The Hindu Business Line : Wednesday, April 30, 2003

Forwards fall; bond prices crash
FOLLOWING the announcement of the cuts in the Bank rate and the Cash Reserve Ratio in the Credit Policy, the forward premia fell by 15-20 basis points in the money markets on Tuesday. The six-month premium closed at 2.00 per cent (2.15 per ... More

STOCKS

Bank stocks lose steam on profit booking
THE strategy of `buy on rumour, sell on news' seemed to have worked quiet well as far as trading in banking stocks was concerned today as Dr Bimal Jalan gave the market half of what it expected yesterday, i.e., a Bank Rate cut but not such luck ... More

CREDIT POLICY

RBI drops Bank Rate — Jalan prescription looks at growth
IN a firm resolve to flag off growth, the Reserve Bank of India today dropped Bank Rate to 6 per cent from 6.25 per cent. Further changes in Bank Rate are ruled out till October. The Cash Reserve Ratio has also been cut to 4.50 per cent, ... More

A word of caution markets better heed
While still not explicitly changing the bias from soft to stable, RBI does provide some fodder to the small group of interest rate bears who have been crying wolf for long. It is probably trying to pre-empt rising expectations of an ever-exuberant bo nd market. More

Bonds and rising rates: Buyback to the rescue?
THE Guv has finally made the call. In his Annual Monetary and Credit Policy for 2003-04, Dr Bimal Jalan was pretty clear. He says that, "on balance of probabilities, given normal conditions and overall stability in macroeconomic environment ... More

Forex norms eased to spur investment — We are open to more such measures, says Jalan
THE Reserve Bank of India in its Statement on Monetary and Credit Policy 2003-04 has announced a slew of relaxations relating to foreign exchange regulations leading to capital account convertibility. The measures are aimed at encourage overseas ... More

Back-stop facility linked to reverse repo cut-off rates
THE interest rate on "back stop'' facility provided by RBI to banks and primary dealers has been linked to the "reverse repo cut-off rate,'' with effect from April 30, 2003. `Back stop' facility is a part of the standing facilities offered by ... More

Coping with interest rate swings — Sops to banks to build up IFR
BANKS have been urged to build up a higher Investment Fluctuation Reserve (IFR) in view of the fluctuations in interest rates in the Government securities market as was witnessed in the year 2002-03. To cope with volatility in interest rates, ... More

Finance Ministry says RBI growth projection realistic
THE Ministry of Finance today seconded the Reserve Bank of India's projection of a 6 per cent GDP growth for the current fiscal made in the Credit Policy. ``We share the expectation of RBI of a good (6 per cent) GDP growth," the Finance ... More

Bets on rains ignoring rural credit
CREDIT policy essays in general have never been strong on credit flows to agriculture and the services sector. The Monetary and Credit Policy for 2003-04 measures economic growth in terms of fund offtake by the commercial sector. But no numbers ... More

Industry hails soft rate bias
THE apex chambers of commerce and industry have welcomed the measures to improve the credit delivery mechanism and continuation of the soft interest rate regime announced by the RBI Governor, Dr Bimal Jalan, in the Credit Policy on Tuesday. ... More

Urban co-ops told not to lend to directors — Ban applies to kin, linked firms also
THE Reserve Bank of India has directed that Urban Cooperative Banks should not grant loans and advances (both secured and unsecured) to their directors, relatives or firms/companies in which they have an interest. This is with immediate effect, ... More

RBI to permit banks to issue long-term bonds
TO enable commercial banks to raise long-term funds, the Reserve Bank of India proposes to permit them, as in the case of financial institutions (FIs), to issue long-term bonds, which would not be part of the subordinated debt. This significant ... More

Bankers guarded on rate cut impact
THE announcements by the RBI Governor are indicative of the continuation of the soft interest rate regime and will act as a signal to banks in this matter, State Bank of Mysore Managing Director, Mr Sitarama Murty, has said. By ... More

A guidance note laced with moral suasion
THE overall stance of the monetary policy continues to be providing adequate liquidity and imparting greater flexibility to the interest rate regime. The organisations of trade, industry and commerce as also market participants have been ... More

