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RBI hints at another CRR cut; rules out SLR reduction
Australia’s Rio Tinto to invest $2 bn in Orissa iron ore project
Cotton exports banned until further notice, global prices up
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RCom-HCL Info bags Rs 300 cr UID contract
Citi, BoB, LIC partner ICICI to form $2 bn infra debt fund
Oil slips to $123 after China cuts GDP target
TDSAT notice to S Tel over Infratel petition on dues
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RBI hints at another CRR cut; rules out SLR reduction
Mumbai, March 5 "Space for (another) CRR cut still exists as we need to see significant fall in aggregate deficit," Gokarn told reporters here. He did not indicate any timeline for the cut. Gokarn, however, ruled out any cut in the SLR saying, "Reducing SRL will not create any additional capacity in the system at this point of time, because of there is surplus. If SLR is close to the limit, then a reduction is possible, and may have created capacity. But given the situation all instruments are on the table." On January 24, RBI had cut CRR by 0.5 percentage points to 5.5%, releasing Rs 32,000 crore into the system. Since then, the fund crunch has only worsened. Last Thursday, the strain on the system rose to high of Rs 1.02 lakh crore. And going forward it will only increase as by March 15 companies will have to make advance tax payments which will drive out Rs 60,000 crore from the system. Another Rs 12,000 crore is likely to go out of banks due to the ONGC auction last week, and a similar amount will be drained out on account of excise duty payment by companies. Stating that liquidity deficit is partly structural and partly temporary, Gokarn said: "Current call rates suggest that things are relatively stable (since) there is arbitrage in the market. Banks which have surplus SLR can borrow at the LAF (liquidity adjustment facility) and lend through call (money) market to banks which do not have excess SLR. So, the fact that SLR is skewed isn’t a cause of concern." Part of the liquidity crunch is temporary, and partly structural and the reason why RBI conducting open market operations consistently is to address that, Gokarn said. "Part of the structural problem has arisen due to currency operation of the past three months...some of that has been offset by OMOs but it is structural and we are conscious of it," he added. The Reserve Bank remains focused on economic growth even though rising oil prices have emerged as an inflationary risk since the RBI's last policy review in January, Gokarn said. He noted a sharp slowdown in economic growth had reduced the ability of producers to pass on price increases. Gokarn, who handles the monetary policy at the RBI, said the bank's stance on policy did not change quarter-to-quarter.
— Reuters |
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Australia’s Rio Tinto to invest $2 bn in Orissa iron ore project
New Delhi, March 5 The investment would be the largest by any Australian company in India. Total foreign direct investment from Australia from April 2000 till December 2011 stood at $486.5 million, just 0.3% of India's total FDI flows, according to trade ministry data. India's mining companies have found it difficult to expand to keep pace with rising demand, hampered by opposition from displaced locals, stringent environmental norms and a slow process for getting approvals. "We’ll bring the technology and environment safety system and we will obviously be using the local people in the project," said Walsh, when asked if he was confident of the project considering the various regulatory issues in the sector in India. The Supreme Court had banned iron ore mining in Karnataka citing environmental degradation and illegal mining. It has restricted state-owned NMDC to mine only up to 1 million tonnes per month. Iron ore exports are yet to resume from Karnataka, which accounted for a quarter of shipments before the state government imposed a ban, even though the Supreme Court ordered the ban lifted in April last year.
— Reuters |
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Cotton exports banned until further notice, global prices up
Mumbai, March 5 India has already exported 9.4 million bales, the government said on Monday, higher than the projected export surplus quota of 8.4 million bales New Delhi had set in January, due to strong demand from China. Each bale is 170 kg. This excess led India's Directorate General of Foreign Trade to ban shipments, to ensure steady supplies for the local textile industry, the country's largest employer after agriculture and which accounts for some 4% of GDP. "The decision to ban exports took into account the trend of domestic consumption and depletion of domestic availability," the government said in a statement. Cotton output estimates for the year ending September 30, 2012 were cut to 34 million bales from 34.5 million bales previously, the statement said. The government said there were also signs of hoarding in bonded warehouses abroad. Benchmark US May cotton futures climbed over 4.5% on Monday to be limit up and at their highest level since February 29 after the announcement. Prices in China, India's top customer and the world's largest user of the fibre, gained over one per cent.
