The Tribune, Chandigarh, India

	Monetary Policy Realty developers, exporters to feel pinch Ruchika M Khanna/TNS Chandigarh, May 3 The Reserve Bank’s decision to hike interest rates will have an adverse impact on the budgets of all those who have taken loans. An interest rate hike on various loans is likely to be announced by banks over the next few days, and will be effective immediately. Three categories of businesses will feel the pinch in the region- realtors, exporters and small businesses. While the borrowing cost for the developers will increase, their customers, too, will have to shell out more on home loans. “It’s a double whammy for the real estate sector. Though the hike in interest rates on home loans will pinch the home buyers, it will not have any significant impact on their decision to buy real estate. But for developers, the hike in cost of borrowing would mean that our profit margins shrink. This could also lead to a hike in property prices,” said Ranjeev Kalia, general manager, marketing, Ansal Buildwell Ltd. Ashwani Kohli, a Phagwara-based exporter and senior vice-president of Punjab Chamber of Small Exporters said that banks will now increase interest rates charged on working capital and term loans. “Across the world, the exporters pay anything between 1-4.5 per cent as interest. With this hike, exporters in India will pay 11 per cent interest. The government should be encouraging industry for exports, rather than increasing interest rates every few weeks. In fact, RBI should ensure that exporters should not be charged oer 7.5 per cent as rate of interest,” he added. A L Aggarwal, general secretary of Haryana Chamber of Commerce and Industry, said that small industry is already reeling under financial constraints. “These units are getting term loans and working capital at an exorbitant 12-13.5% rate of interest from banks. Now they will get loans at still higher rate from the financial institutions.” “This is the ninth rise in rates over 13 months since March 2010. The micro industrial units which constitute more than 90% of total industrial units in the country, will be the ultimate sufferers. I hope that RBI reduces the rate of interest on loans to Micro units so as to provide some relief not only to the micro industry but the general public at large,” he added.
	FDI proposals worth Rs 1,027 cr approved New Delhi, May 3 The government today said it has cleared 21 foreign direct investment (FDI) proposals amounting to Rs 1,027 crore, including those of ACB India and Oriental Tollways. A total of 47 FDI proposals were taken up by the Foreign Investment Promotion Board (FIPB), but the board deferred decisions on 17 applications and rejected nine, the Finance Ministry said. The board gave its approval to Oriental Tollways Pvt Ltd (Delhi and Haryana) for induction of foreign equity in an investing company. The proposal is likely to bring in FDI worth Rs 475 crore. Darjeeling Organic Tea Estates' application for induction of foreign equity and a collaborator to carry out the business of production, distribution and export of tea was also approved by the FIPB. The firm aims at FDI worth Rs 93.37 crore. ACB (India) Ltd, which is engaged in the business of coal washing and electricity generation, was given ex-post-facto approval for issue of warrants. The proposal is worth Rs 97.51 crore. The other major proposals that were cleared by the FIPB include those of Netmagic Solutions, Jay Shree Tea and Industries and Augere Wireless Broadband India. Meanwhile, the Finance Ministry said the next meeting of the FIPB chaired by Secretary of Economic Affairs R Gopalan will be held on May 20. — PTI
	New borrowing facility for banks Shiv Kumar/TNS Mumbai, May 3 The RBI would open a new borrowing facility for banks under the marginal standing facility (MSF) effective May 7 to contain volatility in the overnight inter-bank rates. The interest on this facility will be 100 bps above the repo rate. Banks can borrow up to 1 per cent of their net demand and time liabilities (NDTL) from this facility. Under these norms, the difference between the reverse repo and MSF will be 200 basis points. While the repo rate will be in the middle, the reverse repo rate will be 100 basis points below it, and the MSF rate 100 bps above it, Subbarao said, adding the MSF rate gets calibrated at 8.25 per cent. The Bank is also moving to a single rate regime - the repo rate, according to Subbarao. "There will henceforth be only one independently varying policy rate, and that will be the repo rate. This transition to a single independently varying policy rate is expected to more accurately signal the monetary policy stance," the governor said. The reverse repo rate will continue to be operative but it will be pegged at a fixed 100 basis points below the repo rate and hence, it will no longer be an independent variable, the RBI governor said. The decision follows a report prepared by the Working Group constituted to review the operating procedure of the monetary policy.
