be no rental for GPRS connections. Only usage charges, including the downloading charges, will apply. The normal charges for downloading are 10 paise per 10 kb of data. — PTI
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HPCL to invest Rs 900 crore
New Delhi, July 25 “The company plans to set up 800 new retail outlets (petrol pumps) during 2006-07,” he said in a written reply to a question in the Rajya Sabha here. To another question, Mr Deora said ONGC would set up a special purpose vehicle, Mangalore Petrochemicals Ltd, for implementation of an Aromatics complex at Mangalore Special Economic Zone at an estimated cost of Rs 4,852 crore. ONGC would have 46 per cent stake in the proposed SPV, while its subsidiary MRPL would hold 3 per cent. The remaining 51 per cent equity would be offered to financial institutions and banks.
— PTI |
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GMR Infrastructure
Chandigarh, July 25 The four-laning on Ambala- Chandigarh highway, awarded to us, will be complete by mid 2008, while the modernisation of Delhi airport will be complete by 2010," he said.
— TNS |
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Tata Indicom offer
Chandigarh, July 25 Mr Subhash Atya, Chief Operating Officer (Punjab), said under the scheme, the customers have the freedom to choose a handset from low-end to high-end sets and couple it with a tariff plan of his choice.
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Tata Motors net up by 40 pc
New Delhi, July 25 Total income of the company has increased to Rs 5,869.3 crore for the period from Rs 3,965.7 crore last year. The company has attributed this rise in profit, to the strong sales of higher-margin vehicles. Lupin Q1 net up
Pharma company Lupin Ltd has posted a 17.38 per cent rise in net profit at Rs 50.65 crore for the quarter ended June 30, as compared to Rs 43.15 crore for the corresponding quarter in 2005-06. The total income (net of excise) rose to Rs 495.16 crore for the first quarter in 2006-07, up by 35.63 per cent from Rs 365.07 crore in the year-ago period. The group reported a consolidated net profit after minority interest of Rs 53.55 crore for the quarter ended June 30 and the consolidated total income (net of excise) of the group stood at Rs 526.17 crore for the first quarter in FY 06-07. Jaiprakash Associates
Construction service provider Jaiprakash Associates Ltd has posted a decline of 77.77 per cent in net profit at Rs 92 crore for the quarter ended June 30 as compared to Rs 414 crore for the same quarter in 2005-06 The total income (including profit on sale of shares of Jaiprakash Hydro Power Ltd) decreased by 24.27 per cent to Rs 920 crore for the first quarter ended June 30 from Rs 1,215 crore for the corresponding quarter a year ago. Godrej Industries
Godrej Industries Ltd has posted a rise of 74 per cent in its net profit to 16.5 crore for first financial quarter of 2006-07 as against that in the corresponding period last year. The diversified Indian company with several business interests, Godrej posted its EPS (annualised) higher at Rs 13.6 as compared to Rs 7.8 last year. “Our continued focus on strategic investments in group companies is yielding attractive returns. This quarter we have acquired a 100 per cent stake of Nutrine Confectionery, the market leader in the confectionery business through Godrej Beverages and Foods Limited, one of our associate companies,’’ GIL Chairman Adi Godrej said. Zee Telefilms
Zee Telefilms Ltd has posted a profit after tax of Rs 15.60 crore for the quarter ended June 30 as against Rs 30.68 crore for the same quarter in 2005-06. The total income was Rs 243.99 crore for the quarter ended June 30 whereas the same was Rs 177.69 crore for the quarter ended June 30, 2005. The group posted a profit after tax of Rs 56.22 crore for the quarter ended June 30 as against Rs 77.85 crore for the quarter ended June 30, 2005. The total income was Rs 404.58 crore for the quarter ended June 30 in comparision to Rs 325.04 in the previous fiscal’s corresponding quarter.
—Agencies |
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CRR, bank rate unchanged; home loans to cost more
