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Global markets bounce back
DoT forms panel to look into 2G-3G revenue split
Don’t panic, says FM |
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Don’t stop lending, RBI tells banks
Worst is behind us: ICICI Bank
PM’s panel for further cut in CRR
Foreign investment norms may be eased
Nath: Global crisis may hit FDI inflow
Honda Siel to set up plant at Alwar
Jet, Kingfisher join hands to beat downturn
Barclays to raise over £6.5 b
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London, October 13 Leading indices had plunged by almost a quarter in value last week on a collapse of confidence in the global financial system, while some shed as much as 10 percent just on Friday in the worst performance for 21 years. Central banks in Europe fired a new broadside on Monday to free up frozen lending, by providing commercial banks with unlimited amounts of dollars in a joint operation that might be reinforced by their key Japanese ally. Governments in Berlin, Paris and Rome were to announce more than half a trillion euros in rescue funds for Europe's stumbling banking sector, as each puts a price tag on a joint bail-out plan. Leaders of the 15-country eurozone single currency bloc, following the lead of Europe's financial giant Britain, agreed Sunday on a high-stakes joint bid to pull the world financial system back from the brink of collapse. Germany was to unveil a 470-billion-euro rescue package to save the country's banks from collapse, government sources said. "Friday's late rally on Wall Street, a positive start to trade in Asia and news of widespread government intervention on a worldwide basis to prop up ailing banks looks likely to give equity traders ... something to cheer as the new weeks gets underway," said CMC Markets dealer Matt Buckland. "But there has to be a degree of caution in the whole equation too. In midday trade, Frankfurt's stock market was up a huge 6.15 percent and Paris soared 6.36 percent. London won 4.84 percent, Madrid rallied 6.85 per cent and Zurich rocketed 7.63. Hong Kong closed up 10.2 per cent on Monday while Tokyo, Asia's largest stock market, was shut for a public holiday after slumping 24 percent last week. Australian shares ended 5.6 per cent higher — rebounding from an 8.3 percent plummet Friday -- after Canberra announced plans at the weekend to guarantee bank deposits. In a bid to shore up the market Australia's central bank also pumped 2.85 billion dollars (1.9 billion US) into the financial system to ease the grinding liquidity crisis. New Zealand had a rollercoaster after opening lower, then moving into positive territory but ending the day 0.82 percent off despite similar government guarantees on bank deposits to Australia. Seoul bounced 3.8 per cent higher after the exchange was earlier forced to suspend trading temporarily to cool the market. Taiwan closed down 2.15 per cent. — AFP
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DoT forms panel to look into 2G-3G revenue split
New Delhi, October 13 The finance ministry had raised objections to the proposal of the DoT for the splitting of the revenue earned in the 2G and the 3G spectrum as it felt that there would be losses to the government exchequer. "The sub-committee formed by the department (for 2G and 3G revenue segregation) will come up with its report very soon," communications and IT minister A Raja told reporters on the sidelines of the South Asian Telecommunication Regulators' Council (SATRC) conference here. The finance ministry feels that the segregation of revenue would lead to operators camouflaging 2G revenue to avoid paying the revenue share. Industry experts also feel that the DoT may find it difficult to work through the segregation of revenue between 2G and 3G due to complex splitting methods. Even as ministry of finance, TRAI and CDMA operators feel the separation is tough and can give rise to revenue loss, GSM operators had told DoT that such a plan was workable, but it now appears that even the COAI is finding it difficult to cite successful example for such a split. The committee would examine that once 3G services comes into operation, whether there can be some mechanism to segregate revenue of 2G and 3G for a service provider. The committee was also formed as TRAI had also pointed out that the recent modifications made by the DoT where it said that, "the licensee shall pay an annual spectrum charge of 1 per cent on the incremental revenue due to 3G services after a period of one year," was not a feasible option. It would be impossible to calculate the revenue arising out of 2G-3G services in case a service provider provides both services. Incidentally, the finance ministry has also asked the DoT to speed up 3G spectrum auction process, so that operators can roll out services as early as possible, and avoid introducing new clauses in the guidelines, which can cause further delays.
