New Delhi, October 30
The bankers are gearing themselves for sector-specific restrictions in the credit policy to be announced tomorrow, especially in the fast-growing housing loan and credit card segments, while hoping that the RBI will not raise short- term lending rates for the time being.

“Keeping in view that the international oil price is stable, and the inflation rate is within the target range of around 5 per cent, we are hopeful that the RBI may not raise the short-term lending rates. However, to improve the quality of credit, the RBI may impose certain restrictions on certain sectors like housing and credit market,” said Mr K.N. Prithviraj, CMD, Oriental Bank of Commerce, here today.

The bankers are expecting that the RBI may extend the date for meeting the Basel-II norms for at least another six months from March 31, 2007, though most of the banks have already moped up adequate resources from the market under tier-I, II instruments.

The bankers admit despite stricter capital adequacy norms, put up by the banking watchdog to check the astronomical rise in housing loans, it grew by almost 45 per cent to Rs 1,86,429 crore on March, 2006, against Rs 1,28,728 crore in March, 2005. It will not be surprising, they said, if some restrictions on taking a loan for the second house.

The country’s second largest public sector bank PNB has also shown 26 per cent growth in the housing loan segment in second quarter this year despite an upward revision of interest rate by over 2 per cent over the past one year.

“I don’t think there will be any change in the interest rate,” PNB Chairman and Managing Director S.C. Gupta told The Tribune. On implementation of the BASEL II norms, he said the PNB was fully prepared to implement it and if needed it could muster Rs 1,000 crore within a fortnight to meet the norms.

Earlier this month, RBI Governor Y.V. Reddy, Deputy Governor Rakesh Mohan had met a select group of bankers to fine-tune the contours of the credit policy.

With unprecedented growth in credit cards, the RBI is also expected to come with broad-guidelines to put restrictions and ensure creditworthiness of the borrower.

Finance Minister P. Chidambaram has already indicated his priority areas-adequate credit to the productive sector, including infrastructure, manufacturing and agriculture though he would not mind if some further restrictions are put on housing loans and retail lending to moderate the growth in that sector.

The government is also worried that the people’s expectations about a further rise in interest rates is also fuelling demand in the economy, leading to higher inflation. That could be one of the reasons, say industry captains, for the RBI to defer a hike in interest rates at least till the next Budget.

New Delhi, October 30
India and Britain have agreed to join hands to explore areas of cooperation in the small and medium scale sector.

"Both countries recognised that besides collaboration among the big industrial houses, cooperation between the small and medium enterprises (SMEs) would benefit the small and medium firms in both countries through cheap labour to the British firms and technology upgradation of Indian firms," said Mr Ashwani Kumar, Minister of State for Industry, after meeting Prince Andrew.

Prince Andrew as a Special Representative of the United Kingdom for international trade and investment in on a visit to India and discussed ways to step up two-way trade and investment between India and the UK.

Talking to the reporters, he said, "the UK is looking for collaboration between the two countries and also looking for investment from the Indian companies."

Prince Andrew said there was tremendous scope for increasing the number of joint ventures and collaborative enterprises between SMEs of the two countries, particularly in engineering, textile machinery, automobile components, automobile ancillaries, electronic hardware and pharmaceutical industry in addition to the service sector.

Noting the immense contribution of the Indian diaspora in UK's economic development, Prince Andrew, the Duke of York, hoped for a further consolidation of Indo-UK relationship through the deepening of economic and political relations.

Mr Ashwani Kumar also focused upon possibilities for expansion of the Indo-UK trade and investment in manufacturing, infrastructure, IT, service sector, food processing, textile machinery and advance technology products.

Prince Andrew and Dr Kumar also discussed the possibility of opening up of legal services sector in the country as well as further liberalisation of FDI norms and reforms in the banking sector. Dr Kumar informed of the huge opportunities India offers for UK companies to invest and work in India. 

New Delhi, October 30
The Indian government may not have lost a moment in congratulating Mohamad Yunus, Nobel Prize winner from Bangladesh, who has changed life of millions of people through micro credit, but the micro- finance sector in India is still waiting for government attention.

Despite government’s claims to ensure credit access to the poor sections through self-help groups (SHGs) across the country, the government has so far succeeded in providing around Rs 2,000 crore annually as against a demand of over Rs 50,000 crore by the 75 million poor households.

These facts have been brought out by a “State of sector of micro-finance” report prepared through a countrywide survey on the credit needs of the poor households in the rural and urban areas. The report will be presented at the 3rd annual Micro-Finance India to be held on October 30-31 here.

“Today a farmer has access to agricultural credit up to Rs 3 lakh annually at 7 per cent interest rate, industries can avail of tax exemptions in SEZs, and infrastructure sector is raising money through tax-exempted bonds, but the poor households have to pay up to 15-30 per cent through SHGs and 36-60 per cent to the moneylenders for meeting their credit needs, said Mr Vipin Sharma, Chief, Micro-finance, Care India, which is holding the conference in collaboration with Nabard, Sidbi and the SBI.

He lamented since the cost of raising funds was much higher, the SHGs were unable to provide credit at lower rate. There is huge demand worth over Rs 1 lakh crore for micro-finance products like small credit, micro insurance and micro pension products in the rural and urban India.

