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Banks will slash rates soon: FM
Sensex jumps 293 pts
IDBI responds
Banks going slow on
fixed deposits renewal
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Moody’s affirms ICICI Bank UK’s rating
EU presses for reforms, Australia cuts rates
Nokia to cut 600 jobs
Religare board okays Lotus acquisition
‘DoT to charge for extra spectrum’
US firm to invest $100 m in Punjab
Corporate Results
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Banks will slash rates soon: FM
New Delhi, November 4 IBA (Indian Banks’ Association) has assured that it would reflect on the issue of rate cuts, Chidambaram said after meeting heads of the public sector banks today. The FM also assured that housing and small and medium scale will get adequate liquidity on a priority basis. Finance secretary Arun Ramanathan has also called a meeting of the private and foreign banks to discuss the issue. The RBI will soon take a decision on extending a line of credit of Rs 10,000 crore to the National Housing Bank to ensure that adequate funds are available for the housing sector. The finance minister said demand for credit was higher and bankers were feeling the pressure. The minister has sought from them a fortnightly report on the credit growth. “I think the discussion on pricing of credit and delivery of credit will lead to some very encouraging decisions by the public sector banks,” Chidambaram said. The finance ministry will also interact with private and foreign banks operating in India tomorrow to ensure that liquidity and interest rates issues are addressed in tandem by lenders in both public and private sectors.
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Mumbai, November 4 The 30-share Sensex on Bombay Stock Exchange ended the day at 10,631.12, a gain of 293.44 points, or 2.84 per cent. National Stock Exchange index Nifty also advanced by 98.25 points or 3.23 per cent to close at 3,142.10. Markets opened weaker by 221 points after a four-day gaining spree — which saw the Brokers said markets which were down were revived by finance minister P Chidambaram’s comments that banks have assured him that they would consider the demand for lowering lending rates. Realty and banking sectors surged on expectations of boom on a likely cut in lending rates and on assurance of housing and SME sectors of adequate liquidity. Country’s largest public sector lender State Bank of India agreed to consider a cut in lending rate, immediately after Chidambaram’s meeting with heads of state-owned banks this afternoon. Realty index was up by a handsome 12.14 per cent, while banking index rose by 6.56 per cent. FMCG, PSU and power indices also gained in the range of 4-5 per cent. A strong surge in Japan where the Nikkei gained more than 6 per cent as well as a steady trend in European markets also helped recovery in local stocks. — PTI
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IDBI responds
Mumbai, November 4 The rate cut will be applicable to both existing and new customers. Home loans will be now available to customers at an interest rate of 11 per cent against the earlier 11.5 per cent, the bank said. The margin on housing loans has been enhanced from 15 per to 20 per cent for loans up to Rs 30 lakh and to 25 per cent for loans over Rs 30
lakh. Punjab National Bank had yesterday cut its prime lending rate by 0.5 per cent, effective from November 1 and deposit rates from December 1. —
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Banks going slow on
fixed deposits renewal
Mumbai, November 4 According to information available, a number of public sector banks have asked their branch managers not to renew FDs at higher interest rates on an automatic basis. “Right now, we offer 11 per cent interest on FD for a period of 400 days,” a branch manager of Bank of Baroda said. FDs for longer duration carry much lower interest rates of just around 8.5 per cent, he said. However, the PSU banks are offering to FDs at the high rates from retail customers who specifically request for it. Corporates looking to park excess funds are also given the higher interest rates. Over the past few days, PSU banks like the State Bank of India (SBI) have managed to mobilise crores of rupees after sharply hiking interest rates. Reports say the SBI was collecting as much as Rs 1000 crore per day for the past fortnight. Over senior bank officials here refused to confirm the news. After the RBI sharply cut important rates over the past fortnight, the government is leaning on managers of PSU banks to reduce lending and deposit rates to kick-start the economy. In Delhi, finance minister P Chidambaram after a meeting with chiefs of government-owned banks today, said they were working on reducing interest rates sharply. Among the leading banks that have already indicated rate cuts include the SBI, Bank of Baroda and UCO Bank who said they would cut benchmark-lending rates up to 75 basis points. Punjab National Bank, which had cut interest rates by 50 basis points last week, said it would reduce rates even further. Banking officials here feel that apart from lower interest rates, incentives would be given to borrowers looking for funds to buy houses. Small and medium enterprises that ere being squeezed by the credit crunch are also likely to benefit from a pro-active policy initiated by the government, say banking officials here. Private sector banks are also likely to follow their PSU counterparts in reducing interest rates. ICICI Bank has already indicated that it would slash interest rates in tandem with government banks. However, ICICI Bank chief K V Kamath is demanding that RBI slash key rates even further to jump-start the economy. The housing industry is demanding that home loans be priced at single-digit interest to increase purchases of new homes. Even after the rate cuts by the banks, housing loans are hovering the region of 11 per cent.
