Content Development Team, Chennai 1 Vol -1, Issue-37

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1 INSURERS TO DISCLOSE MORE The Insurance Regulatory and Development Authority (IRDA) has asked insurance companies to disclose all investments made during the last three months September, October and November prompting insurers to make additional disclosures. ( Business Standard Dec 8, 2008) (1233) OBAMA PLANS BIGGEST INFRA PUSH SINCE EISENHOWER President-elect Barack Obama said he'll make the single largest new investment in roads, bridges and public buildings since the Eisenhower Administration to lift the sagging economy and create jobs. ( Business Standard Dec 8, 2008) (1234) WORLDWIDE BAILOUTS 10 TIMES BIGGER THAN INDIAN ECONOMY In their efforts to tackle the global economic crisis, the rescue packages announced by the governments across the world has crossed 10 trilliondollar mark (about Rs.50,00,000 crore) an amount equivalent to nearly 10 times the total size of Indian economy. ( Business Standard Dec 8, 2008) (1235) RURAL INDIA GOES FMCG-SHOPPING DESPITE SLUMP Rural consumers are displaying considerable resilience in spends on fast moving consumer goods (FMCG) despite the economic slowdown, top industry officials say. While overall consumer spends (urban +rural) on FMCG is showing smart rates of growth, according to industry estimates growth in rural markets, at 20% plus has overtaken urban which is growing at 17-18% ( The Economic Times Dec 8, 2008) (1236) PVT BANKS BEGIN DEPOSIT RATE CUTS After state-owned banks, private banks have now started cutting interest rates on deposits. HDFC Bank, the second-largest private bank, has slashed interest rates on deposits while other private banks such as IndusInd Bank will take a decision next week. ( The Economic Times Dec 8, 2008) (1237) ASSET RECONSTRUCTION COS TO HELP REVIVE SINKING FIRMS Armed with the RBI mandate to acquire management control of defaulting firms, Asset Reconstruction Companies (ARCs) are set to become agents of reviving sinking companies. So far, they could acquire and sell only the collateral borrowers had pledged and not the company. RBI's draft guidelines issued last Friday would make corporate rescue and turnaround a robust business for ARCs, which would fetch better returns than from peddling in the secured assets snatched from defaulters, bankruptcy experts say. ARCs can now appoint professionals on the boards of companies to turn them around and tie up with non-banking finance companies to infuse fresh working capital when needed. ( The Economic Times Dec 8, 2008) (1238) SUSPEND FRBM ACT FOR TWO YEARS, ABHIJIT SEN TELLS GOVT In order to step up public expenditure to battle economic slowdown, the government should suspend the Fiscal Responsibility and Budget Management (FRBM) Act for two years, said Planning Commission member Abhijit Sen. ( Business Standard Dec 9, 2008) (1239) LIC TO RECRUIT 10,000 EMPLOYEES THIS YEAR At a time when financial institutions are in the process of cutting costs through retrenchment, the country's largest insurer, Life Insurance Corporation of India (LIC), has drawn up plans to hire over 10,000 employees and around 250,000 insurance agents across the country. ( Business Standard Dec 9, 2008) (1240) RBI POLICY RATES LAST ( ) CURRENT RATES THIS ( ) BANK RATE 6.00% 6.00% EXCHANGE RATES (As On) LAST ( ) THIS ( ) REPO RATE 6.50% 6.50% 1U.S $ Rs Rs REVERSE REPO 5.00% 5.00% 1 EURO Rs Rs RBI RESERVE RATIOS 1 POUND Rs Rs CRR 5.50% 5.50% 1 YEN Rs Rs SLR 24.0% 24.0% 1 YUAN Rs Rs INTEREST RATE SPECTRUM ( ) ( ) 10 YEAR GOVT. PAPER 6.78% 6.52% CALL RATE 6.20% 5.15% PLR RANGE (TOP 5 BANKS) % % US $ LIBOR (6 MONTHS) 2.52% 2.32% SOURCE: RBI & BUSINESS STANDARD( & ) Content Development Team, Chennai 1 Vol -1, Issue-37

