IndusInd Bank may raise $300 million from overseas investors

IndusInd Bank, the fourth biggest private sector lender, may raise as much as $300 million from overseas investors, exploiting the Reserve Bank of India's window of attractive swap options.

The easing of rates in the dollar market after the Federal Reserve made a U-turn on tapering of bond purchases earlier this month, has made borrowings in overseas market attractive.

Furthermore, the flexibility to raise even one-year funds to avail the swap options has made banks believe that the risk is lower as a minimum three-year borrowing as stipulated has been done away with. "Now the tenure of the borrowing and the hedge will match," said Romesh Sobti, MD and CEO, IndusInd Bank. "Earlier, the norms specified that while the borrowing was for three years, the hedge would be available only in the first year."

The Reserve Bank of India on Wednesday reduced the minimum tenor of fund raising to one year since banks were reluctant to take funds for a longer tenor when the demand for funds remain uncertain. Also, the fall in yields of 20 to 40 bps since May 18 when Fed decided not to taper, has boosted sentiment.

RBI governor Raghuram Rajan had doubled banks' limit to borrow overseas as he attempted to shore up reserves to prevent a currency crisis. The rupee was on a free fall as foreign investors pulled out 68,738 crore from Indian bonds and stocks.

Borrowing overseas makes a lot more sense since the yields in the local market have shot up after Rajan raised the repo rate, the rate at which RBI lends to banks, by 25 basis points on September 20. One-year money in the domestic market comes at 9.50% while the all inclusive cost of borrowing under this window is around 8.50%.

Other banks, including ICICI Bank, HDFC Bank and Axis Bank, are also talking to investment bankers to finalise fund raising, which is expected to raise at least $5 billion. HDFC Bank may raise as much as $750 million, said a person familiar with the negotiations. The confluence of falling yields in the international market, and rising yields in the Indian markets are making borrowing overseas attractive.

"We have already borrowed around $800 million of debt. We don't mind raising as much as $300 million. We are in talks with banks. There is a clear cost advantage of about 100 to 150 basis points,'' said Sobti.

Source: Economic Times

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Raghuram Rajan awarded Deutsche Bank Prize

The Reserve Bank of India Governor, Raghuram G. Rajan, has been awarded the Fifth Deutsche Bank Prize for Financial Economics 2013, in recognition of his ground-breaking research work which influenced financial and macro-economic policies around the world.

The academic prize is sponsored by the Deutsche Bank Donation Fund and carries an endowment of euro 50,000. The Centre for Financial Studies (CFS) awards the prize bi-annually in partnership with Goethe University Frankfurt.

Presenting the prize to Rajan, Deutsche Bank co-chairman Juergen Fitschen has said that it would have been hard to find a more deserving winner for this year’s award.

Rajan’s career “is not only marked by path-breaking, empirically-based research, but he never shied away from the real world of complex policy issues and special interests. He never shied away from speaking inconvenient truths,” Fitschen said.

He noted that Rajan had in 2005 warned about the dangers of building up “unsustainable imbalances in the financial system,” three years ahead of global financial crisis.

“Prof. Rajan’s work revealed that the relationship between the financial sector and the rest of the economy is so complex that it is not good enough to simply look at the size of the financial sector in relation to the gross domestic product, as is done so often at present,” Fitschen said.

He had also “warned us about the dangers of using or rather misusing” financial regulations and financial systems for purposes other than their original objectives, for example, for safeguarding stability or fostering growth, the Deutsche Bank co—CEO said.

The housing bubble in the United States, which triggered the financial crisis in 2008, had highlighted the danger of using the financial system to make up for the failures in social policies.

Jury chairman and director of the Centre for Financial Studies Michael Heliassos said the organisers are quite pleased to welcome Rajan in his new capacity as the RBI governor.

Rajan was picked for the prize from more than 260 nominations from top universities, central banks and research centres in 37 countries. More than half the nominations came from the US.

Source: thehindubusinessline

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Insurers can invest in India Infra debt NCD issue: IRDA

Insurers can invest in the Rs 500-crore non-convertible debenture (NCD) issue of India Infradebt Ltd.

The Insurance Regulatory and Development Authority (IRDA) on Thursday said this issue could be reckoned as an investment in the infrastructure sector.

The decision of the regulator came after an application by India Infradebt seeking approval of the former to recognise the NCD issue as investment in the infra sector.

IRDA, in the amendment to the IRDA (Investment) Regulation, 2000, notified in February this year, stipulated that investments in infrastructure debt funds backed by the Central Government shall be reckoned as infrastructure investment on a case-to-case basis.

naga.gunturi@thehindu.co.in

Source: thehindubusinessline

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Vijaya Bank opens 10 branches in Mandya

As a step to strengthen financial inclusion (FI) in Mandya district, Vijaya Bank has opened 10 FI branches by upgrading the ultra small branches.

Vijaya Bank has been active in FI, especially in direct benefit transfer and electronic benefit transfer programmes of the Centre. The bank has so far covered 3,319 villages in the country under the above programmes through 330 rural brick-and-mortar branches and 669 business correspondent and ultra small branches.

Speaking at the financial inclusion outreach programme organised by Vijaya Bank in Adichunchanagiri in Mandya district, RBI Deputy Governor K.C. Chakrabarty stressed on the need for the rural people to move towards formal financial mainstream so that the excluded sections of society could get the benefits of banking services.

He also emphasised the need for inculcating the habit of savings among the rural people and called upon them to get credit facilities from banks to improve their living standards. He also lauded the efforts of Vijaya Bank in bringing the hitherto deprived sections of society into banking fold.

In his inaugural address, H.S. Upendra Kamath, Chairman & Managing Director, Vijaya Bank, said, “With this, the bank has now 45 branches in the district. The bank at present covers 1,369 FI / electronic benefit transfer villages through 245 business correspondent agents in the district.”

The bank has been disbursing every month, social security pensions – widow pension, old age pension and physically handicapped pension – to the tune of Rs 4 crore a month to around one lakh beneficiaries through business correspondent agents / smart cards in the villages. The bank is continuously spreading financial literacy in the district through its FI Resource Centre and FI Literacy Centres, he added.

As a part of the outreach programme, the bank has also rolled out Aam Admi Bima Yojana, a social security micro-insurance scheme for the weaker section beneficiaries under tie-up with LIC of India covering 2,437 beneficiaries. Vijaya Bank has also rolled out micro recurring deposit scheme for the FI beneficiaries wherein monthly instalments are collected through the business correspondent agents of the bank.

anil.u@thehindu.co.in

Source: thehindubusinessline

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Ramachandra Rao reappointed MD & CEO of SKS Micro

The board of directors of SKS Microfinance reappointed M. Ramachandra Rao as the Managing Director and Chief Executive Officer for a further period of five years, the company said in a notice to the BSE.

The appointment, which is effective from October 4, 2013, is subject to review after three years.

The market is agog with speculation that Vikram Akula, the founder and ex-chairman of SKS Microfinance, would stage a comeback with the help of five mutual benefit trusts.

In response to SKS Trust Advisors Pvt Ltd and five mutual benefit trusts’ bid to seek a board seat, SKS Microfinance on Tuesday said that no shareholder has any right to nominate a director.

Hyderabad-based SKS Microfinance, in a notice to the BSE, said it has received a request for a seat on the board of directors from SKS Trust Advisors and five mutual benefit trusts.

Source: thehindubusinessline

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