The Tribune, Chandigarh, India

No immediate hike in lending rates: Bankers

Mumbai, April 20
Home, auto and consumer loan rates are unlikely to move up in the near future despite a 0.25 percentage points hike in the key policy rates with bankers today assuring that they will not make loans dearer anytime soon as liquidity is sufficient in the system.

During the year I do see the lending rates going up but I don't see any immediate impact on rates as of now. — Chanda Kochhar, MD, ICICI Bank

Top bankers like the State Bank, ICICI Bank, HDFC Bank, Union Bank and Bank of Baroda, among others said shortly after the RBI policy announcement that none of them are planning any hike in the lending rates in the near-term.

"Whatever has been done in the policy has reduced the supply. So definitely there is an upward bias in rates. As credit demand increases, there will be a demand-supply gap, and then there is a possibility of interest rates going up," SBI chairman OP Bhatt said.

Bhatt further observed the Reserve Bank has signalled its rising concern on the runaway inflation that is hovering near double-digit level, reflecting the ballooning food and fuel prices.

Shifting its policy focus from growth to inflation, RBI today hiked repo and reverse repo rates (overnight lending and borrowing rates of banks) and cash reserve ratio or CRR (deposits that banks keep with RBI) by 0.25 per cent each.

ICICI Bank chief executive and managing director Chanda Kochhar shared a similar view saying, "during the year I do see the lending rates going up but I don't see any immediate impact on rates as of now." These comments assume significance as millions of common borrowers were worried that a tightening in the rates could make their borrowings dearer, thus hitting their savings, especially in the current high inflation scenario.

The country's second largest private sector lender HDFC Bank also said it was not considering any increase in its lending rates soon. "Lending rates will depend on the demand-supply and cost of funds. In the near-term, there will not be any significant increase in the rates. Our rates will depend on demand-supply and the cost of funds," its managing director Aditya Puri said, adding however, it has seen pressure building on its margins with the cost of funds moving up.

State-run Union Bank of India CMD and Indian Banks Association chairman MV Nair said sufficient liquidity was expected to remain in the system over the next six months despite the RBI action.

"Considering that around Rs 1,00,000 crore liquidity in the system now, even if RBI sucks out money through 25 basis points hike in CRR, I think there will be enough liquidity in the next six months," Nair said, adding banks are confident of achieving at least 20 per cent credit growth this fiscal.

Another public sector lender Central Bank of India executive director Arun Kaul said there was no surprise in the policy as RBI action was factored in by the market. "There would not be any impact on interest rates and status quo will be maintained," he added. — PTI

Monetary Policy
RBI measures will cool inflation: FM

New Delhi, April 20
The rate hike by the Reserve Bank will gently tighten money supply and help moderate inflation, which is hovering close to 10 per cent, Finance Minister Pranab Mukherjee said today.

He, however, also felt that inflation has peaked and would begin falling and be lower than the 5.5 per cent projected by RBI for this fiscal.

"These policies should have a gentle impact in tightening money in the economy and should dampen further inflationary pressures," he told reporters here.

The central bank today hiked key short-term lending and borrowing rates (repo and reverse repo) and CRR, the portion of money banks park with it, by 25 basis points each. These moves are aimed at tempering demand for loans and would, in turn, check consumer spending.

The hike is part of the steady exit from the easy money policy that the RBI unveiled in the wake of the global financial meltdown in 2008. RBI began rolling back monetary stimulus in January when it hiked CRR to 5.75 per cent and later in March, it hiked repo and reverse repo by 0.25 percentage points each.

"If nothing untoward happens on the weather front, my belief is that overall inflation has peaked and should be on downward trajectory from now on," Mukherjee said. Wholesale prices-based inflation was 9.90 per cent in March and is largely fed by food inflation, which is around 17 per cent. Food prices are on a high due to supply side constraints.

"My own belief based on analysis done in my ministry is that inflation is now on downward trajectory and in 2010-11 will be less than 5.5 per cent and in fact closer to 4 per cent with an upward bias," Mukherjee said.