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Don’t panic, says FM
New Delhi, October 13 “Our banks are ready and willing to provide credit, suitable advisories are being issued to the banks. We will respond swiftly according to the needs of the situation,” Chidambaram said. “We are working on measures that will infuse liquidity, make credit intermediation smoother and increase the confidence of depositors and investors. We hope to be able to announce them shortly,” he said. After the week-end mayhem in which the market tanked 800 points, the finance minister went live on television channels expecting the stock market to take a cue from the positive developments of the Australian markets and three of the East Asian capital markets opening on a 'bright note' this morning. “We must remain confident and respond to the situation in a cool and mature manner. We must banish fear. Especially depositors have nothing to fear because their deposits in banks are safe,” his statement read. “Investors must take informed decisions. Before you sell, you must remember that for every seller there is a buyer. You must ask yourself why the buyer is buying in these times of perceived uncertainty and, therefore, ask yourself the further question whether there is a need to act in haste or in panic. In my view, there is no reason at all to act in haste or to give room for panic,” he said. Mentioning that already Rs 60,000-crore liquidity has been infused into the financial system by RBI's measures and that Rs 91,500- crore liquidity adjustment facility exists, Chidambaram said the government, RBI and SEBI were watching the situation carefully and coordinating their actions. Referring to the banks, he said, they were ready and willing to provide credit. The minister further said if all players take informed decision, the Indian economy would weather the current storm and emerge stronger.
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Don’t stop lending, RBI tells banks
Mumbai, October 13 "It has come to our notice that in view of some tight liquidity conditions in the domestic market in the recent past, some of the banks have been averse to disbursing working capital limits and term loans (including short-term loans) to their clients against the sanctioned limits," RBI said in a notification. The central banks said some banks are resorting to such tendencies even when drawing power is available in the clients account and all the terms and conditions of the sanction of the loans stand complied with. "In view of the improved liquidity in the markets, the banks concerned are advised to review all such cases and permit drawal of sanctioned limits, guided by their usual commercial judgement," the Reserve Bank said. Earlier in the day, Finance Minister P Chidambaram had said that "our banks are ready and willing to provide credit. Suitable advisories are being issued to the banks." RBI is already infusing Rs 60,000 crore by reducing mandatory cash requirement for banks (cash reserve ratio) by 1.50 per cent. — PTI
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Worst is behind us: ICICI Bank
Mumbai, October 13 "The worst is behind us, but we will remain vigilant and any rumour-mongering would be dealt with accordingly," ICICI Bank chief K.V. Kamath told
PTI.