2 IOB, UNIVERSAL SOMPO IN DISTRIBUTION TIE- UP Universal Sompo General Insurance Company today signed a memorandum of understanding (MoU) with Chennai-based public sector lender Indian Overseas Bank (IOB) for distribution of the Japanese company's general insurance products through its branches across the country. ( Business Standard Dec 9, 2008) (1241) SEBI OPENS WINDOW FOR NEW HYBRID PRODUCT The Securities and Exchange Board of India (Sebi) has put in place a framework for a new hybrid product, whereby companies can raise low-cost debt and at the same time, allow investors to detach the equity component from the instrument and trade in it. Regulator provides for combined offering of Non-Convertible Debentures (NCDs) with warrants, through the qualified Institutional Placement (QIP) mechanism. While NCDs and warrants would be offered together, they can be listed and traded separately The minimum contract value for trading of NCDs/warrants has been set at Rs. 1 lakh With this product having an option to convert debt into equity, issuers can raise debt at a lower interest rate. ( Business Standard Dec 9, 2008) (1242) ICICIDIRECT.COM LAUNCHES NEW WEBSITE ICICIdirect.com, the largest participant in online Indian equity trading, today announced the launch of On-the-move, a new website aimed at facilitating high-speed trading for customers who access the internet using new generation technology such as GPRS and data cards. The new website operates on a low bandwidth and has been designed to solely support trade. ( Business Standard Dec 9, 2008) (1243) SBI LIFE TO INFUSE Rs. 600 CRORE SBI Life Insurance, which is gearing up for listing later next year, on Monday said it would make capital infusion of about Rs. 600 crore in for business expansion. The company has tied up with Bajaj Capital Insurance Broking to tap the retail market across the country. ( The Financial Express Dec 9, 2008) (1244) LIC SET FOR Rs. 40K CRORE SPLASH IN SHARE MARKET Life Insurance Corporation of India (LIC) chairman TS Vijayan said the state-run insurer will invest Rs. 40,000 crore in the secondary stock market and Rs. 35,000 in corporate debentures by next March. ( The Financial Express Dec 9, 2008) (1245) FOREIGN INVESTORS TOO CAN SUBSCRIBE TO TAX-FREE IIFCL BONDS The tax-free bonds to be issued by India Infrastructure Finance Company Ltd (IIFCL) for refinancing infrastructure projects as per the economic stimulus package announced on Sunday, will be open to both domestic and foreign investors. These bonds would be issued in tranches till March 31, 2009 to raise Rs. 10,000 crore. The interest rate of these bonds is expected to be equivalent to at least the rate on a 10-year government bond paper, which comes close to 8%, an offical said. ( The Financial Express Dec 9, 2008) (1246) LOW-COST HOME LOAN PACKAGE HAS FRILLS As banks begin to cut rates after the announcement of fiscal and monetary packages by the government and RBI over the weekend, it emerges that the incentive package for low-cost homes includes an interest subsidy of 3% for loans of up to Rs. 5Lakh. This means that compared with the current benchmark prime lending rate of around 13%, customers for low-cost homes would be able to borrow at around 10%. ( The Financial Express Dec 9, 2008) (1247) NEW LIC PLAN OFFERS GUARANTEED RETURNS Life Insurance Corporation of India is planning to garner Rs. 25,000 crore through its new 'single premium' endowment product offering 'Jeevan Aastha'. The plan would offer guaranteed benefits on maturity and death. The plan offers a guaranteed return of 10 per cent of the maturity sum assured for a 10-year term and a 9 per cent return for a five-year period. Beginning Monday, the close-ended plan is open for subscription for 45 days. ( The Hindu Dec 9, 2008) (1248) RETAIL DEPOSITS CONTINUE TO POUR INTO BANKS Public sector banks have begun losing their appetite for bulk deposits as flow of retail deposits gain pace. Content Development Team, Chennai 2 Vol -1, Issue-37