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The group would comprise of finance minister P Chidambaram, industry and commerce minister Kamal Nath, Planning Commission deputy chairman Montek Singh Ahluwalia and RBI Governor D Subbarao. “The group will meet regularly to coordinate and decide the government’s response to the points raised by industry time to time with regard to the current global financial crisis and its impact on India," an official release said. The decision to constitute the group comes a day after the Prime Minister held a meeting with the industry leaders on the global crisis. The Prime Minister has also approved a committee of officials (CoS) chaired by finance secretary that would meet on a daily basis or as often required to consider the issues raised by the industry. The members of the CoS include commerce secretary, industry secretary and secretary in the Planning Commission, "The joint secretary (banking), the finance ministry will be the government contact person to receive suggestions from industry," the release said. — PTI
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Moody’s affirms ICICI Bank UK’s rating
London, November 4 Affirming a ‘D’ bank financial strength rating (BFSR), which implies modest intrinsic financial strength, and stable outlook on all the ratings for the UK entity, Moody’s said the long-term bank deposit and senior unsecured debt ratings for ICICI Bank UK were being changed from Baa1 to Baa2, which is similar to the Indian parent’s senior debt rating. The agency also stated that current BFSR incorporates “a certain degree of volatility in earnings, which could potential arise from the bank’s large securities holdings”. Moody’s noted in its rating action note that it “takes comfort from the fact that the parent bank, as demonstrated earlier this year, has been proactive in supporting its largest overseas subsidiary by injecting an addition $100 million of tier-I equity to mitigate potential losses and maintain ICICI Bank UK’s current capitalisation level.” The UK arm currently has a capital adequacy ratio of 18.4 per cent, much higher than the British regulatory requirement of 14 per cent, the officials added. Moody’s said the exposure of $80 million to Lehman Brothers with likely write-down implications that was partly provided in September quarter results, combined with additional mark-to-market writedowns and write-offs could depress profitability for this financial year. It further noted that the downgrade of ICICI Bank UK’s long-term debt and deposit ratings is because of change in the parent bank’s baseline credit assessment (BCA). Yesterday, Moody’s has revised down ICICI Bank’s BCA from Baa1 to Baa2. It has also revised down subordinated debt rating for the UK entity to Baa3 from Baa2 and junior subordinated debt rating to Ba2 from Ba1. — PTI
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EU presses for reforms, Australia cuts rates
London/Sydney, November 4 For investors, the worst financial crisis in 80 years has all but eclipsed Tuesday’s U.S. presidential election although the result may offer some relief with the promise of more fiscal stimulus. Whether Democrat Barack Obama or Republican John McCain wins, he will face a huge challenge in reviving the world’s largest economy, which is already contracting. Australia’s bigger-than-expected 75 basis point rate cut followed cuts in the US, China and Japan last week. Britain and the euro zone are expected to follow suit on Thursday with half point reductions, or maybe more. The recession that authorities have tried to temper with trillions of dollars in bank bailouts, cash thrown into money markets and economic pump-priming measures, looms ever larger. Australia's central bank said there was "significant weakness" in major economies in explaining why it cut rates to 5.25 per cent, the lowest since March 2005. "Each of the big developed economies now is either in a severe recession or well on the way," said Rory Robertson, interest rate strategist at Macquarie in Sydney. EU reform call
European Union finance ministers, meeting in Brussels, backed proposals for reform of the G8 club of major industrial nations and an end to self-regulation in financial markets that critics say caused the credit crisis. The proposals, drawn up by current EU president France, will feed into a summit of world leaders in Washington on November 15, which the US President-elect is expected to attend. German Chancellor Angela Merkel demanded world leaders agree quickly on new rules for financial markets. "It mustn't take years, it must be done in months," she said in Berlin. British Prime Minister Gordon Brown, finishing a trip to Gulf capitals, said countries were likely to pledge funds to bolster the International Monetary Fund at the November 15 meeting. The IMF has offered money to Iceland, Ukraine, Hungary and Belarus. But more countries are expected to need help, raising fears that the Fund may not have enough money to cope. Recession
Evidence of a severe economic downturn is mounting. Japan’s economy has joined much of the developed world in a recession, economists polled by Reuters say, with GDP seen contracting for a second consecutive quarter as the financial crisis hits exports and capital investment. Underlining car sector troubles, Germany's BMW abandoned its 2008 earnings forecast and cut production after a 60-per cent plunge in quarterly profit. There was mixed news from Europe's financial sector. European banks and insurers warned of tough times ahead as more writedowns and rising bad debts hit profits but executives said confidence was recovering and most bank shares rose. UBS, Royal Bank of Scotland and reinsurer Swiss Re all said they faced more writedowns on toxic assets or because of accounting rules, and showed the financial crisis was causing more pain for consumers and businesses. Shares in RBS and Swiss Re tumbled. But the broader banks sector was buoyed by that banks were rebuilding capital to weather the storm, with government help. "The government action around the world has given the financial system a very good chance of getting through to the point of market stability and the early signs are favourable," said Stephen Hester, incoming chief executive of RBS. —