	SBI welcomes savings rate hike Mumbai, May 3 The nation's largest lender State Bank of India has welcomed the RBI decision to hike the interest rate on savings deposits, saying the measure will in fact bring down the cost of its funds. "For a bank like ours, it (hike in interest rate on savings deposits) does (augurs well)... (People are) keeping Rs 9.5 lakh crore at home in cash because of the low interest rate (on savings deposits). They are not comfortable in committing money in long-term deposit," SBI Chairman Pratip Chaudhuri told reporters after the post-policy meet with the RBI Governor. On whether the step will increase his cost of funds, he replied in the negative. "No, in fact it will help me bring down the cost of my funds. In fact, our average cost of funds may come down because of the savings rate going up," Chaudhuri said. He further pointed out that the cost of maintaining savings accounts is zero, especially in a CBS system, "so incremental cost is very low," the chairman said. On whether SBI will increase its lending and deposit rates following the RBI policy, he refused to give a clear answer. — PTI
	Adani to buy Australian coal mine for $2 billion Sydney/Mumbai, May 3 Adani Enterprises has agreed to buy Abbot Point Coal Terminal in Australia for $2 billion in an all-cash deal to tap into growing coal traffic in overseas markets, a unit of the Indian firm said on Tuesday. Indian firms are eyeing coal assets overseas to supply power plants in India, looking to benefit from the energy-hungry nation's aim to halve its nearly 14 per cent peak-hour power deficit within two years. The Abbot Point Coal deal is one of the largest acquisitions of an Australian asset by an Indian company since Adani acquired Linc Energy’s Galilee coal project for $2.7 billion last August. Analysts said the acquisition of the terminal by Mundra Port and Special Economic Zone, the port operating arm of Adani, would help Adani ship coal from Galilee to its power plants in India and tap into the growing coal cargo in the region. "It’s a good deal for Mundra Port as the Abbot Point terminal will have assured cargo from Adani's own mine there as well as other coal mines in the region," said Kapil Yadav, a sector analyst with Mumbai brokerage Dolat Capital. Mundra Port’s CFO B Ravi said the company had arranged short term mezzanine debt to fund the deal and said Standard Chartered was arranging the debt. He did not disclose the amount. India holds 10 per cent of the world's coal reserves, but a shortfall in local supplies has grown rapidly because of an increase in coal-fired power plants. — Reuters
	FICCI to partner govt in skill creation Aditi Tandon Tribune News Service New Delhi, May 3 The Federation of Indian Chambers of Commerce and Industry (FICCI) today initiated the setting up of National Knowledge Functional Hubs (NKFH) focusing on specific needs of industries that are facing severe human resource and skill shortage. The aim is to partner the government in boosting vocational skills. The hubs would be designed to facilitate the creation of a mechanism to enable higher educational institutions and universities to engage with industry effectively and efficiently so that the quality of new engineering graduates in the country improves dramatically. The process was formalised today with Dilip Chenoy, CEO, National Skill Development Corporation talking about government interventions and Diwakar Loshalui, Head, Compensation and Benefits, stressing on good practices by the industry. B N Jain, Vice-Chancellor, BITS, Pilani, talked about good practices by institutions. The capital goods industry is the first specific sector to be addressed by NKFH. NKFH aims to facilitate industry-academia connect in top institutions which are the source of bulk engineering graduates for the capital goods industry. Some of the suggestions the core group today gave include - to bridge the skills gaps and shortage of personnel, there is an urgent need for companies to mentor engineering institutions; each capital goods company can adopt two to three institutions in its vicinity for sustained interaction and collaboration; interested institutions should upload performance indicator on its website or send it to companies with a request for collaboration; to reach out to institutions at remote locations, technology such as webcasting should be leveraged to create a network of institutions for disseminating lectures by leading professionals.
	NHAI to raise Rs 10K cr in bonds Tribune News Service New Delhi, May 3 The National Highways Authority of India (NHAI) will raise about Rs 10,000 crore in tax-free bonds to finance its projects around the country. Addressing the media here Union Minister for Road Transport and Highways CP Joshi said here that this was the first time that NHAI had been allowed to raise money to finance its projects through tax free bonds. He said a total amount of Rs 10,000 crore would be raised through the issue of tax free bonds. He also said that Annual Pre-qualification of bidders had been introduced by his ministry to cut delays in completion of the projects. He announced that all NHAI tenders after August will be through e-Tendering only. Joshi added that an apex committee under DDG, NIC has been constituted to carry forward the process of Electronic Toll Collection (ETC) which will facilitate thorough movement of vehicles save fuel and time and plug revenue leakages. He announced that about 10,000 km of roads will be taken for award of contracts in 2011-12 for ensuring minimum achievement of 7300 Km which has been decided as a target by EGoM last month. Meanwhile, NHAI has awarded four projects worth Rs 5,527 crore last month to be built on build, operate and transfer (BOT) basis, out of the six for which it had received bids beginning February last week. NHAI had received bids with premium for these six projects, valued at about Rs 8,588 crore, he added.
	Push PPP model to build infrastructure, says ADB Hanoi, May 3 Development finance institutions should encourage greater use of risk-sharing models like public-private-partnerships (PPP) to build critical infrastructure in developing countries, panelists at the Asian Development Bank (ADB) meeting said here today. The recent global financial crisis has reduced the risk appetite of the private sector, especially for investing in emerging markets, ADB Vice President for Private Sector and Co-financing Operations Lakshmi Venkatachalam said. "The time-tested public-private partnership financing modality needs to be redesigned and customised to address some of the issues emerging out of the post-crisis environment," Venkatachalam said.— PTI