IDBI Bank to lend Rs 700 cr more to microfinance firms

IDBI Bank plans to lend Rs 700 crore more to microfinance companies by the end of this financial year, a top official said on Tuesday.

"We have exposure of about 800 crore, and we can take it to about 1,500 crore by the end of the fiscal," Executive Director RK Bansal said.

He said the Reserve Bank of India's (RBI) guidelines for the sector issued in May have brought about clarity and now "things are okay" in the sector.

The central bank had in May issued regulations for the microfinance sector and capped at 26% the interest rate that these firms can charge their customers.

The central government, which has been taking feedback from the RBI, banks and MFIs, is widely expected to table the draft MFI Bill in the monsoon session of parliament.

The country's MFI sector suffered a setback last year when Andhra Pradesh, the biggest market for MFIs in the country, approved legislation to regulate the industry following complaints about high interest rates, aggressive recovery practices and overextended borrowers.

Source: Business Standard

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Citi India ramps up markets team

Citibank India today said it had made key appointments in its markets team primarily to further strengthen its fixed income, currencies, commodities, credit trading and equities businesses.

"Citi has made several significant hires strengthening our credit markets trading, structuring and commodities businesses," Citi India Managing Director and Head of Markets Pankaj Vaish was quoted as saying in a statement issued here.

Fixed income, currencies, commodities, credit trading and equities products and services will be the areas which will get strengthened through the new hires, he added.

The key appointments include those of Rohit Dusad, who joins from JP Morgan as director of origination in credit markets trading; Aditya Bagree, who joins from Nomura as director of credit structuring; and Chintan Shah from Morgan Stanley, who joins as Vice-President for credit trading.

In the past three years, Citi has helped raise close to $60 billion from capital markets for its Indian clients and advised on nearly $25 billion of India-related mergers and acquisitions, the American banking giant said.

Source: Business Standard

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RBI Governor Subbarao gets 2-year extension

New Delhi: The government gave a two-year extension to Reserve Bank Governor D Subbarao to ensure continuity of India's monetary policy at a time when the whole world is reeling under the fallout of the downgrade of the sovereign rating of the US.

"It (extension) will be good because at this point of time, extension of the RBI Governor is needed. Though there was time till September, we decided (that) we should do it quickly to ensure that there is no uncertainty," Finance Minister Pranab Mukherjee told reporters after announcement of Subbarao's extension as head of the country's monetary authority.

Subbarao, who has played a key role in steering the country out of the global financial meltdown following the fall of America's iconic investment banker Lehman Brothers in September, 2008, will continue as RBI chief till September 5, 2013.

"He (Subbarao) is doing good job and he has already earned his reputation as central bank Governor in the various deliberations of the G-20, where Finance Ministers and central bank governors meet and take decisions," Mukherjee said.

Subbarao was to retire in September following the completion of a three-year term. "The Prime Minister approved the extension to D Subbarao, Governor of RBI, for two years," a PMO spokesman said.

The 61-year-old former IAS officer and veteran Finance Ministry official was appointed the 22nd Governor of the central bank in September, 2008.

The continuation of Subbarao at the helm of the RBI assumes significance as it comes at a time when the government and the central bank are gearing up to meet the challenge posed by the economic crisis in several eurozone nations and the downgrade of the US sovereign rating to AA+ from AAA by Standard and Poor's.

The downgrade triggered a steep fall in stock markets throughout the world, including the BSE and NSE in India.

Subbarao, who steered the country through the economic crisis of 2008, is credited with taking a tough monetary stance to check inflation.

It was under his leadership that the RBI increased key interest rates 11 times in the past 16 months to control the rate of price rise, despite stiff resistance from industry.

Under his governorship, the RBI had doubled the frequency of monetary policy reviews from every quarter to eight times a year with a view to decrease the need for off-cycle rate moves.

Subbarao had earlier served under Manmohan Singh in the Finance Ministry as a senior official in the early 1990s, when the latter was Finance Minister.