3 Bankers said that public sector banks are seeing accretions of close to Rs. 4,000 crore per day by way of deposits. The flood of the deposits is likely to push up bank's current and savings deposits accounts (CASA) component in the overall working fund mix to anywhere between 35 and 40 per cent, bankers said. Last year, CASA ranged between 25 and 30 per cent. ( The Hindu Dec 9, 2008) (1249) LIC'S INVESTMENT IN MFS RISES 3-FOLD The public-sector insurer has pumped in over Rs. 14,000 crore into liquid funds of various fund houses. This is more than three times its investment of around Rs. 4,500 crore in such instruments last year. ( Business Standard Dec 10, 2008) (1250) IL&FS CLOSES REALTY FUND AT $895 MN IL&FS Investment Managers (IIML), the private equity investment arm of Infrastructure Leasing & Financial Services (IL&FS), has announced the closure of a real estate fund at $895 million (about Rs. 4,500 crore), exceeding its target of $750 million. ( Business Standard Dec 10, 2008) (1251) MFs STARE AT FRESH REDEMPTIONS Mutual funds are set to witness a fresh round of redemption of Rs. 36,848 crore between December 2008 and March 2009, with many of their debt schemes such as fixed maturity plans (FMPs), quarterly and monthly interval plans, fixed horizon plans and money market-related schemes set to mature during the coming months. ( Business Standard Dec 10, 2008) (1252) CLAIMS SETTLEMENT PROCESS NEEDS TO BE IMPROVED: IRDA Health insurance in India currently covers only around five per cent of the total spending in the healthcare sector. This should at least increase to 20 per cent, said Mr. J. Harinarayan, Chairman, Insurance Regulatory and Development Authority of India, while addressing the CII Health Insurance Summit. Insurance companies' payout, allowing for a per cent claim, is only around Rs. 5,000 crore as against the total health care spending of around Rs. 1,70,000 crore, Mr. Harinarayan said. ( The Hindu Dec 10, 2008) (1253) DOMESTIC PVT INSURERS PUMP IN Rs. 3K CRORE The global meltdown notwithstanding, domestic private life insurers have infused Rs. 3,000 crore of extra capital during this fiscal to bolster business and maintain their ability to pay claims to policy-holders, according to J HariNarayan, chairman, Insurance Regulatory Development Authority of India (IRDA). The cumulative capital of life insurers topped Rs. 17,030 crore as on September 30, 2008, factoring in the additional capital infusion of Rs. 3,000 crore. ( The Economic Times Dec 10, 2008) (1254) RATERS' OVERSIGHT ON THE CARDS The country's financial regulators both Sebi and the Reserve Bank of India (RBI) and the ministry of finance are working jointly on a plan which will focus on closer supervision of the rating agencies, greater accountability for the action of raters and disclosure of rating methodologies, said a senior official in one of the regulators who is associated with this exercise. The form in which we have to do it and the manner of oversight is yet to be finalised. But Sebi will work closely with RBI on this to evolve a new framework, the official said. ( The Economic Times Dec 10, 2008) (1255) GLOBAL MORTGAGE INSURERS EYE INDIAN MARKET AS US CAUGHT IN A TAILSPIN With the US housing market going into a tailspin, a number of mortgage insurers such as PMI and MGIC, Genworth Financial Mortgage Guaranty India Private Limited are betting on India. In February this fiscal, the Reserve Bank of India allowed mortgage risk guarantee companies to register as non-banking finance companies, thereby allowing 100% FDI in this segment. ( The Financial Express Dec 10, 2008) (1256) ING BETS BIG ON INDIA The group that operates in India through its three verticals ING Life Insurance, ING Vysya Bank and ING investment Management is set to roll out a massive marketing campaign starting Thursday to push its pan-india presence. ( The Economic Time Dec 11, 2008) (1257) WILL BE A TOUGHER YEAR, SAYS RBI GOVERNOR Year (FY09) would be difficult year and year will also be a difficult year perhaps a more difficult year, he told reporters after a Content Development Team, Chennai 3 Vol -1, Issue-37

