Content Development Team, Chennai 1 Vol -1, Issue-9 (FOR PRIVATE CIRCULATION ONLY)

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1 ++ May 26 to June 1, 2008 CREDIT SUISSE BETS BIG ON INDIA, TO ACQUIRE NBFC Credit Suisse is on an aggressive growth path in the country. The bank is in the process of acquiring a non-banking finance company (NBFC) in the country. ( The Economic Times May 26, 2008) (222) PACKAGE FOR PROMPT PAYMENT OF FARM LOANS ON CARDS The Union Government is working on an incentive package for farmers who made prompt repayment of loans, according to the Union Minister of Agriculture, Mr Sharad Pawar. ( The Hindu May26, 2008) (223) INDUSIND BANK MD SOBTI UNVEILS 3-YEAR BLUEPRINT Following the change of top management, the Hindujas controlled IndusInd Bank, kicking off a major restructuring, has decided to go for a global depository receipts (GDR) offering during the first quarter of the current fiscal. The bank s plans include new lines of activities like wealth management, insurance broking, asset reconstruction and opening an overseas banking unit. Towards that end, the bank has decided to tap the market for capital at regular intervals. ( The Financial Express May26, 2008) (224) SBI HIKES RATES ON LONG-TERM DEPOSITS State Bank of India on Monday announced an increase of 25 to 50 basis points in interest rate on deposits of tenures of two years and above. The revision which will come into effect from June 1, has been done mainly to raise funds for the long-term loan portfolio, said a senior SBI official. ( The Hindu May 27, 2008) (225) SEBI SETS RS 25 CR CEILING FOR COS TO PARTICIPATE IN SME EXCHANGE Market regulator SEBI has proposed a maximum post-issue capital of Rs 25 crore for companies to be eligible to participate in the proposed SME (Small and Medium Enterprises) exchange. It has recommended a minimum investment size of Rs 5 lakh in order to have only well informed and financially sound investors at the time of the IPO. ( The Hindu May 27, 2008) (226) FISCAL NUMBERS DON T REFLECT UNDERLYING PRESSURES: REDDY Reserve Bank of India Governor YV Reddy said India s fiscal deficit continues to be among the highest in the world and the underlying pressures are not entirely reflected in headline fiscal numbers. The central fiscal situation has improved but several underlying fiscal pressures are not entirely evident in the number. ( Business Standard May 27, 2008) (227) CURRENT RATES RBI POLICY RATES Last week This week BANK RATE 6.0% 6.0% REPO RATE 7.75% 7.75% REVERSE REPO 6.00% 6.00% RBI RESERVE RATIOS CRR 8.00% 8.25% SLR 25.0% 25.0% EXCHANGE RATES (AS ON) U.S $ Rs Rs Euro Rs Rs Pound Rs Rs YEN Rs Rs Yuan (China) Rs Rs INTEREST RATE SPECTRUM 10-YR GOVT. PAPER 8.04% 8.09% CALL RATES 6.05% 8.00% PLR RANGE ( TOP 5 BANKS) % % US $ LIBOR ( 6 MONTHS) 2.81% 2.93% (SOURCE:RBI & BUSINESS STANDARD ( & ) Content Development Team, Chennai 1 Vol -1, Issue-9