A day after ICICI Bank filed a police complaint against people believed to have been behind the rumours casting doubt over its financial health, Kamath said, "We will talk to the finance minister, RBI and other regulators to brief them about the situation." "Our position has been vindicated that vested interests were working against the bank, but the most heartening part is that context have been found to everything," Kamath said, adding that global rating agencies Moody's and Standard and Poor's have also vindicated our stand by saying that the bank's credit fundamentals continue to remain strong. "The government, RBI and SEBI have re-assured their support by standing behind us... This has helped us in a great way," he noted. "Absolutely" was the answer given by ICICI Bank's joint managing director and CFO Chanda Kochhar when asked if the day has turned out to be bright for the bank, given a sharp rebound in its share price after a battering for days. "Day after day, rumours have continued to spread, whether it was about our UK subsidiaries, our investments or exposure to the global financial crisis... Now everything has been contextualised," Kochhar said. When asked what was her biggest fear now, she said, "I do not believe in apprehensions and fears... it is our performance that would speak for us... But we'll have to guard against any rumours that may come in our way." Kamath re-assured that ICICI Bank has no liquidity problem as it has Rs 90,000 crore in government securities and the global subsidiaries have $2.5 billion in cash. — PTI
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PM’s panel for further cut in CRR
New Delhi, October 13 "I do expect those measures (Cash Reserve Ratio and Statutory Liquidity Ratio reduction) could be taken to further ease liquidity," PMEAC chairman Suresh Tendulkar told PTI. As domestic fund position is tight, he said, "Either of the instruments could be used to infuse liquidity in the system." Tendulkar further stressed that since the inflation seems to be easing, the policy stance of the RBI as well as the government should "gradually... shift towards growth." Last week, RBI slashed CRR by 150 basis points to 7.5 per cent, a move that has released Rs 60,000 crore in the cash strapped banking system. The impact of the cut in the ratio which came into effect on Saturday will be felt today. In the past five years, this is the first time that the apex bank has gone in for reducing the CRR. RBI last reduced the ratio in June 2003. When asked whether the RBI should go in for reduction of the short-term lending (repo) rate to boost liquidity, Tendulkar said, "At this juncture I would not rule out a cut in repo rate." Moreover, he added, as part of the liquidity management exercise, the RBI could also consider reduction in the Statutory Liquidity Ratio, the amount which the banks are required to park in approved government securities.
— PTI |
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Foreign investment norms may be eased
New Delhi, October 13 At present, foreign direct investment (FDI) and foreign institutional investments (FII) are added to determine sectoral foreign investment cap in banking, credit information companies, broadcasting, commodity exchanges and telecom. But, with RBI allowing FIIs to acquire shares in companies under the Portfolio Investment Scheme (PIS), the government is now likely to mandate that sectoral caps would henceforth be for FDI investment only, official sources said. In sectors with caps, the balance equity would specifically be beneficially owned by/held with/in the hands of resident Indian citizens and Indian companies, owned and controlled by resident Indian citizens. FIIs investing under PIS shall not seek a representation on the board of directors and they will have to give a self-declaration whenever they act in concert with any of the companies that they have invested in. Sources said investments by registered FIIs under PIS are made under Schedule 2 of the Foreign Exchange Management Regulations and are distinct from FDIs which are made under Schedule 1. FIIs are also permitted to make investments under FDI Scheme under Schedule-1.
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Nath: Global crisis may hit FDI inflow
New Delhi, October 13 "Because of the liquidity crunch globally, some investments in the future may be affected," he told reporters here. He was, however, quick to add that the effect would be minimal and "at least for this year we will achieve our (FDI) target." During the current year he estimated that FDI inflows would surpass the target of $35 billion. Nath said exports continue to be robust, witnessing a 30 per cent growth. "Exports have gone up by 30 per cent and even this month I feel the exports will go up by that much," he said. The minister said rupee was depreciating against the dollar due to continuous outflow of the currency. "I do not think it is permanent." Rupee is trading closer to 49 mark now against the US dollar. Echoing finance minister P Chidambaram's views, Nath said the government does not believe in calibrating the rupee. "In India, we do not calibrate rupee... the government should not intervene unless there are extraordinary and unnatural situations arising," he said. On the downslide in stock markets, he said external reasons were responsible for the slide. "Our stock markets are going down because of external reasons...Their (the US and EU) liquidity crunch is causing problems in our stock markets." "The most liquid assets are on the Indian stock markets," Nath said, adding that this speaks well of the Indian stock market.
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Honda Siel to set up plant at Alwar
Chandigarh, October 13 The new plant is being set up at an estimated cost of Rs 1,000 crore, and other than the Honda plant, it would also have eight company suppliers setting base here. Talking to TNS, on the sidelines of the launch of third generation Honda City car here today, Jnaneswar Sen, vice president, marketing, Honda Siel Cars, said this plant would initially have a capacity to produce 60,000 units, which would later be enhanced to 2 lakh units. “The first phase of this plant at Tapukhare is already over and we have already started manufacturing body panel and machine shop. We will start manufacturing the entire car here by June 2009,” he said. Sen said the company has also invested another Rs 1,400 crore for the capacity expansion of the company plant at Greater Noida. “From a capacity of 60,000 units a year, we have enhanced the capacity to one lakh units,” he said, adding that they have already sold 2,34,600 units in India.