4 meeting with West Bengal Chief Minister Buddhadeb Bhattacharjee. While Subbarao did not put out any estimate, this is the first statement from the central bank indicating that there are even tougher times ahead. ( Business Standard Dec 11, 2008) (1258) BANK OF RAJASTHAN TO DISTRIBUTE EDELWEISS MF PRODUCTS Bank of Rajasthan will distribute mutual fund products of Edelweiss Mutual Fund. For this purpose, Edelweiss Asset Management has entered into a tie up with Bank of Rajasthan. ( The Hindu Dec 12, 2008) (1259) BANKS WANT SUBSIDY TO CUT HOME LOAN RATES Public sector banks are likely to announce a 50 to 100 basis point cut in interest rates on home loans up to Rs. 20 lakh. The government is also considering an interest subvention for loans below Rs. 5 lakh. ( Business Standard Dec 12, 2008) (1260) NEW COMPANIES BILL TO FIX RESPONSIBILITY AT TOP The new companies Bill 2008, which is before the standing committee of Parliament, for the first time has fixed responsibility and accountability on the top management instead of leaving it loose and broadbased as in the existing Companies Act. The draft Companies Bill 2008 has identified the three key managerial positions as chief executive officer (CEO), Chief finance officer (CFO) and company secretary (CS). ( Business Standard Dec 12, 2008) (1261) COS MAY TAP BOND MARKET TO BEAT CREDIT SQUEEZE India's largest-private sector company Reliance Industries (ril) is expected to raise over Rs. 12,000 crore through bonds to meet its funding requirements. Indian companies are expected to raise over Rs. 25,000 crore in the next couple of months through bonds and loans. Raising funds through the bonds route is proving much cheaper than taking term and working capital loans from banks, according to a primary dealer. ( The Economic Times Dec 12, 2008) (1262) INFLATION FALLS TO 8%, RATE CUTS IN THE OFFING Cheaper food items dragged inflation down to its lowest in seven-and-half months at 8%, prompting analysts to predict another round of rate cuts by the Reserve Bank to fuel demand for loans thus increasing consumption in the economy. ( The Economic Times Dec 12, 2008) (1263) RBI EXTENDS Rs. 9,000-CRORE LINE OF CREDIT TO NHB, EXIM BANK The Reserve Bank of India (RBI) on Thursday announced Rs. 9,000 crore of refinance facility to Exim Bank and the housing sector, thereby providing significant liquidity support to the corresponding sectors. The refinance facility, available for a period of 90 days, will be given at the current repo rate of 6.5%. ( The Financial Express Dec 12, 2008) (1264) INFLATION FALLS FOR 5 TH IN SUCCESSION The Wholesale price index based inflation fell by 0.40% to 8% for the week ended November 29, from 8.40% a week ago. Inflation is now at its lowest level since April 1 ( The Financial Express Dec 12, 2008) (1265) REVERSE MORTGAGE TO BE AVAILABLE FOR LIFETIME The housing finance regulator, National Housing Bank (NHB), is in talks with at least two life insurance companies to extend the tenure of payment for reverse mortgage products for the lifetime from the currently available period of 20 years post retirement. The idea was to make the product, which was launched by NHB one and half years ago, more popular, said S Sridhar, chairman and managing director, NHB. ( The Financial Express Dec 12, 2008) (1266) UNION BANK MERGER WITH BANK OF INIDA UNLIKELY Union Bank of India chairman and managing director MV Nair has said that he does not foresee the much anticipated amalgamation between Bank of India (BoI) and Union Bank of India in future. ( The Financial Express Dec 12, 2008) (1267) Content Development Team, Chennai 4 Vol -1, Issue-37

5 US CREDIT LOSSES LIKELY TO TOP $3 TRILLION With the financial crisis pushing the US into a recession, the world's largest economy is projected to see a credit loss as high as $3.1 trillion, says global consultancy firm McKinsey. The losses will be greater if another major asset area (such as credit default swaps) collapses or if a misguided policy response exacerbates the problems, as it did in Japan during the 1990s. ( The Financial Express Dec 12, 2008) (1268) FOREIGN RESERVES DROP $1.8 BN TO $245.9 BN The country's foreign exchange reserves declined $1.8 billion to $245.9 billion in the week ended December 5, the Reserve bank of India said in its weekly statistical supplement, on Friday. ( The Financial Express Dec 13, 2008) (1269) BANKS LEND EVEN LESS, PARK MORE IN SLR Domestic banks, public and private, invested Rs. 93,216 crore in SLR papers in November, a 400% rise over October's Rs. 18,690 crore, RBI data showed. Not just that. Bank credit to companies declined to Rs. 70,208 crore in November from Rs. 1,09,057 crore in October, a 35% dip. All this happened despite