The Hindu Business Line : Wednesday, October 26, 2005

Mid-Year Review of the Annual Credit Policy — Managing inflation, encouraging growth
While the RBI Governor, Dr Y. V. Reddy, has left alone the interest rate structure and liquidity controls, though his raising the reverse repo rate will have implications on some short-term lending rates. The Quarterly Review reflects the Government' s concern about the fiscal insulation of oil price increases from the consumer, and highlights the need to encourage credit to the agricultural and SME sectors as well as to NBFCs. Overall, the Policy has met the twin requirements of inflation manage ment and growth impulses. More

FOREX

Rupee recovers; bond prices rise
MUMBAI: The rupee appreciated against the dollar on Tuesday, in tandem with a rise in the euro and the domestic hike in key interest rates. The rupee opened at 45.12/13 and weakened by 3 paise immediately after the announcement of the ... More

Rupee confusion mars wise moves
It is a wise decision by the RBI not to have raised the Bank Rate. And it has rightly shown concern over the share of credit to infrastructure. But the RBI's policy on rupee continues to confuse the market. More

STOCKS

Market positive; bank stocks surge
Stocks, particularly banking, rallied after the central bank met market expectations with a quarter-percentage-point hike in repo/reverse repo rates and raised the GDP growth forecast to 7-7.5 per cent. BSE Bankex rose 1.42 per cent and NSE's ... More

CREDIT POLICY

Intra-day short sales to improve liquidity in securities market
THE proposal to permit intra-day short sales was essentially to benefit some of the financial institutions for participating in the securities market and improving the liquidity. Short sales are sales of securities that the seller does not own ... More

`Sub-PLR lending to take a hit, short-term rates may rise'
THE Reserve Bank of India today hiked the reverse repo and repo rates by 25 basis points, which could translate into an increase in deposit and lending rates, according to bankers. Long-term deposits might carry a premium, according to Mr M. ... More

Will banks price car, tractor loans at par now?
The RBI has asked the IBA to review, in consultation with its member banks, the BPLR system afresh and issue transparent guidelines for appropriate pricing of credit. More

Govt must fix PLR too, says TEA
THE upward revision in the GDP growth presented in the credit policy would give a positive signal to the investors. But a review on prime lending rate (PLR) by Indian Banks Association might give a signal that the cost of acquiring funds would ... More

A focus on price stability
THE most important feature of the RBI Review is the clear shift in emphasis in the monetary policy stance. The current policy stance clearly seeks to showcase `price stability' as the primary objective giving `provision of liquidity to meet ... More

Mixed opinions from housing finance cos
OPINIONS from the housing finance sector were mixed on whether the credit policy might see a rise in housing finance rates. "The lending rate should see a rise," said Mr S.K. Mitter, CEO, LIC Housing Finance Ltd. "Although in our case, the bulk ... More

Lending rates may harden by Dec, says PNB chief
THE Chairman and Managing Director, Punjab National Bank, Mr S. C. Gupta, said that there is a likelihood of a slight upward movement of about 25 basis points in lending rates by December-end. "At present, there is enough liquidity in the ... More

Micro finance fund corpus raised to Rs 200 crore
THE Micro Finance Development Fund, set up by the National Bank for Agriculture and Rural Development, has been re-designated as Micro Finance Development and Equity Fund (MFDEF). The Reserve Bank of India , in its mid-term review of monetary ... More

Insurers welcome e-trading of gilts
THE Reserve Bank of India has decided to extend electronic trading in gilts - the screen-based anonymous order matching - to insurance companies. By the end of September 2005, 117 members were active on this module. NDS-OM volumes ... More

Reverse repo rate hike to ease margin squeeze
THE goal of price stability is seen as the prime reason behind the hike in reverse repo rate. The rate hike, however, could serve to ease the pressure on lending margins of public sector banks that came under pressure in the quarter ended ... More

Sensex eases from peak level, closes 70 points up
STOCK prices rose on Tuesday, as the RBI did not increase the bank rate as anticipated by some market players. However, they lost part of the gains during the day. BSE Sensex which opened firm in the morning, continued to rise and intra-day was ... More

Capital market exposure limit for banks hiked
THE Reserve Bank of India has increased the sub-limit for capital market exposure of banks to 40 per cent of the net worth (own funds) of banks. Higher limits may be allowed for banks with sound controls. This can be interpreted as a move to ... More

RBI insists on `no frills' bank accounts
THE Reserve Bank of India has asked banks to make available "no frills" account either with "nil" or very low minimum balances so as to make banking services accessible to more people. The RBI had noted in its policy in April, that current ... More

Infrastructure cos' ECBs through approval route
THE Reserve Bank of India on Tuesday said that special purpose vehicles (SPVs), or any other entity notified by the central bank, that are set up to finance infrastructure companies and projects would be treated as financial institutions and ECBs ... More