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Jet, Kingfisher join hands to beat downturn
Mumbai, October 13 Announcing the alliance, both Naresh Goyal of Jet and Vijay Mallya of Kingfisher said the coming together was in tune with the global practice of reducing killing costs and clarified that there was no equity involvement. “This is a long-term alliance on a sustainable basis and not a matter of convenience,” Goyal, emerging after a two-hour long meeting with Mallya, told waiting news persons but declined to take any queries saying they would answer when the two visit Hyderabad Air Show tomorrow. “Both parties recognise economic realities and benefits of the alliance... it is a meeting of both mind and heart,” Mallya, who earlier received Goyal, his wife Neeta and entourage of top officials at his office at his Ville Parle office said. The alliance would bring the two airlines, which account for nearly 60 per cent of market share, to work together on seven fronts, including route and code sharing as also sharing of crew, a move that would help them cut exorbitant cost that had been putting enormous pressures for the last 4-6 years. The two airlines would cooperate to leverage the joint network deploying 189 aircraft, offering 927 domestic and 82 international flights daily. Asked if the alliance could lead to a merger or equity participation, Goyal said, “There is no equity involved... we will give details when we meet at the Hyderabad Air Show tomorrow.” In a joint statement issued after the meeting, the two corporate honchos said, “While maintaining their legal entities and brand entities, both Jet and Kingfisher will examine co-branding opportunities and have formed a core committee of senior management personnel from both companies who will drive the various identified initiatives forward with immediate effect.” Goyal, accompanied by wife Anita who is also Director, Marketing, of Jet, Executive Director Saroj Dutta, CEO, COO and other top officials, walked into Mallya’s office for working out the details. Mallya is believed to have met Goyal at his office earlier in the day. “I look forward to this alliance delivering superior quality, cost savings, flexibility and enhance consumer value, which is the hallmark of all successful alliances,” Mallya said. —
PTI
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Barclays to raise over £6.5 b
London, October 13 The bank's board has decided to raise in excess of £6.5 billion of Tier-I capital after taking into account the new higher capital targets set by regulator Financial Services Authority (FSA) for all UK banks, Barclays Plc said in a filing to the London Stock Exchange. "Given the strength of Barclay's well diversified business and the existing capital base, the board expects that the additional capital will be raised from investors without calling on the government funding, which has been offered to UK banks," the filing stated. This would result in a pro-forma Tier-1 capital ratio as on June 30, 2008 of over 11 per cent, it added.
— PTI |
Mumbai Axis Bank Q2 net up 77 pc: Axis Bank has clocked a 76.8 per cent growth in net profit for the quarter ended September 30. Net profit grew to Rs 402.91 crore in the second quarter as compared to Rs 227.82-crore in the year-ago period while total income rose to Rs 3,239.45 crore from Rs 2,059.37 crore in the same period in last year, the bank said today. — TNS Kolkata New
Delhi TAFE plant in Turkey: Chennai-based Tractors and Farm Equipment Ltd (TAFE) is setting up a greenfield plant in Turkey, at an estimated investment of about $20 million. The plant, which is the company's first ever overseas unit, would have an annual production capacity of 15,000 units and will go on-stream by the first quarter of next year.— PTI Aircel, ZTE Corp in pact: Telecom operator Aircel's holding company Maxis has signed a $400-million GSM network infrastructure project deal with ZTE Corporation, a leading telecommunications equipment and network solutions provider, to expand GSM coverage in the country. Aircel has a subscriber base of over 11 million users. Dubai Harare Washington
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