The Hindu Business Line : Weekly News Round-up

Sending a strong signal to banks to lower lending rates, the Reserve Bank of India on Wednesday cut repo and reverse repo rates by half a percentage point each with immediate effect. With the latest cut, the repo, the rate at which the RBI lends short-term funds to banks, now stands at 5 per cent and the reverse repo, the rate at which the RBI borrows from banks, at 3.5 per cent.

ICICI Bank has cut the interest rates on floating home loans for new borrowers by 25-50 basis points, with immediate effect. Following the reduction, the floating rate on loans up to Rs 20 lakh is 9.75 per cent, against 10 per cent; on loans of Rs 20-30 lakh it is 10 per cent against 10.5 per cent) and on loans of over Rs 30 lakh it is 11.5 per cent against 12 per cent. The bank also reduced the rate on fixed home loans to 15 per cent from 16 per cent.

Similarly, Union Bank of India and Punjab National Bank announced cuts in interest rates on car loans and home loans with effect from March 1. Union Bank of India cut the interest rates on new car loans by 125-150 basis points and on home loans by 25-200 basis points. PNB cut the interest rates on car loans by 50 basis points

Reliance Petroleum will be merged with Reliance Industries with the boards of both companies giving the go-ahead to the move on Monday. The exchange ratio is one Reliance Industries share for every 16 shares of Reliance Petroleum.

Reliance Industries will issue 6.92 crore new shares to Reliance Petroleum shareholders which will increase its equity base from Rs 1,574 crore to Rs 1,643 crore. Consequently, the promoter holding in Reliance will fall to 47 per cent from 49 per cent.

The Satyam board has proposed to offer 51 per cent equity to the prospective investor participating in the global competitive bidding and specified that the bidder should have net assets of over $150 million.

Giving broad outlines of the proposal, Satyam said the selected investor should subscribe to the newly issued equity shares, comprising 31 per cent of the authorised share capital. After that, the investor should go for a mandatory minimum public open offer at the same share price the investor paid for the subscription of new shares for the remaining 20 per cent.

It also said that whoever wins the bid cannot sell equity shares for a period of three years from the date of the acquisition.

The Chief Election Commissioner, Mr N. Gopalaswami, announced that the five-phase polling to elect the 15th Lok Sabha will begin on April 16. Announcing the election schedule to newspersons, he said the fifth and final round of voting will be on May 13.

The Centre's personal income-tax collections in February stood at Rs 5,920 crore, substantially lower than the Rs 8,762 crore collected in the same month in the previous year. However, corporate tax collections in February stood higher at Rs 5,578 crore, higher than the collection level of Rs 5,390 crore for the same month last year.

Inflation slowed to 3.03 per cent, the lowest since 2002 in the week ended February 21, lower than the previous week's annual rise of 3.36 per cent. The fall in the year-on-year inflation rate by 33 basis points was on account of a dip in primary and manufactured product categories,

The foreign trade figures for the first month of this calendar year make a dismal reading, as both exports and imports nosedived sharply by 16 per cent and 18 per cent respectively in dollar terms, as a sequel to which the trade deficit too moderated to $6 billion in January 2009.

Provisional trade figures released by the Department of Commerce here show exports in January at $12.38 billion were 15.9 per cent lower than $14.71 billion in the corresponding month of 2008, while imports at $18.45 billion were 18.2 per cent lower than $22.56 billion in the comparable month.

As a result of the slowdown, the trade deficit for January is the lowest in recent months at $6 billion, against $9.9 billion in January 2008.

State Bank of India has cut interest rates on fixed deposits in four maturity slabs between one year and three years by 40 to 50 basis points. From March 9 onwards, the highest interest rate that the bank offers its depositors is 8.50 per cent as against 9 per cent now. The bank has pared the interest rate on its popular 1,000 days FD scheme by 50 basis points to 8.50 per cent. SBI has cut the interest rate on FD in the one year to less than two years maturity bucket by 40 basis points to 8.10 per cent from 8.50 per cent.

The rupee on Monday opened lower at 51.50 and touched a new record low of 52.18 and traded in the range between 52 and 51.45 during the week. It closed sharply lower at 51.69/70 on Friday against previous week close of 51.13/15. The rupee was weak due to strong dollar demand from domestic corporates.

Compiled by M J Madhavan
Podcast by A Srirengarajan

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