— Reuters |
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RCom-HCL Info bags Rs 300 cr UID contract
New Delhi, March 5 According to sources, Anil Ambani-led RCom has won the number repository and IT infrastructure contract for Aadhaar as part of a consortium led by HCL Infosystems. The value of the contract executed by RCom is expected to be in the range of Rs 200 crore to Rs 300 crore, the sources said. RCom will provide network and telecom support for Aadhar, they added. The “unique identification” (UID) project was initially conceived by the Planning Commission as an initiative to provide identification for each resident across the country and use it as a basis for efficient delivery of welfare services. The UID number is also envisaged to act as a tool for effective monitoring of various government programmes and schemes.
— PTI |
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Citi, BoB, LIC partner ICICI to form $2 bn infra debt fund
New Delhi, March 5 The IDF would seek to raise debt capital from domestic as well as foreign resources and would invest in infrastructure projects under the public-private partnership (PPP) model that have completed one year of operations. The fund will expand and diversify the domestic and international sources of debt funding to meet the large financing needs of the infrastructure sector. ICICI Bank (together with a wholly-owned subsidiary), Bank of Baroda, Citi and LIC will hold a 31%, 30%, 29% and 10% shareholding, respectively, in the fund. Finance Minister Pranab Mukherjee said setting up the fund through public private partnership would meet the long term need of infrastructure sector funding. He said setting up the fund through PPP would be a guiding principle for future activities. He added funds to the tune of $1 trillion would be required for Infrastructure Sector Funding in next five years, out of which 50% would come from private sector through PPP model. The IDF was announced in last year’s budget speech by the minister to accelerate and enhance the flow of long-term debt in infrastructure projects for funding the government’s ambitious development programme. To attract offshore funds into the IDF, Mukherjee had also announced that withholding tax on interest payments on the borrowings by the IDFs would be reduced from 20% to 5%. The fund’s income has also been exempted from income tax. The framework for setting up the IDF was announced by the finance ministry in June 2011, whereby the fund was permitted to be set up either structured as a nonbanking financial company or as a mutual fund. The Reserve Bank of India issued the regulations for IDFs to be set up as a NBFC in November, 2011 and the Securities & Exchange Board of India issued the regulations governing an IDF structured as a mutual fund in August, 2011. |
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Oil slips to $123 after China cuts GDP target
China cut its 2012 growth target to an eight-year low of 7.5 percent, lowering its long-standing annual goal of 8 percent, causing a fall in Asian shares and raising questions over oil demand. Brent crude oil futures for April fell 99 cents to a low of $122.66 before recovering to trade around $123.00 by 1025 GMT. US April crude on Monday fell $1.20 to a low of $105.50 per barrel but then rebounded to around $105.78. Sanctions against Iran, the world's fifth largest oil exporter, have made oil trading more difficult and the country's biggest customers including China, Japan and India are reducing imports from Tehran, supporting prices. India's Mangalore Refinery & Petrochemicals Ltd , one of Iran's biggest customers, announced plans to cut its yearly Iranian oil import deal by as much as 44% to 80,000 barrels/day in 2012-13. Saudi Arabia's current spare capacity is 2.5 million bpd while production is now at 9.8 million bpd.
— Reuters |
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TDSAT notice to S Tel over Infratel petition on dues
New Delhi, March 5 The notice was issued on Monday by a TDSAT bench headed by justice S.B. Sinha. S Tel was asked to file a short reply by March 14, the next date of hearing. Infratel had approached the tribunal to recover dues from S Tel, which had signed a 10-year lease agreement in 2009 with Infratel to use the latter’s infrastructure. This is another fallout of the development following the Supreme Court ruling canceling 122 2G cellular licences, including those of S Tel. |
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Mumbai, March 5