2 SBI TO EARN OVER RS 400 CR PREMIUM FROM NON-LIFE JV State Bank of India (SBI), the country s largest bank, is likely to pocket an entry premium of over Rs 400 crore to tie up with Insurance Australian Group (IAG), the highest in the insurance business so far. The amount is almost double the Rs 220 crore that a consortium of Bank of Baroda and Andhra Bank earned for its life insurance tie-up with UK-based wealth and investment company Legal & General Group. ( Business Standard May 27, 2008) (228) IOB TIES UP WITH ALANKIT ASSIGNMENT Chennai-based public sector bank Indian Overseas Bank (IOB) has tied up with Alankit Assignment (AAL) to provide various tax related services at its select branches to its account holders and general public. This tie-up will enable IOB to offer various services such as application for issuance or change request of PAN and tax deduction and collection account number (TAN) and filing returns for tax deduction sources, tax collection sources (TCS) and various forms. ( Business Standard May 29, 2008) (232) FINACLE DEVELOPS A NANO FOR FINANCIAL INCLUSION Finacle, the banking product arm of software major Infosys Technologies, has developed a solution to take forward financial inclusion which, in its scope and business possibilities, can turn out to be a major offering. ( Business Standard May 27, 2008) (229) ICICI BANK PLANS ARM FOR WEALTH MANAGEMENT ICICI Bank today said it will float subsidiaries for undertaking wealth management activities in Canada and other markets even as it rolled out ICICI Group Global Private Clients for those with net worth of $1 million or more. ( Business Standard May 29, 2008) (233) PNB KEEN ON 51% STAKE IN BHUTAN VENTURE Punjab National Bank is keen to take a 51 per cent stake in the proposed joint venture for setting up a bank in Bhutan. It had recently signed a memorandum of understanding with local promoters in Bhutan for such a venture. ( The Hindu May 28, 2008) (230) TIGHTER NORMS FOR WILLFUL DEFAULTERS The Reserve Bank of India (RBI) today barred banks and financial institutions from extending loans to promoters and entrepreneurs, who have siphoned off funds and engaged in frauds, for five years to start new ventures. ( Business Standard May 29, 2008) (234) ULIPS SET TO GET COSTLIER The next time you buy a unit-linked insurance plan (ULIP), you will be shelling out more money depending on the types of ULIP you buy and the company you buy from. This is because the Finance Bill that had proposed applying the service tax (12.36 per cent) on all charges that are deducted by an insurance company in a ULIP has been passed by both houses of the Parliament this month. ( Business Standard May28, 2008) (231) BANKS SEE PROFITS IN SEBI s NEW IPO PAYMENT SYSTEM According to the proposal, retail investors who want to apply at the cut-off price of an IPO can apply at designated branches of banks holding a Sebi registration. The process, known as applications supported by blocked amounts (ASBA), will require retail investors bidding at the cut-off price to apply through selfcertified syndicate banks (SCSBs), banks that comply with conditions laid down by Sebi. ( Business Standard May 29, 2008) (235) Content Development Team, Chennai 2 Vol -1, Issue-9

3 RELIANCE MONEY FORAYS INTO CHINA, SETS UP OPERATIONS IN HK In yet another attempt to woo NRIs and PIOs, Reliance Money after entering Oman, UAE and Singapore extended its foray into the Chinese market on Wednesday. Reliance Money, an ADAG company, announced its debut in Hong Kong and China by launching its bouquet of financial services for retail investors in these markets. ( The Financial Express May 29, 2008) (236) LIC THINKS BIG, TO ROPE IN 3 LAKH MORE AGENTS Faced with a sharp slowdown in growth of new business, the country s largest insurance company Life Insurance Corporation is looking at recruiting three lakh agents. The corporation, which has over one million agents, is finding the size of its agency force being overshadowed by the collective agency force of the private companies. ( The Economic Times May 30, 2008) (240) BANK CEO S STILL SWEAR BY DEBT RECAST CELL BANK CEOs have shot down the proposal to wind up the Corporate Debt Restructuring (CDR) forum-a forum set up by banks to resolve bad loans. This was decided at a meeting of CEOs of large commercial banks held early this week. ( The Economic Times May 30, 2008) (237) INFRA COS ALLOWED TO RAISE UP TO $100M OVERSEAS Resource constrained infrastructure companies and corporate houses can now raise more lowcost funds abroad and repatriate them for domestic spending. The finance ministry on Thursday eased the ceilings on external commercial borrowings (ECBs) by companies. ( The Economic Times May 30, 2008) (238) INDIA POST BETS BIG ON SALE ON FINANCIAL PRODUCTS Post offices across the country collected more than Rs. 600 crore as investment in mutual funds, almost 10 times the corresponding number in the same period last year. Post offices form one of the important distribution channels for us, says Jaideep Bhattacharya, chief marketing officer at UTI Mutual, the oldest fund house in the country. The total amount raised may not be noteworthy, but the sheer number of investors that have joined us through this route is impressive, he adds. ( The Economic Times May 30, 2008) (239) CREDIT SQUEEZE IS THE BIGGEST PROBLEM, SAY RAVI KANT The reluctance of banks and other financial intermediaries to extend vehicle financing is the biggest problem for the Indian automobile industry, Tata Motors Managing Director Ravi Kant said here today. ( Business Standard May 30, 2008) (241) RBI BACKS STATE-RUN BANKS TO BUY UCBS The Reserve Bank of India (RBI) today said it supported the initiative of public sector banks to acquire assets of ailing urban cooperative banks (UCBs) as it helps to clean up and strengthen the urban banking sector. There were about 2,000 urban banks a few years ago. Now, with various steps for reforming UCBs, their number has come down to 1,800 RBI Deputy Governor Usha Thorat said today. ( Business Standard May 30, 2008) (242) DEBT MARKET TO SEE MORE EXPOSURE The finance ministry has doubled the headroom for foreign institutional investors (FIIs) in the debt market. This will substantially ease the over dependence on stock market exposure of foreign entities in the Indian capital markets. The investment limit in the government securities market for FIIs has been raised to $5 billion from $3.2 billion, while their exposure in the corporate bonds segment has been doubled to $3 billion. ( The Financial Express May 30, 2008) (243) Content Development Team, Chennai 3 Vol -1, Issue-9