Prior to this appointment, he was the country's Finance Secretary.

Source: Financial Express

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PSU banks exposure in Noida realty projects at Rs 2,166cr

New Delhi: The public sector banks have sanctioned a total of Rs 2,166.2 crore as home loans and other construction loans in Noida realty projects, the government on Tuesday informed Parliament.

"RBI has reported that 'Noida Extension' does not appear as a 'banked centre' in the master office file on banks," Minister of State for Finance Namo Narain Meena said in a

written reply to the Rajya Sabha. He was replying to a query regarding the total quantum of housing loans extended/approved for home buyers by various public sector banks for housing projects in Noida Extension (a part of Greater Noida). Meena, however, said the total outstanding housing loans and other construction loans for 'Noida Centre' as on March 31, 2010, by public sector banks stood at Rs 2,166.2 crore. Of which, Rs 1,258.7 crore was sanctioned as home loans to 12,330 customers and Rs 907.5 crore as construction loans.

In two separate orders, the High Court has quashed the acquisition of about 750 hectares of land from farmers in Noida Extension, affecting more than 26,000 flat-owners and about 20 housing projects of developers, including Amrapali and Supertech.

The minister said that banks have done proper due diligence and followed regulatory guidelines while sanctioning housing and other related loans. "Indian Bank Association has reported that banks release such loans after processing and due diligence in accordance with credit policy and regulatory guidelines," the minister said.

Source: Financial Express

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RBI: Will ensure liquidity

Following Standard & Poor’s downgrading of the long-term US sovereign rating from AAA to AA+, with negative outlook, on Friday, government securities and foreign exchange markets saw volatile trade on Monday. While the rupee weakened to its lowest in five weeks during early trade, bond yields fell to a three-week trough, as investors sought safe-haven government securities.

Anticipating volatility in financial markets, the Reserve Bank of India (RBI) issued a statement before the start of trade on Monday to calm investors. It said it was the central bank’s priority in the immediate future to maintain rupee and forex liquidity to prevent volatility.

The rupee depreciated, tracking weakness in equity markets. It closed at a near-six-week low of 44.98 against the dollar, after trading in the range of 44.90-45.06. At the close on Friday, the rupee saw a weekly loss of 1.26 per cent—the biggest weekly loss in the last three months.

Yields on the 10-year benchmark government bond traded between 8.21-8.28 per cent before closing at 8.26 per cent on Monday, lower than Friday’s close of 8.31 per cent. Bond yields also fell, as a fall in crude oil prices softened the outlook on domestic inflation, weakening a case for further monetary tightening.

According to the central bank, though India is not insulated from global developments, during the worst phase of the recent global financial crisis, the growth was 6.8 per cent, showing high resilience to the crisis, owing to from domestic factors.

“While downside risks to growth may have increased in the wake of global developments, they are likely to have limited impact,” the central bank said. RBI said it was monitoring the global situation and would “respond quickly and appropriately to the evolving situation”. India’s foreign exchange reserves currently stand at more than $300 billion.

“As regards forex liquidity, in anticipation of financial market turbulence related to the US debt ceiling impasse, the Reserve Bank of India made an assessment of the ability of the forex reserve portfolio to meet potential forex requirements in the event of significant capital outflows. This exercise indicated there were sufficient liquid reserves to meet the demand for forex, even in stress scenarios,” it said. According to RBI, the banking system does not face any immediate liquidity stress and banks can borrow by pledging government bonds. They can also avail of the marginal standing facility.

“There has been substantial global risk aversion after the US downgrade. RBI, in on Monday’s statement, said it would respond if global uncertainty worsens, which means RBI is willing to change its stance. Still, it is too early to take a big call. The markets are assigning a probability that RBI may change its stance. The yields would be range bound and any uptick would be bought into. I expect yields to range between 8.20-8.35 per cent,” said Vivek Rajpal, India rates strategist, Nomura.

Source: Business Standard

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