Posts Tagged ‘Banks’

Indian Private Equity Industry to Hit By US Banks Curbs : Experts

Indian Private Equity Industry to Hit By US Banks Curbs

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In case, US President Barack Obama‘s proposal to curb the role of commercial banks in hedge and PE funds is implemented, then fund-raising could indeed become a very tough task for Indian private equity players.

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But at the same time, the move could help Indian funds take part in more deals, market players insist.

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Obama has proposed to bar commercial banks from owning, advising and investing their own capital in PE and hedge funds.

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Though most investors in Indian PE funds are university funds, endowment funds, pension funds, insurance funds and institutional investors,  the industry expects the move to impact fund-raising in the long term and in big way, as banks will be barred from taking part in these funds.

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A large number of venture capital and PE funds of US-based commercial banks had reduced their exposure to India during the economic slowdown.

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Though few big ones like Goldman Sachs, Merrill Lynch etc; stayed back in the market.

Indian PE players hope to get more deals if these players vacate the market.

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Market experts do not see any significant impact in the coming few months, but cannot deny that a slowdown in USA market will surely impact the Indian private equity industry.

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They feel that any curbs on banks would make fund-raising a very difficult task since banks were the biggest contributors of funds.

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Industry players say the focus will shift from funds of banks to fund of funds, pension funds, and university and endowment funds.

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“It will be difficult to put a number as these transactions are structured in a complex manner.

But I believe a significant proportion of investments in India-based PE funds come from balance sheets of these banks.

These firms will be affected and will have to look for new sources of money,” said Jagannadham Thunuguntla, equity head at SMC Capitals.

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Wise Money Weekly Update of The Market (Week: 25th – 29th January)

Hello Friends, here, we bring you the weekly view of the Indian as well as of the Global markets and latest global business and industry updates..

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Wise Money Weekly Update of The Market (Week: 25th - 29th January)

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A sell-off in global stocks, disappointment from key corporate earnings like L&T, possibilities of further monetary tightening by China and US president‘s proposal to put new restrictions on big banks weighed heavily on the domestic markets.

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In the forthcoming week, domestic markets are expected to remain volatile as traders roll positions in the derivative segment from January 2010 series to February 2010 series.

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Markets will also take cue from monetary policy which is scheduled to come out on January 29.

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Though tightening is largely expected by way of Cash Reserve Ratio hike as RBI has already started the first phase of ‘exit’ in its October 2009 policy statement but there is a belief if the RBI sucks out some liquidity, it may not raise interest rates, since liquidity is excess in the system.

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The Indian food price inflation is largely due to supply constraints.

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But going ahead anticipation of decline in food price inflation & lower borrowing from government in future because of huge money raising plans through disinvestment are some of the factors that are likely to determine RBI stance on increasing policy rates.

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The widely watched wholesale price index rose an annual 7.3% in December 2009, its highest since November 2008 and accelerating from a 4.8 % rise in November 2009.

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Food prices rose 16.81 % in the 12 months to 9 January 2010, easing from nearly 20 % in early December.

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On the Global economic front, GDP of China returned to double-digit growth in the fourth quarter of 2009 at 10.7 percent, and over the full year GDP surpassed the government’s target of eight percent.

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Back at home, domestic economy, which grew at 7.9% in the September quarter, is expected to grow 6-6.5% in the December quarter.

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The World Bank has raised its forecast at 2.7% for global growth in 2010.

Moreover it has raised its forecast for US growth in 2010 to 2.5% growth, after predicting 1.8% in June.

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Japan’s gross domestic product will expand 1.3% this year, more than the 1% predicted in June.

The euro area’s economy is forecasted to grow 1%, compared with the earlier estimate of 0.5% expansion.

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Stay Tuned for More on this..

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please click here

Hello Friends, here, we bring you the weekly view of the Indian as well as of the Global markets and latest global business and industry updates.

Banks Warned Regarding Insurance to Farmers

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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Banks Warned Regarding Insurance to Farmers

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Banks Warned Regarding Insurance to Farmers:

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Severe action will be taken against banks if they adjust the amounts payable to farmers under crop insurance scheme (Rs. 801 crore) and input subsidy (Rs. 600 crore), against their old loan dues.

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Collectors have been asked to convene meetings of district level bankers’ committees to warn them against withholding these sums, affecting sowing of fresh crops.

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Also, they have been asked to take steps for re-scheduling of crop loans in 1,068 mandals declared as affected by drought or floods.

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The conference also decided to provide road connectivity to all SC and ST habitations with Rs 1,200 crore available for the purpose, begin procurement of kharif produce to build up buffer stocks for subsidizsd schemes.

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Mr Rao said a decision was taken to announce a new tribal policy aiming at empowerment of the tribals.

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In Other major Commodities Updates we can read that retail prices have sugar have started showing some signs of moderation in the national capital of the country.

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Retail sugar prices moderate in Delhi, high in other cities:

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In some good news for consumers, retail prices of sugar which have climbed by more than Rs 6 per kg since January 1 have shown some signs of moderation at least in the national capital Delhi, which has been bearing the brunt of the price spike.

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Latest data from food and consumer affairs ministry shows that retail sugar prices in the capital, which had risen to almost Rs 47 per kg around January 15 has dropped by Rs 2 per kg to Rs 45 in the last couple of days.

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In other major cities though there is hardly any big change.

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In Jammu, government data showed that retail sugar prices have climbed by Rs 8 per kg since January 11, while in Lucknow prices have hardened by Rs 6 and in Jaipur, Aizwal and Dehradun prices have moved by whopping Rs 9 to Rs 10 per kg since January 11.

