Content Development Team, Chennai 1 Vol -1, Issue-53

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1 GOVT ASKS S&P TO CLARIFY RATING ACTION A team from rating agency Standard and Poor's (S&P) is expected to hold discussions with finance ministry officials after the government asked for an explanation for lowering India's long term sovereign rating outlook from stable to negative. The government is also approaching the other two major rating agencies Moody's and Fitch to explain its fiscal strategy, the economic situation and the outlook. ( Business Standard Mar 30, 2009) (1856) BANKS TO GO AHEAD WITH ATM EXPANSION Beginning April 1, one can walk into the ATM of any bank and withdraw cash or check the balance, at no extra charge. This is when the Reserve Bank of India's guidelines, allowing free access to ATMs, become effective. It was feared that the move may prompt banks to go slow on ATM expansion, in view of the fee from customers disappearing. But this does not seem to be the case, as most banks plan to continue with their ATM expansion. ( Business Line Mar 30, 2009) (1857) RBI MAY TAKE A CALL ON FUTURE OF NATIONAL FINANCIAL SWITCH The banking regulator may soon have to take a call on whether the National Financial Switch (NFS), which currently interlinks 35,000 off ATMs across the country, should continue to remain with the IDRBT or be hived off to the recently established NPCI. Following the establishment of the National Payments Corporation of India (NPCI), an umbrella organisation set-up jointly by public and private sector banks at RBI's behest for handling retail and domestic card payments, it is widely expected that the Corporation will take over RBI's existing electronic payment infrastructure (National Electronic Funds Transfer and Electronic Clearing Service) as also the NFS from the Hyderabad based Institute for Development & Research in Banking Technology (IDRBT). ( Business Line Mar 30, 2009) (1858) RBS PLANS NEW FACILITY IN CHENNAI Royal Bank of Scotland (RBS) is planning to expand its financial back office operations in India with a new facility in Chennai having potential to develop into a 4,000-seater hub over a period. ( The Economic Time Mar 31, 2009) (1859) FOREIGN BANKS MAY HAVE TO SELL 26% IN SUBSIDIARIES Foreign banks in India may have to sell at least a 26 per cent stake in Indian subsidiaries and meet Government targets for lending, under proposals made by a joint Reserve Bank of India and Finance Ministry panel. Foreign banks should list their subsidiaries on stock exchanges, capping their ownership at 74 per cent. ( Business Line Mar 31, 2009) (1860) LIC LAUNCHES CREDIT CARD Life Insurance Corporation of India launched its white-labelled credit card on Monday. Initially, the card will be issued in Mumbai and New Delhi on a limited scale, a press release issued by the company said. The credit card would be launched by LIC's subsidiary LIC Cards Services Ltd (LIC CSL) and would be managed by the Corporation Bank. ( Business Line Mar 31, 2009) (1861) UBI TO GET Rs. 800-CRORE GOVT SUCCOUR, CAPITAL REJIG ON CARDS The government on Monday decided to restructure the capital of United Bank of India (UBI), besides injecting Rs. 800 crore in the bank. After restructuring, the bank would also be able to raise funds from the market through maiden issue of equity shares. ( The Financial Express Mar 31, 2009) (1862) RBI POLICY RATES LAST WEEK ( ) CURRENT RATES THIS WEEK ( ) BANK RATE 6.00% 6.00% EXCHANGE RATES (As On) LAST WEEK ( ) THIS WEEK ( ) REPO RATE 5.00% 5.00% 1U.S $ Rs Rs REVERSE REPO 3.50% 3.50% 1 EURO Rs Rs RBI RESERVE RATIOS 1 POUND Rs Rs CRR 5.00% 5.00% 1 YEN Rs Rs SLR 24.0% 24.0% 1 YUAN Rs Rs INTEREST RATE SPECTRUM ( ) ( ) 10 YEAR GOVT. PAPER 6.77% 6.94% CALL RATE 4.10% 4.00% PLR RANGE (TOP 5 BANKS) % % US $ LIBOR (6 MONTHS) SOURCE: RBI & BUSINESS STANDARD ( & ) Content Development Team, Chennai 1 Vol -1, Issue-53