“Nabard is refinancing the loans to the banks, which offer loans to the SHGs at 9-11 per cent, resulting in 15-30 per cent final interest rate for the household,” said Nabard Executive Director S.K. Mitra.

He said since early 90s, the banks have so far financed around Rs 12,000 crore through SHGs and the recovery rate has been over 95 per cent.

The bank has helped to set up over 23 lakh SHGs covering around three crore women, mostly in Andhra Pradesh, Tamil Nadu and Karnataka.

However, the micro-finance movement, which has gained strength in some southern states besides in Orissa, West Bengal and Jharkhand, has still to pick up in the northern states, including Punjab and Haryana.

Over 500 representatives of the micro-finance institutions, banking sector and SHGs, which are participating in this international conference, have urged the government to ensure adequate credit to the poor households at reasonable interest rate, as part of its promise of providing financial services to each section. 

New Delhi, October 30
The proposed merger of Air-India and Indian could see creation of a special post of a group CMD for the merged entity with special business units (SBUs) to be headed by separate CEOs.

These SBUs or divisions, to be run as independent profit-centres, are proposed to be set up in the areas of integrated passenger service covering both domestic and international operations, cargo business, ground handling, MRO (maintenance, repair and overhaul), low-cost carriers and other allied activities.

Reports emerging from the Ministry of Civil Aviation said all these proposals have been listed in the Cabinet note. It would be forwarded to the Cabinet Secretariat before getting the final approval of the Union Cabinet.

The focus of these SBUs would be to maximise revenue in the single operating company by joint sales strategy, common distribution network and outsourcing plans.

This business model also recognises the principle dissimilarities in the career progression, seniority and compensation packages for the employees of Indian and Air-India.

As part of the merger plan, the chiefs of the two state-owned carriers have already written to their respective employees seeking to allay their apprehensions regarding the job insecurity.

They assured them that HR issues were a top priority of the government and categorically ruled out any retrenchment.

The two chiefs also assured the employees that due care would be taken to protect their remuneration, perks and status and sought their cooperation in the process.

M/s Accenture, the consultants appointed for preparing the roadmap for the merger, are currently working on these issues to develop a unified approach whereby these problems could be corrected without disturbing the pay structure and seniority in both organisations, they said.

While several merger options have been suggested by the consultant, the most optimal option seems to be the merger of the two airlines into a new company.

Another recommendation of the consultants is to merge the financial books of the two companies as the shareholders are the same. The shares of the new company should be issued to the government to the extent of their shareholding in Air-India and Indian.

The merger is projected to add around Rs 1,200 crore to the bottom line of the new entity through synergies between the two airlines in different areas.

Wuxi (China), October 30
Indian engineering and technology conglomerate Larsen & Toubro Ltd today opened its first-ever electrical manufacturing facility abroad in the Chinese city of Wuxi.

The company also announced plans to establish two more ventures in China - one in the valves sector and the other in rubber.

Mumbai-based L&T has set up a wholly owned subsidiary, L&T (Wuxi) Electric Company Limited (LTW) in Wuxi, a booming city in east China’s Jiangsu province with an investment of $11 million to make high-end switchgears.

The manufacturing unit, established in Wuxi New District, a national-level hi-tech industrial park, will make high-end air circuit breakers (ACB) for which China is the world’s largest market.

The factory was inaugurated by Mr R.N. Mukhija, Chairman of LTW and whole-time Director of L&T.

The Wuxi factory will also roll out more switchgear products from the unit, Mr Mukhija said. — PTI 

Bangalore, October 30
Sequoia Capital India, a leading venture capital and growth equity investor, today announced an investment of $12 million in Paras Pharmaceuticals, an Ahmedabad-based personal care company.

Paras has a portfolio of 15 successful brands, including Moov and D'Cold which were among the top ten Indian over the counter brands.

The investment was expected to take Paras to take its brands to next level. Sequoia Capital and Actis, another investor, could provide the company sound advice besides assisting in strengthening the portfolio and brands of the company, according to Mr Girish Patel, CEO, Paras. — UNI

Mumbai, October 30
Tata Motors Ltd has posted a 31 per cent increase in profit after tax at Rs 441.72 crore for the quarter ended September 30 as compared to Rs 337.87 crore for the corresponding quarter last fiscal.

Total income (net of excise) rose by 37 per cent to Rs 6,656.62 crore for the second quarter during 2006-07 from Rs 4,846.22 crore in the same quarter a year ago, the company said.

The group reported a consolidated profit of Rs 536.44 crore for Q2 2006-07 as against Rs 393.31 crore for Q2 2005-06.

New Delhi, October 30
Punjab National Bank has posted a 19.65 per cent increase in its net profit for the second quarter ended September 30, 2006, at Rs 504.99 crore as compared to Rs 422.04 crore for the same period last year.

The bank's total income increased 13.62 per cent to Rs 3,048.32 crore for the quarter from Rs 2,682.84 crore for the corresponding period previous year.

The operating profit of the bank for the quarter stood at Rs 889 crore, up by 29.97 per cent as compared to Rs 684 crore during the second quarter this fiscal.

Asserting that the bank is poised to cross the net profit target of Rs 1,700 crore during the current fiscal, PNB Chairman and Managing Director S.C. Gupta said the bank registered a positive growth in deposits and advances despite it not adopting differential rate of interest for deposits like other banks.