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Helsinki, November 4 “As a follow-up to Nokia’s reorganisation in the beginning of 2008, Nokia plans further changes in its sales and marketing activities in the markets unit,” it said in a statement. “Nokia estimates that approximately 450 employees in the markets unit will be affected by the planned changes,” the company said, adding that another 130 employees at the Nokia research centre would also be affected. — PTI As many workers of Gujarat’s textile mills offered VRS
AHMEDABAD: With around 600 workers being offered voluntary retirement scheme (VRS) by three Gujarat’s leading textile mills in the last few days, the global recession seems to have hit the already sick mills of the state. According to Majur Mahajan Sangh, a premier workers’ union, because of the global recession, export orders of the leading mills such as Arvind Mills, Ashoka Kotsin Mills and Ashima Mills have been severely hit, registering a cut of 30-50 per cent. —
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Religare board okays Lotus acquisition
New Delhi, November 4 The board of director at their meeting held today approved the proposal to discuss, negotiate and finalise the terms of acquiring 100 per cent or majority equity shareholding of Lotus India AMC, Religare said. “We are delighted to take on a business that has been backed and promoted by institutions of such stature and pedigree and looking forward to taking it to the next level of growth. Like all other businesses that Religare operates globally we are committed to building it further as a business of excellence with a leadership position," Religare Enterprises chief Sunil Godhwani said. The company has agreed to acquire Lotus India AMC from its majority shareholders, Alexandra Fund Management (an affiliate of Fullerton Fund Management Company Ltd) and Sabre Capital. — PTI
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‘DoT to charge for extra spectrum’
New Delhi, November 4 In addition to this, there will also be a one-time spectrum charge levied, highly placed sources said after a meeting between telecom minister A.Raja and Prime Minister Manmohan Singh in which finance minister P Chidambaram was also present. It was decided in the meeting that action on 3G will be completed on or before January 15 as scheduled. Sources said the DoT would levy a one per cent charge on spectrum up to 8 MHz. GSM Operators get 4.4 MHz of start-up spectrum (2.5 MHz in case of CDMA players) bundled with telecom licences. Sources said the Prime Minister was apprised of the controversy over Swan and Unitech by the finance minister who told him that it was only dilution of shares of FDI and not any sale or trade. “It is well within the corporate laws since FDI is allowed up to 74 per cent since 2000,” sources said. — PTI
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US firm to invest $100 m in Punjab
Chandigarh, November 4 The company has already bought 20 acres for setting up the manufacturing facility. MERIAL had earlier scouted states like Himachal Pradesh, Gujarat, Andhra Pradesh and Karnataka before zeroing in on Punjab for setting up their plant. During an interaction with Punjab Chief Minister Parkash Singh Badal here today, Dr Jean-Loius Crosia, president of the company, said after getting favourable response from the Punjab government and on-spot delivery of services, they had firmed up investment in the state. This would be the fourth FMD vaccine manufacturing plant in the country. It was also informed in the meeting that first phase of the project would be completed by 2010 and the second and third phases would be functional by 2011 and 2013 respectively. Dr Crosia said they would set up an R&D centre here with an investment of Rs 250 crore, which would explore India’s domestic requirements of FMD vaccine. A full-fledged production plant will also be established in Punjab. "The new biotechnology facility with world-class process and standards for production and R&D of FMD vaccines in Punjab will be comparable to our facilities in the UK, Brazil and France," Crossia said.
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Corporate Results
New York, November 4 Aptech profit up For the quarter ending September 2008, Aptech Limited has announced its stand-alone results. System-wide revenues increased by 15 per cent year-on-year from Rs 137.76 crore to Rs 158.05 crore. The net income increased by 25 per cent year-on-year from Rs 27.32 crore to Rs 34.04 crore. BMW posts losses BMW, the German luxury car maker, has said it could no longer give a forecast for 2008, after it was hit head-on by the international financial crisis. The group said it would have to take additional charges of 1.3 billion euros in the third quarter, and that it would cut production by an additional 40,000 units this year. UBS net at $253.3 m UBS has said its net profit for third quarter ended September 30 stood at 296 million Swiss francs, even as the battered firm witnessed money outflows to the tune of 83.7 billion Swiss francs during the same period. — Agencies
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Rupee jumps 91 paise Oil below 60 Silver, gold dip Spice Mobiles Maytas Infra bags order NDS investment plans Pavers England plans
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