2 VIZAG CO-OP BANK TO OPEN MORE BRANCHES The Visakhapatnam Cooperative Bank is planning to open a couple of more branches in the state during the next financial year including in Hyderabad. The bank currently has 16 branches in Visakhapatnam, Vizianagaram, Srikakualam and East Godavari districts. ( Business Standard Mar 31, 2009) (1863) IIM-A, UNION BANK SIGN MOU FOR SME RESEARCH The Indian Institute of Management, Ahmedabad (IIM-A) and the Union Bank of India (UBI) have signed a memorandum of understanding (MoU) to undertake research on the small and medium enterprises (SME) sector. ( Business Standard Mar 31, 2009) (1864) ICICI BANK, CHINA EXIM TIE UP FOR BUYER CREDIT India's largest private sector lender ICICI Bank and the Export-Import Bank of China (China Exim) have signed a long agreement for $98 million under the twostep buyer credit arrangement. This programme will provide finance to Indian corporates, who import capital goods from China. A buyer credit arrangement is usually used to finance capital goods or projects for a medium-or long-term period. ( Business Standard Mar 31, 2009) (1865) GOVT SHOULD LOWER BANK STAKES BELOW 51%: RBI The Reserve Bank of India's committee on financial sector assessment has recommended that the banking sector should be gradually opened to foreign players and that the government lower its holding in public sector below 51 per cent and allow state-owned players to merge. ( Business Standard Mar 31, 2009) (1866) COMMITTEE MULLS SETTING UP GOVT MORTGAGE VEHICLES The committee on financial sector assessment has proposed the setting up of one or two governmentsponsored secondary mortgage vehicles (with private management and ownership participation) such as Fannie Mae and Freddie Mac in the US to develop a healthy mortgage market. However, the committee also said that in view of the prevailing market conditions and fiscal implications, it might not be the right moment to set up such institutions. ( Business Standard Mar 31, 2009) (1867) FINANCIAL SECTOR REPORT FAVOURS MERGERS OF PUBLIC SECTOR BANKS The Financial sector assessment report, prepared by the Reserve Bank of India (RBI) and the Central Government, has favoured the merger of public sector banks (PSBs) having a government holding bordering on 51 per cent with those having a much higher state holding to ensure that their business growth does not suffer due to capital constraints. ( Business Standard Mar 31, 2009) (1868) SOON, MONEY TRANSFER THROUGH BANKS 24X7 Money transfer through banks in India will soon be possible 24 hours a day. Picture this. Your parents, living in another city, need some cash to make an urgent hospital payment. You can send the money from your workplace or form home to their bank account even at midnight and they can withdraw it the next moment. This facility will be available throughout the country in the next few months when the newly set up National Payments Corporation of India (NPCI) launches its retail money transfer facility. ( Business Line Apr 1, 2009) (1869) CAPITAL ACCOUNT SHOWS DEFICIT FIRST TIME IN 10 YEARS India's capital account balance turned negative, showing outflows of $3.7 billion during the October-December 2008 quarter, against net inflows of $31 billion in the corresponding quarter last year. This is the first time in 10 years, since the first time in 10 years, since the first quarter of , that capital account balance has turned negative. ( Business Line Apr 1, 2009) (1870) TERROR COVER PREMIUM TO BE HIKED BY 30% Beginning April 1, companies will have to shell out more to buy an insurance cover against terrorist attack. The insurance companies offering terror cover have decided to increase the premium rates by around per cent, from April 1. ( Business Line Apr 1, 2009) (1871) BHARTI MAY EXIT MUTUAL FUND BIZ Bharti Enterprises may look at exiting its 25:75 mutual fund joint venture with French financial services major AXA as it considers mutual fund business to be non-core and the joint venture company wants to induct a partner from the banking industry. ( The Economic Times Apr 1, 2009) (1872) Content Development Team, Chennai 2 Vol -1, Issue-53

3 INVESTORS COLD TO ELSS, FUND HOUSES COLLECT ONLY Rs. 587 CR IN JAN-FEB Tax payers have stayed away from Equity Linked Saving Schemes (ELSS) this year, mainly because of the uncertainty in the stock market. As per data from the Association of Mutual Funds in India (Amfi), in the first two month of the calendar year, fund houses have collected only Rs. 587 crore. Last year, during these two months, the mutual industry had collected Rs. 1,737 crore. ( Business Standard Apr 1, 2009) (1873) RESERVE BANK WANTS TO REGULATE NBFC HOLDING COMPANIES The Reserve Bank of India (RBI) has decided in principle to bring under its regulatory ambit holding companies floated by business groups and companies that also own non-banking finance companies (NBFC). ( Business Standard Apr 1, 2009) (1874) BANKS SEE NO SLOWDOWN IN OVERSEAS EDUCATION LOAN PORTFOLIO The increased cost of overseas education because of the appreciating dollar and the uncertainty prevailing in the job market abroad