New Delhi, December 18
While the Reserve Bank of India has signaled that monetary policy focus will now shift towards boosting growth, a rate cut will have to wait till the next policy in end of January. In the monetary policy announced today, the central bank kept interest rates unchanged and stuck to its earlier guidance of easing in January when inflation moderates.

However, there was a clear signal that since inflation has moderated faster than anticipated and is likely to ease more in the coming months, the focus will shift to growth. "In view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards", RBI governor D. Subbarao said in the midquarter monetary policy review.

He said while the wholesale price index is showing some signs of moderation, retail inflation has continued to remain elevated. "The emerging patterns reinforce the likelihood of steady moderation in inflation going into 2013-14, though inflation may edge higher over the next two months”.

Industry, which has been consistently seeking lower interest rates, was disappointed. The new president, of FICCI, Naina Lal Kidwai said: "While disappointing, the status quo is as was widely expected”.

She added with the inflation numbers showing a decline and the global economy still in a difficult situation, industry is crying out for an impetus for investment and growth and lower interest rates would be oxygen to the sentiment which is beginning to turn positive.

CII said the position being maintained by the RBI on headline rates is “becoming inexplicable”. It hoped that RBI would not wait for the next quarterly review but would recognize the enormity of the problem and intervene sooner than that.

Analysts say the RBI has had few options given the tough macro situation. According to Ajay Srinivasan, CEO, financial services, Aditya Birla Group, “2012 was expected to be a year of growth recovery and inflation moderation. Unfortunately, neither has panned out, making the RBI’s job a really tough one this year. But the good news is that finally our inflation picture is starting to become more benign”.

There is now a consensus that the RBI will certainly cut rates in January giving impetus to growth. Says Gautam Trivedi, MD & head of equities, Religare Capital Markets: “ We’re not surprised at all with the lack of a move by the RBI on both the CRR and the repo rate. We maintain our view that the RBI will cut the repo rate in the Jan-Mar quarter. The RBI’s commentary is starting to get more dovish and supportive of growth”.

ECONOMY ON TRACK for its WEAKest ANNUAL PERFORMANCE IN A DECADE

The central bank has repeatedly resisted pressure from the finance ministry to cut rates to prop up an economy that has posted GDP growth below 6% for the past three quarters and is on track for its weakest annual performance in a decade in the fiscal year ending March. Whilst such a growth rate is still robust by the standards of developed economies, it is worryingly sluggish for a country that aspires to annual expansion of at least 8.5% to provide jobs for it burgeoning population. "I think it ‘s good the RBI sees there is room to ease and clearly they are taking a decision, keeping in mind their main job is combating inflation," said Raghuram Rajan, chief economic adviser to the finance ministry, adding, "but they also have some incentive to seek growth in the country." The 10-year bond yield fell 3 basis points to 8.14% from levels before the decision, reflecting somewhat heightened expectations of a rate cut early in 2013. The benchmark BSE Sensex was flat. "Liquidity conditions will be managed with a view to supporting growth ... thereby preparing the ground for further shifting the policy stance to support growth," the RBI said. — Reuters

New Delhi, December 18
The transition at the Tata Group was formally announced on Tuesday with Cyrus Mistry being appointed chairman of Tata Sons, the holding company of the over $ 100 billion conglomerate. Mistry will take over on December 28 when the current chairman Ratan Tata retires from the group. Tata will be the honorary chairman emeritus of the group.

“The board of directors of Tata Sons today announced the appointment of Cyrus P. Mistry as chairman of the board after Ratan N. Tata retires on Dec 28, 2012,” Tata Sons said in a statement. The two line statement announced the biggest transition in India Inc in recent times.“The board has decided to confer on Tata the honorary title of chairman emeritus”, it added.

Mistry was chosen as Tata's successor in November last year and was appointed deputy chairman of Tata Sons, whose board he had entered in 2006.

During the last year, Mistry has been mentored by Tata to take over the reins of a diversified conglomerate which has its major revenues now coming from overseas.

The last few months has seen the transition at the companies level being completed. Earlier this month, Tata Motors had appointed Mistry as its chairman with effect from Dec 28 after the retirement of group chief Tata.

Mistry has also been appointed as chairman of Tata Steel and Tata Chemicals. Last month, Tata had stepped down as chairman of Tata Global Beverages, making way for a successor, who was also inducted into the Indian Hotels Co board. TCS had inducted him as deputy chairman.