a 1% cut in the SLR by the Reserve Bank of India on November 8. This means banks had cash but were not willing to lend to companies. ( The Financial Express Dec 13, 2008) (1270) HEALTH INSURANCE PORTABILITY COULD BE A REALITY NOW Cheering the health insurance policy holders, the issue of health insurance portability has finally taken shape and just waiting for the approval from the Insurance Regulatory and Development Authority (IRDA). The General Insurance Council (GIC), which is the self regulatory body of non-life insurance companies, has taken a decision on portability of health insurance products on Friday. Now, the proposal on health insurance portability would be sent by GIC to the insurance regulator, IRDA for its approval. ( The Financial Express Dec 13, 2008) (1271) KOTAK MAHINDRA BANK TO LAUNCH CORPORATE CREDIT CARDS Kotak Mahindra Bank is looking at launching a corporate credit card product and also enter into partnership programmes for launching co-branded credit cards by April ( The Hindu Dec 13, 2008) (1272) AXIS BANK EXPANDING IN SOUTH, TO INCREASE HEADCOUNT Axis Bank is in the process of expanding its branch network and upgrading its extension counters to branches in the South. The bank has 181 branches in the South zone comprising the four States Tamil Nadu, Karnataka, Kerala and Andhra Pradesh. RBI has given the bank licence to add another 55 branches in this zone. ( The Hindu Dec 13, 2008) (1273) NEGATIVE SHOW: INDUSTRIAL OUTPUT CONTRACTS IN OCTOBER The Index for Industrial Production (IIP) has posted a negative growth of (-) 0.4 per cent in October as against a robust 12.2 per cent in the same month last year. However, between April and October the index had grown by 4.1 per cent compared with 9.9 per cent in the same period in ( The Hindu Dec 13, 2008) (1274) CORPORATE INDIA TURNS TO PE PLAYERS TO TAP GROWTH CAPITAL With traditional sources of finance in short supply, most Indian companies, including leading corporate houses, are turning towards private equity to raise growth capital. The private equity deal flow has risen sharply as the ongoing credit crunch, tighter lending norms by banks and slowing demand have forced companies to prioritise their capex plans. ( The Economic Times Dec 13, 2008) (1275) COS CITE PERFORMANCE TO SPIKE IIP DATA Citing robust production and sales figures, FMCG and consumer durable companies said the October industrial production (IIP) data is not reflective of its performance. The IIP numbers are not in accordance with AC Nielsen numbers which have shown a 17-18% for FMCG companies. ( The Economic Times Dec 13, 2008) (1276) BANKS MAY CUT PRE-PAYMENT PENALTY SOON Public sector banks are considering a suggestion to waive pre-payment penalty for home loans up to Rs. 20 lakh. At present, banks charge anywhere between 1% and 3% of outstanding loan amount as additional interest if a consumer wants to repay the loan amount before the initially agreed loan tenure. Content Development Team, Chennai 5 Vol -1, Issue-37

6 We are considering a proposal to either completely waive the pre-payment penalty or reduce it significantly, said the chairman of one state-run bank, on condition of anonymity. ( The Economic Times Dec 13, 2008) (1277) UPPER CRUST IS STILL INTACT Luxury brands undeterred by terror attacks; Going ahead with investment & expansion plans in India. Undeterred by the barrage of terror on the favourite haunts of luxury goods such as the Taj Mahal Palace and The Oberoi high-end fashion and luxury brands such as Louis Vuitton, Zegna, Bvlgari, Salvatore Ferragamo and Gucci are still bullish about their India story. ( The Economic Times Dec 14, 2008) (1278) HNIS STILL GO FOR LUXURY HOMES During the last six months, the home loans in the above Rs. 75Lakh segment witnessed an average growth of 15-20% thanks to the young high networth individual (NHI) population liking for the high-end property. In fact, with real estate developers in a money tight situation, they are offering discounts to the tune of 10-15% for the properties above Rs. 1 crore and above. ( The Economic Times Dec 14, 2008) (1279) Content Development Team, Chennai 6 Vol -1, Issue-37