may not have a significant impact on the overseas educational loan portfolio of banks, though, there might be a slight slowdown in the number of applicants for such loans, according to senior bank officials. ( Business Line Apr 2, 2009) (1875) SHARIAH BeEs MAKES DEBUT ON NSE WITH MARGINAL PREMIUM Benchmark's Islamic exchange traded fund Shariah BeEs listed at a premium on the National Stock Exchange on Wednesday. The Unit opened at Rs , which was at a premium to its previous day's net asset value of Rs ( Business Line Apr 2, 2009) (1876) CRISIL DOWNGRADED RATINGS ON 84 COS IN Crisil downgraded ratings on 84 entities in the fiscal, while upgrading those on only two. In , there were 14 downgrades and nine upgrades. ( Business Line Apr 2, 2009) (1877) BoM TO SEEK MORE CAPITAL WHEN REQUIRED Though the requirement for additional capital is not immediate, Bank of Maharashtra would consider the option when the market improves, its executive Director Mr. M.G. Sanghvi said. The bank is planning to open 100 new branches, hire 500 officers and clerks in We are targeting a business of Rs. 1,10,000 crore against Rs. 81,000 crore achieved during the current fiscal, Mr Sanghvi said. (Business Line Apr 2, 2009) (1878) LIMITED LIABILITY PARTNERSHIP TURNING REALITY FOR CORPORATES The stage has been set for making the Limited Liability Partnership (LLP) concept a reality from Thursday. A senior official from the Ministry for Corporate Affairs told Business line that, last minute preparations are going on. Efforts are on to notify the rules to implement the LLP Act today (on Wednesday) so that the first LLP can be registered from the beginning of the new financial year (2009). ( Business Line Apr 2, 2009) (1879) RESTRUCTURING OF LOANS: AUDITORS FOR SEPARATE DISCLOSURES IN 'NOTES' In view of the sheer number of 'applications received but not processed' cases, auditors feel that banks would do well to make separate disclosures in this regard in their notes to accounts for FY as the eligibility or otherwise of many borrowers, who put in requests for restructuring just before the deadline expired, would not have been determined by banks by the time their accounts are finalised for FY (Business Line Apr 2, 2009) (1880) SIDBI WANTS TO REV UP THE DISTRESSED ASSETS MARKET Having notched up record disbursements, Small Industries Development Bank of India (SIDBI) is now turning its attention to revving up action in the distressed assets market. India SME Asset Reconstruction Company (ISARC), the asset reconstruction firm co-promoted by SIDBI, has initiated talks with IDBI Bank's Stressed Asset Stabilisation Fund (SASF) and state finance corporations (SFCs) to take over distressed assets. ( Business Standard Apr 2, 2009) (1881) REMITTANCES FROM NRIs MAY DECLINE BY 20% With the global financial crisis deepening and migrant workers losing jobs, remittances from Non- Resident Indians (NRIs) could decline by 20 per cent this financial year, said a Planning Commission report, which was submitted to Prime Minister Manmohan Singh. ( Business Standard Apr 2, 2009) (1882) Content Development Team, Chennai 3 Vol -1, Issue-53

4 SEBI PULLS UP MF INDUSTRY The Securities and Exchange Board of India's (SEBI's) whole time member M S Sahoo has pulled up the mutual fund industry for aggressively churning their portfolios and confusing small investors by launching multiple schemes. ( Business Standard Apr 2, 2009) (1883) ICICI BANK REPURCHASES BONDS WORTH $90 MILLION India's largest private sector lender ICICI Bank has repurchased and extinguished bonds worth $90 million. The bonds were issued by its Bahrain branch. It bought back bond worth $75.87 million at face value, out of the $2 billion worth of debt slated to mature in These bonds were issued in October The bonds carried a coupon rate of per cent. ( Business Standard Apr 2, 2009) (1884) INDIANS PREFER DEBIT CARDS OVER CREDIT CARDS: STUDY According to the report of Knowledge Management Company Venture Infotek the number of debit card transactions during February 2009 vis-a-vis September 2008 saw an increase of 36.6 per cent as against an increase of 25 per cent for credit cards. In value terms too, daily transactions through debit cards increased by 27.2 per cent in February 2009 vis-a-vis an increase of 13.3 per cent in credit card transactions in the period under review. ( Business Standard Apr 2, 2009) (1885) GOVERNMENT ABOLISHES BCTT Taxpayers will not have to pay the levy on withdrawal of cash from banks with the government withdrawing the