Tata Sons is the promoter of the major operating Tata companies and holds significant share holdings in these firms. About 66% of the equity capital of Tata Sons is held by philanthropic trusts endowed by members of the Tata family.

New Delhi, December 18
The Banking Amendment Bill, a major reforms legislation, on Tuesday got approval of the Lok Sabha after the government dropped the controversial provisions relating to allowing banks to trade in futures and keeping the sector outside the purview of Competition Commission.

The bill is aimed at drawing foreign investment to the banking sector by increasing shareholders' voting rights, after dropping a controversial clause allowing banks to trade in commodity futures.

The banking bill will increase shareholders' voting rights to 26% from 10% in private sector banks, making investment more attractive to foreign players. The bill will now move to the Rajya Sabha for voting on Thursday, where it is also likely to be passed as it is backed by both the Congress and the BJP parties.

The bill also clears the way for more corporate houses to run banks by enabling the RBI to issue new bank licenses.

"Since the bill is too important for me to pass, therefore I am bringing the bill dropping the controversial clauses," Finance Minister P. Chidambaram said, winding up the discussion on the Banking Laws (Amendment) Bill, 2011.

The bill, which seeks to strengthen banking regulation, was later passed by the voice vote after the amendments proposed by the left parties were rejected by the house.

The bill, along with proposed legislations on pension and insurance, was one of the five key reforms measures on the government's agenda during the current session of Parliament.

The government dropped the controversial changes in the bill in deference to the wishes of the opposition, the minister said, adding it has accepted all major recommendations of the standing committee on finance.

As regards other issues, Chidambaram said while the RBI would regulate the banking sector, the Competition Commission of India would look into competition practices in banking. — PTI, Reuters

Washington, D.C., Dec 18
In a major counteroffer that moves the White House and congressional Republicans closer to resolving the "fiscal cliff" standoff, President Barack Obama is seeking $1.2 trillion from higher tax revenues, including increased rates on those earning more than $400,000 a year, a source familiar with the negotiations said on Monday.

In exchange, the president is willing to agree to $1.22 trillion in spending reductions, including some cuts achieved by changing the way cost of living adjustments are made to Social Security retirement benefits and other programs. "We view this as a good offer that shows we have met the Republicans more than halfway on spending and halfway on revenues," the source said.

The offer asks for Congress to increase the national borrowing ceiling for two years using a parliamentary procedure proposed by Senate Republican leader Mitch McConnell.

The offer comes as the president and House of Representatives Speaker John Boehner seek to iron out differences in an effort to stop automatic tax increases and spending cuts from going into effect early next year. — Reuters

Washington, D.C., Dec 18
India's holding of US government debt securities has declined for the second consecutive month, even as many other countries including China, Japan, Brazil and Russia hiked their exposure to American treasury bonds.

According to the latest data released by the US Department of Treasury, India's holding of treasury securities stood at $58.9 billion at the end of October 2012 — marking the second straight month of decline after an uptrend for seven continuous months.

However, the holdings of countries like China, Japan, Brazil, Switzerland, Russia, France and Canada rose during October.

At the end of the month, India was the 18th largest holder of the US treasury bonds, while China was the largest foreign owner of these securities followed by Japan, Brazil, Taiwan, Switzerland, Russia, Luxembourg, Hong Kong, Belgium and the UK in the top ten.

Others with higher holding than India included Singapore, Ireland, Norway, France, Canada, Germany and Mexico, US Treasury data showed.

India's holding of treasury securities stood at $60.6 billion at the end of August and fell to $59.7 billion in September. — PTI

New Delhi, December 18
Thousands of Tata Teleservices cellular subscribers in the border state of Jammu & Kashmir would be left high and dry after January 18 with the CDMA operator shutting shop there as it would have no spectrum to continue services.

While some of the other operators like Airtel, Aircel, Reliance and Idea providing services in J&K have been approaching Tata Tele subscribers in the state, the situation remains unclear for almost over 100,000 customers.

Having lost its licences to the Supreme Court order issued in February this year, Tata Tele will shut down its operations in Jammu & Kashmir, North-East and Assam circles from January 18 as it does not have spectrum to operate in these areas.

Tata Tele’s three circles of Jammu & Kashmir , North-East and Assam were among the 122 telecom permits that the Supreme Court cancelled last February. The company has around 320,000 subscribers in the three circles with over 100,000 in J&K itself. Despite these numbers, the company did not bid for buying spectrum in these areas in last month’s auction as it found the price too high.