Delicate balancing act
THE monetary policy stance in the recent past has underlined RBI's commitment to maintain liquidity with a clear tilt towards a soft interest rate regime. The central bank had cut the repo rate and the savings bank rate by half a percentage point ... More

Banks told to scrap tenor-based PLR
THE Reserve Bank of India (RBI) has directed banks to scrap tenor-based prime lending rates (PLR) and told them to arrive at a benchmark PLR. In its monetary and credit policy 2003-04, the apex bank has said that the benchmark PLR must take ... More

Jalan continues growth theme
THE RBI Governor, Dr Bimal Jalan, has managed to achieve the dual objective of fuelling economic growth and maintaining a soft interest rate regime. The credit policy contained no big surprises on the `rate' front and was largely as was ... More

Case for repo rate cut
AS expected, RBI cut the Bank Rate and CRR by 25 basis points in the Credit Policy 2003-04. Probably, the central bank was constrained by the possibility of inflationary pressures on the economy. However, the important aspect of the policy is ... More

Nudging rates to spur growth
THE monetary policy reflects the underlying assumption of buoyant economic growth and gives direction to the interest rate environment towards supporting this growth. The markets today are characterised by surplus liquidity with continued ... More

Push to infrastructure
THE RBI Governor has reiterated his faith in monetary policy as an instrument to spur the economy and has reduced the bank rate and the cash reserve ratio in this endeavour. Under the present conditions when the system is flush with funds, the ... More

Banks need to ponder on corporate governance
THE Credit Policy comes at a time when the world is experiencing a prolonged recession and its ripples are being felt by the Indian economy. Against the backdrop of a slowdown in industrial output, rising inflation and a projected ... More

Industry differs on inflation impact
INDUSTRY associations have welcomed the initiatives announced by the RBI in the credit policy. However, there was concern on the rising inflation. Mr Suresh Kotak, President, Indian Merchant's Chamber, said the RBI decision to prepare ... More

Effort to tone up credit delivery
THE policy announcement is broadly as expected. The Bank Rate cut was, quite frankly, not required but at the same time, was as per expectation. While opinion is divided on the CRR cut, I expect that it is given to keep the economy on track ... More

Important issues unaddressed
THE policy announced by the RBI Governor is largely on expected lines. Cut in Bank Rate, CRR generally trying to add to the "feel-good" factor in industrial circles. But questions - some important - remain about what was said and even what was ... More

`Transaction costs still high'
MUMBAI: The PHDCCI President, Mr P.K. Jain, supported the stance of the Policy to provide adequate liquidity to the system to meet credit growth and support investment demand. Mr Jain said that taking into consideration that at present ... More

FIEO disappointed

FINANCIAL INSTITUTIONS

Govt drops plan to convert IFCI into commercial bank
THE reluctance of Reserve Bank of India (RBI) to further clutter the banking sector has forced the Government to decide against converting IFCI Ltd into a commercial bank. The possibility of turning the financial institution into a bank had come ... More

INTEREST RATES

Lead banks may lower rates
BANKS are expected to drop lending and deposit rates in response to the cut in Bank Rate from 6.25 per cent to 6 per cent. Unlike last time when the RBI cut the Bank Rate in October 2002, banks are now more inclined to follow the central bank's ... More

Corporation Bank raises FCNR(B) interest rates
CORPORATION Bank has revised the interest rates on its foreign currency non-resident (B) deposits from April 29. As per the new rate structure, deposits for a period of one year to less than two years will fetch 1.10 per cent in US dollars (1 ... More

TRADE & LABOUR UNIONS

`IBA's stiff stand to blame for strike move'
THE intransigent attitude of the Indian Bank's Association is what led the bank unions to call for a strike on May 2, senior union leaders said on Tuesday. At a press conference here, the General Secretary of the All India Bank Officers ... More

AIBOC to hold rally in Mangalore
MANGALORE: The Dakshina Kannada unit of the All-India Bank Officers' Confederation (AIBOC) has decided to hold a demonstration on April 30 in front of the Circle Office of Canara Bank in Mangalore in connection with the strike call ... More

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