Banking Cash Transaction Tax (BCTT) from today. ( Business Standard Apr 2, 2009) (1886) INSURERS CAN'T REFUSE HEALTH COVER RENEWAL, SAYS IRDA The Insurance Regulatory and Development Authority (IRDA) today issued guidelines on renewability of health insurance policies applicable to general insurance companies. The guidelines would be applicable from June 1, ( Business Standard Apr 2, 2009) (1887) AUTO SALES GALLOP IN MARCH January and February were decent months for automobile sales. But March has hit top gear. According to auto financiers, the auto market seems to have turned the corner with March 2009 managing to better last year's tally. Total car sales in March is estimated to be around lakh units, up 2% over last year. ( The Economic Times Apr 2, 2009) (1888) COMPANIES BILL MAKES SECRETARIAL STANDARDS MANDATORY In order to improve corporate governance practices, the new Companies Bill has made it mandatory for firms to adopt the first two secretarial standards (SS) issued by the Institute of Company Secretaries of India (ICSI). The institute, which has recently come out with its tenth secretarial standard that deals with board's report, wants the government to make all the standards mandatory for companies. ( Business Standard Apr 3, 2009) (1889) MF ASSETS DIP FOR FIRST TIME IN 5 YEARS For the first time in five years, the average assets under management (AAUM) of mutual funds have fallen. The AAUM of fund houses fell by 7 per cent or Rs. 36,798 crore to Rs lakh crore in the financial year , as against Rs lakh crore in , according to data from the Association of Mutual Funds in India (AMFI). ( Business Standard Apr 3, 2009) (1890) INDIA'S OIL IMPORT BILL LIKELY TO BE REDUCED $9 BILLION ANNUALLY In a development slated to enhance India's macro-economic health as well as energy security, Reliance Industries (RIL) has commenced natural gas production from its D-6 block in the Krishna-Godavari (KG) basin. The gas started to flow late Wednesday evening. The development will reduce India's trade deficit, cut the subsidy burden on fertilisers and improve chances of oil multinationals investing in oil and gas exploration below Indian seas. ( The Economic Times Apr 3, 2009) (1891) G-20 PLEDGES $1 TRILLION & CONCERTED FISCAL STEPS G-20 leaders agreed a trillion-dollar deal on Thursday to combat the deepest economic downturn since the Great Depression. At their summit, they also signed off on plans to commission black lists of tax havens, tighten financial norms to bring hedge funds and credit rating agencies under closer supervision. ( The Financial Express Apr 3, 2009) (1892) Content Development Team, Chennai 4 Vol -1, Issue-53

5 WHY WASTE A GOOD RECESSION? GOA ADFEST STARTS ON A POSITIVE NOTE With the tag line 'May the best brain win' the Goafest 2009 began with a big bang in Goa on Thursday. Inaugurating the adfest, Colvyn Harris, chairman, goafest 2009 & CEO, JWT said, It is heartening that India's premier advertising awards festival, Goafest is being supported by the advertising fraternity, Goafest 2009 is organised on a grander scale than the previously held Goafests with the theme why waste a good recession?. ( The Financial Express Apr 3, 2009) (1893) DISBURSAL OF HOME LOANS IMPROVES DESPITE REALTY SLUMP The amount of home loans banks disbursed in the first three quarters of the last financial year is higher than what they had in the corresponding period of the previous year. ( The Financial Express Apr 3, 2009) (1894) BIOMETRIC CARDS FOR RELIANCE FRESH VENDORS Union Bank of India and FINO have enrolled, 1,600 vegetable and fruit vendors who are regular suppliers to Reliance Fresh. These vendors will soon be issued biometric cards using which they can avail themselves of small loans from the bank. The project will be launched in Gurgaon on a pilot basis, said Mr Laxman Rao, general manager, priority sector. ( Business Line Apr 4, 2009) (1895) FSS PLANS Rs. 250-CR EXPANSION Chennai based Financial Software and Systems (FSS) has chalked out a $50-million (Rs 250 crore) expansion plan to deploy around 5,000 ATMs and 2 lakh Point of Sale (PoS) machines across India, over three years. ( Business Line Apr 4, 2009) (1896) FIPB REJECTS BANK OF NOVA SCOTIA MOVE TO SET UP SUBSIDIARY The Foreign Investment Promotion Board (FIPB) has rejected the proposal of Bank of Nova Scotia to set up a wholly owned subsidiary for wholesale trading in precious metal commodities. ( The Economic Times Apr 5, 2009) (1897) Content Development Team, Chennai 5 Vol -1, Issue-53