The measures complement well the policies of the Finance Ministry aimed at controlling inflation and promoting sustainable growth, he said.

"The well balanced measures which involves raising the repo rate, reverse repo rate and CRR by 25 bps each reflect a mature and balanced view of the needs of our economy and I fully endorse the measures," Mukherjee said. — PTI

India becoming hub for mobile manufacturers
Ruchika M. Khanna
Tribune News Service

Chandigarh, April 20
India is the new hub for all mobile handset manufacturers and retailers. No wonder that over 120 handset manufacturers are now retailing their products in the country, and another 70 are all set to enter the Indian market by the end of this year.

With India emerging as one of the largest consumers of mobile handsets (almost 10 million handsets a month or 11 crore units a year), everyone is now looking at gaining a share of the pie. Its not just the entry level, low cost phones that are finding a market in India, but also the smart phones that are being retailed in huge quantities here. This is surely a windfall for the consumers, who are now getting feature rich handsets at affordable prices.

Praveen Srivastava, head, sales and marketing, LAVA International, that is retailing its phones in India under the Lava brand name, agrees that there is a huge potential for growth in India. “Though the maximum business lies at the bottom of the pyramid (in cat III towns and rural India), where mobile penetration is growing by leaps and bounds, but we are also looking at increasing our presence in the hi-end phone segment,” he said.

“We launched our range of handsets in India last year. In the first year, we have managed to sell 1.5 million units and are targeting a sale of 7.5 million units in this fiscal. We propose to double our distributors and multi-brand retail outlets by the end of this year, thus hoping to get a market share of 7 per cent,” he said, adding that these handsets are being manufactured in Taiwan and China.

Though this is huge business, but no major investments are involved as majority of these companies entering the Indian market for retailing its handsets, are setting up their manufacturing base here. Citing lack of eco-system for starting mobile handset manufacturing, these companies are using manufacturing lines set up in China. The manufacturers just place an order of the handsets to be manufactured, after giving his design, which is then made and brought to India.

Says Rajiv Khanna, chairman of Bling Telecom, which is to launch its range of handsets (Movil and Bling) in the country, “There is lack of eco-system for manufacturing handsets in India. One needs to have a robust industry manufacturing mobile handset parts like back panels, speakers, mikes et al., which is presently not there. Thus it is better that we import handsets and retail them here. We have our design house in China and will be manufacturing handsets there,” he said.

3G Auction
Govt may garner over Rs 35,000 crore
Tribune News Service

New Delhi April 20
The government’s assessment of garnering over Rs 35,000 crore from the auction of the third generation (3G) spectrum may get fulfilled with a jump of 73 per cent over the base price having already been achieved till the eighth day of the auction yesterday.

As Delhi continued to be the most sought-after market, there was a minimum assurance of the government raking in Rs 24,620 crore in its kitty with the price for all-India 3G spectrum rising to Rs 6,068 crore and the bidding is still going strong.

The Delhi circle continued to be the most in demand with the bid price is going up to Rs 691.20 crore against the reserve price of Rs 320 crore.

Having completed 46 rounds of auction till yesterday night an increment of Rs 6.91 crore was done to the auction amount for Delhi for the 47th round.

Mumbai witnessed the second highest bid of Rs 635.38 crore, followed by Tamil Nadu with price crossing Rs 606 crore, according to information posted at DoT’s website.

Analysts maintain that the bid price is likely to settle at about Rs 9,000 crore a slot and Rs 45,000 crore overall, including revenues from sale of broadband spectrum, helping the government curb record fiscal deficit that leaped to a 16-year high last year.

According to senior DoT officials, the activity level is still 80 per cent, meaning that the operators are still concentrating only on metros and A-category circles and once they start bidding for the remaining circles, the price is likely to go up further.

The officials said the picture would change once the operators, especially those participating for pan-India spectrum, start showing interest in these circles.