Logical; may not impact stock prices
THE Reserve Bank of India's decision is unlikely to have any impact on stock prices, as most of the banks have not utilised this facility in the past. "The RBI's move to change the maximum limit to capital market exposure from 5 per cent of ... More

Bullish on growth, hawkish on inflation
The RBI's underlying policy message is clear — inflation is its primary concern and gets priority over other objectives such as growth and investments. More

Inflationary pressures may push up interest rates
There are firm indications of expectations of rising inflationary pressures and, hence, higher interest rates. More

Keeping growth on a stable path
A well-structured, well-articulated policy that reflects a sincere attempt to keep the growth of the economy on a stable, non-inflationary path while focussing on all the issues that have raised the concerns about financial stability. More

An aggressive stance
Compared to the more benign earlier stance, the RBI seems ready to take head-on the problem areas. More

Going with the global tide
The RBI's actions are driven by a desire to be seen as being in accord with the ongoing global rate hike campaign. The apex bank insists that it would provide support to the realisation of growth potential without adding to inflation expectations. More

A measured move
The central bank has moved in time, on a precautionary basis, to rein in potential inflationary pressures. More

A fine balancing act
While the issue of developing a vibrant debt market has been addressed, issues relating to interest rate futures and options have not. More

Making India Inc more competitive
As the country integrates with the world economy, the RBI moves to support Indian companies in their ventures abroad. More

India Inc satisfied with decision to hike reverse repo rate
JUSTIFYING the RBI's decision to increase its Reverse Repo Rate (RRR) by 25 basis points to 5.25 per cent , the Federation of Indian Chambers of Commerce and Industry has said interest rates have gone up globally and have also firmed up in ... More

Provisioning norm may have little impact
THE Reserve Bank of India (RBI) has asked banks to increase a general provisioning for `standard advances' from the present level of 0.25 per cent to 0.40 per cent of loans. This move may not have much of an impact. The RBI had asked banks ... More

FINANCIAL PERFORMANCE

HDFC net rises 20 pc in Q2
HOUSING Development Finance Corporation has reported a 20.5 per cent increase in net profit for the second quarter ended September 30, 2005. Net profit for the quarter was reported at Rs 298.98 crore against Rs 248.13 crore for the ... More

SBT clocks net profit of Rs 104 cr in H1
STATE Bank of Travancore (SBT) has posted a net profit of Rs 103.88 crore during the first six months ended September 30, 2005. The net interest income during the period went up by 12.76 per cent to reach Rs 467.12 crore as against Rs 414.27 ... More

CONSUMER FINANCE

Floods have no impact on car loan repayment: Crisil
CRISIL, in its analysis of the impact of the recent floods in Maharashtra on the credit quality of Asset Backed Securitisation (ABS) transactions backed by car loan receivables, has concluded that there will be no impact on the outstanding ... More

PRIVATE BANKS

LVB to distribute MF schemes of Prudential ICICI
THE Karur-based Lakshmi Vilas Bank and Prudential ICICI Asset Management Company have reached an agreement for distribution of the latter's mutual fund schemes. LVB would distribute the entire range of Prudential ICICI's mutual fund schemes to ... More

INTEREST RATES

Growth's fine, inflation the worry
RBI raises repo rates; loans may turn dearer
LOAN products across the board could cost more with the RBI switching on to a high interest regime to contain a swell in prices. Corporate and housing loans, which do not carry fixed interest rates, could be dearer by 0.25-0.30 percentage points ... More

CREDIT MARKET

Banks' capital market exposure to go up Rs 1,000 cr: Reddy
`It's rationalisation not restriction'
THE Reserve Bank of India's decision to rationalise banks' exposure limit to capital markets will give them more headroom, to the tune of Rs 1,000 crore, according to Dr Y.V. Reddy, Governor, RBI. Explaining the revision in capital market ... More

MERGERS & ACQUISITIONS

RBI facilitates merger of UCBs
THE Reserve Bank of India, in a bid to smoothen the merger/amalgamation of Urban Cooperative Banks (UCBs), has proposed to permit the acquirer UCB to amortise the losses taken over from the acquired UCB, for a period not in excess of five years. ... More

TRADE & LABOUR UNIONS

Streamline core banking system, unions tell SBI
EMPLOYEES and officers of State Bank of India have demanded that the bank management take effective steps to streamline core banking system in order to deliver fault-free service to customers. Activists of the State Bank of India Officers' ... More

PEOPLE

Ben Bernanke: A safe pair of hands?
President Bush announced on Monday that the Chairman of his Council of Economic Advisers would succeed Mr Alan Greenspan as Chairman of the US Federal Reserve on January 31, 2006, when Mr Greenspan retires from office. (Readers of this column ... More

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