4 ICICI TO MAKE A LATE ENTRY INTO PVT BANKING ICICI Bank is extending its retail focus to the higher end of the market. The country s second-largest bank is making a move into the private-banking space. The bank is, however, a latecomer in this segment. It will have to face competition from a host of foreign banks like BNP Paribas, ABN Amro, Deustche Bank, Citi, HSBC, Merrill Lynch, who have been in the segment for the past few years. ( The Financial Express May 30, 2008) (244) BETTING ON INDIA According to data compiled by Grant Thornton, a global consultancy firm, a record 156 private equity deals were done in India during the first four months of 2008, with an announced value of $4.94 billion. During the same period last year there were only 136 deals amounting to $3.42 billion. On the other hand, funds raised through IPOs during the same period of January to April this year amounted to $3.9 billion. It only validates that PE players are seriously looking at India and are ready to invest more. ( The Financial Express May30, 2008) (245) LIC TO TAKE REFUGE IN MORE CONVENTIONAL POLICIES The country s largest insurer Line Insurance Corporation (LIC) has decided to rebalance its product portfolio to have more of conventional policies. The corporation, which sees most of its revenues from unit-liked insurance plans, feels that more conventional policies have to be sold if it wants to have a steady premium income. ( The Economic Times May31, 2008) (246) US BANKS LIKELY TO FAIL AS BAD LOANS SOAR US Banks set aside a record $37.1 billion to cover losses on real estate loans and other credits during the first quarter in a sign of the growing economic pain being caused by the global credit crisis, regulators said on Thursday. Sheila Bair, chairwoman of the Federal Deposit Insurance Corporation (FDIC), said it was likely loan-loss provisions and bank failures would rise in coming quarters as the fallout from market turmoil hits the real economy. ( Business Standard May 31, 2008) (247) INSURERS RAKE IN MOOLAH OUTSOURCING RISES AS An increasing number of companies are outsourcing superannuation, gratuity and leave encashment programmes of their employees to insurance companies. The trend that emerged two years ago has got a shot in the arm with SAIL, Nicholas Piramal, Vishakhapatnam Port asking insurers to manage their employee s retirement programmes. ( Business Standard May 31, 2008) (248) OFF-BALANCE SHEET EXPOSURES DEEMED AS CREDIT In a measure to restrict banks from taking undue risk in derivatives, the Reserve Bank of India has tightened prudential norms for banks off-balance sheet deals. As per the guidelines issued today, the prudential norms applicable to standard credit exposures will also be applicable to off-balance sheet exposures. ( The Hindu May 31, 2008) (249) NORMS TIGHTENED FOR BANK INVESTMENTS IN ASSOCIATES Banks that have subsidiaries or associates will now have to reserve more capital, according to an RBI circular. The investment of a bank in the equity as well as non-equity capital instruments issued by a subsidiary, which are reckoned towards its regulatory capital, according to norms prescribed by the respective regulator, should be deducted at 50 percent each, from Tier I and Tier II capital of the parent bank, while assessing the capital adequacy of the bank on Solo basis, under the Basel I framework, said the circular. ( The Hindu May 31, 2008) (250) Content Development Team, Chennai 4 Vol -1, Issue-9

5 FOREX RESERVES SURGE $2.09 BILLION The country s foreign exchange reserves surged by $2.09 billion to touch $ billion for the week ended May 23. ( The Hindu May 31, 2008) (251) MORE UK CREDIT CARD FRAUD CASES TRACED TO INDIA More cases of international credit card fraud with links to India have come to light in Britain, even as authorities refused to rate the problem from Indian cities as very high. In a latest incident, a British journalist discovered that money was withdrawn from his bank account in Chennai this week, while nearly 500 others in Bournemouth suffered the same fate. ( The Financial Express June 1, 2008) (252) FM ASKS BANKERS FOR TRANSPARENCY IN LOAN WAIVER Union finance minister P. Chidambaram has asked bankers to check accuracy and integrity of the statements being made by the agricultural borrowers to ensure that they were the eligible persons to claim money in the agricultural debt waiver and debt relief scheme. Chidambaram urged the bankers to be transparent on the issue of loan waiver and see that the scheme was being implemented in a transparent manner. ( The Financial Express June 1, 2008) (253) Content Development Team, Chennai 5 Vol -1, Issue-9