The government is auctioning the 3G spectrum simultaneously in all the 22 service areas. According to DoT there is negative demand for Punjab, Haryana, Rajasthan and Jammu and Kashmir among others.

BSNL staff call off strike
Disinvestment issue referred to GoM
Tribune News Service

New Delhi, April 20
BNSL employees today gained some ground in their opposition to disinvestment within the public sector telecom company as the government decided to refer the issue to a Group of Ministers (GoM).

The result was that within hours of going on indefinite strike, the employees unions of BSNL today called off the protest. The government assurance came after a meeting between the employees unions and the Telecom Minister A. Raja.

Over three lakh employees of the state-run company had joined the strike from 6 am this morning. Within hours, BSNL chairman Kuldeep Goyal met the Telecom Minister and sought his intervention.

After the meeting with the union leaders, Raja said, "We have assured them that the issue of disinvestment will be referred to a GoM and they would be consulted before taking other decisions with regard to BSNL".

"As the management has agreed to look into our major demands, we have decided to call off the indefinite strike," convener of the joint action committee of BSNL Associations and Unions VAN Namboodiri said.

A high-level panel had recommended 30 per cent disinvestment in BSNL and voluntary retirement to over one lakh staff as part of steps to improve financial health of the PSU.

Besides the scrapping of the divestment plan, the unions were also demanding absorption of 1,500 Indian Telecom Services (ITS) officers, who have been continuing on deputation for the past 10 years.

TCS to hire 38,000 this fiscal

Mumbai, April 20
IT major Tata Consultancy Services today said it was planning to hire about 38,000 personnel to improve efficiencies and generate better returns. "We are hiring a total of around 38,000 people out of which 20,000 would be trainees and 10,000 laterals," TCS global human resources head Ajoy Mukherjee said here today.

"In the past fiscal, we have been through an entire business cycle where controlled hiring in the first two quarters gave way to rapid recruitment in the last two quarters. We have made 20,000 campus offers for this fiscal," Mukherjee said, adding the country's largest software exporter hired 16,668 new employees in the fiscal gone-bye, taking the total strength of employees to 1,60,429.

TCS has also filed for new 600-700 H1B visas this year mainly due to business coming back from countries like the US, Latin America and Europe, he said. It also plans to recruit over 3,000 people on onsite in like Brazil, Uruguay, China and in Latin America, among others. — PTI

Axis Bank Q4 net up 31.54 pc

Mumbai, April 20
Axis Bank today said its net profit rose by 31.54 per cent to Rs 764.87 crore for the fourth quarter ended March 31, 2010. Total income stood at Rs 3,921.99 crore for the March quarter against Rs 3,884.73 crore for the same period previous fiscal, Axis Bank said in a filing to the Bombay Stock Exchange (BSE).

The bank posted a consolidated net profit of Rs 2,478.14 crore for the year ended March 31, 2010 against Rs 1,812.93 crore last fiscal. Besides, the bank has earned an interest of Rs 2,988.45 crore for the fourth quarter ended March 31, compared to Rs 3,039.22 crore for the same period last fiscal. The consolidated interest earned by the bank for the year ended March 31, stood at Rs 11,639.05 crore compared to Rs 10,829 crore previous fiscal. The bank has recommended a dividend of Rs 12 per share for the year ended March, 2010. — PTI

Toyota to recall 34,000 vehicles

Tokyo, April 20
Toyota Motor Corp has said it would recall about 34,000 vehicles worldwide to address potential rollover problems stemming from insufficient activation of the vehicle stability control system.

The 34,000 vehicles include 13,000 Lexus GX 460 sport utility vehicles and 21,000 Land Cruiser Prado cars.

The recall affects all Lexus GX 460 SUVs sold around the world, including about 9,400 units in the United States and 1,000 units each in Russia and Oman.

The Land Cruiser Prados being recalled are among left-hand-drive models, Toyota said. They include 4,400 units in Oman, 4,000 units in Russia and 1,500 units in the United Arab Emirates, it said, adding that no right-hand-drive models are being recalled. — Kyodo