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please Click Here

NABARD Favours Increasing Credit Flow by Rs. 10,000 cr. in 2010-11

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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NABARD favours increasing credit flow by Rs. 10,000 cr. in 2010-11

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NABARD favours increasing Credit Flow by Rs. 10,000 cr. in 2010-11

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Chairman of the National Bank for Agriculture and Rural Development (NABARD),Umesh Chandra Sarangi on Wednesday stressed the need for enhancing the credit potential in the State by at least by Rs. 10,000 crore in 2010-11 over the previous year’s Rs. 27,543 crore.

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NABARD’s regional office has estimated a credit flow potential at Rs. 31,254.74 crore for 2010-11.

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Crop loans of farmers affected by floods would be rescheduled.

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These credit estimates provided the basis for preparation of district credit plans by lead banks in each district, he said.

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In Other major Commodities Updates we have news of Agri Commodities turning bearish since the beginning of the new year and downward revision of reserve price of wheat by the Centre.

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Agri commodities FALL on global cues

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Barring wheat and sugar, all other agri commodities have turned bearish since the beginning of the new year, providing much needed relief to consumers and policy makers.

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Prices of agricultural commodities have declined by up to 11 per cent since January 1 which analysts attribute to a downward turn in the global markets.

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Also, fresh arrivals, including pulses, have provided relief to the government.

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New pulses crop arrivals have started in Maharashtra which, for sometime, will keep prices under pressure.

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Delay in government tenders coupled with higher quotes kept wheat prices firm while unavailability of cane for crushing pushed prices of sugar up.

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Lower price of wheat cheers roller flour mills:

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The roller flour mills in Punjab, Haryana and Chandigarh got a new beginning in the new year with the downward revision of reserve price of wheat by the Centre for bulk buyers.

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The price cut of Rs 200 per quintal under the open market sales scheme(OMSS) from Rs 1,440 per quintal to Rs 1,240 per quintal has helped over 80 roller flour mil is in the region to streamline their operations.

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Under OMSS the states are given a specific quantity of wheat.

Punjab got 140,000 tonnes and Chandigarh got about 14,000 tonnes.

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The roller flour mills and big chakkis get an allocation of about 1,000 tonne per month at the price quoted in the tender.

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The price at which the millers buy wheat under OMSS is slightly higher than the reserved price but substantially lower than the price offered by private players.

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please click here

Banks May Not Up Interest Rates For Next Six Months

Banks May Not Up Interest Rates For Next Six Months

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New Year has brought a good news for the Corporate India.

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SBI Bank chairman has indicated that there will be no increase in interest rates for next six months despite inflationary pressure.

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As inflation is rising, there was speculation going around that RBI, (in its review of monetary policy) might take measures to tighten the money supply which would have led to the hardening of interest rates.

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As the global economy is still in the grip of recession, industry players feel that any hike in interest rates will affect the economic recovery in India.

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Banks authorities and market analysts feel that there was surplus liquidity in the system and credit offtake was slowly picking up.

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This situation of liquidity surplus will force banks not to increase interest rates, in current situation.

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Because of this surplus liquidity, banks have cut deposits rates.

But they are not cutting the lending rates due to slow credit offtake, despite the speculation that RBI can increase key rates (repo or reverse repo) to contain inflation.

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In the eight months of the current financial year till December 4, while the deposits with the commercial banks rose by 3,69,535 crore, credit off take was only Rs 1,44,151 crore.

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This forced the banks to park around Rs 100,000 crore with the RBI at reverse repo rate of 3.25%.

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When the interest rate condition was benign, Banks had cut their lending rates, particularly home loan rate.

This had helped reviving real estate market. The buyers started coming back and cement and steel sectors also started improving.

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The recession did not hit India the way it had affected European countries last year.

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There was only a slowdown in the growth rate which came down to 7% from 9%.

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Market experts believe that withdrawal of stimulus package by the government should not be done in the prevailing situation, but should be phased out in staggered manner.

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RBI Raised The Limits of Funds Transfer/Payment via Mobile Phones

RBI Raised The Limits of Funds Transfer/Payment via Mobile Phones

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RBI has increased the cap on transferring funds or payments through mobile phones to Rs 50,000 as per the latest notification issued by them in the last week of December,2009.

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Earlier to that, the ceiling for fund transfer against shopping was at Rs 5,000 and against purchasing of goods and services was at Rs 10,000.

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“Banks are now permitted to offer this (mobile banking) service to their customers subject to a daily cap of Rs 50,000 per customer for both fund transfer and transactions involving purchase of goods/services,” RBI said in a notification.

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Under the scheme, an account holder can transfer money through mobile to another person, who will receive the cash either through an ATM or a business correspondent.

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The RBI has also pegged the limit for cash transfer through ATMs or business correspondents at Rs 5,000 per transaction, subject to a monthly ceiling of Rs 25,000.

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Out of 32 banks that have been allowed by RBI to provide mobile banking facility, 21 lenders have already started these services.

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Earlier in December itself, RBI deputy governor K C Chakrabarty had hinted at raising the limit, by pointing out that transaction limits of Rs 5,000 and Rs 10,000 were not sufficient for buying airline tickets.

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In October,2008, RBI had issued operating guidelines for banks to transact via mobile phones.

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RBI had said the services would be restricted only to customers of banks and holders of debit and credit cards.

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It asked banks to report suspicious mobile banking transactions to Financial Intelligence Unit-India, as was the practice for normal banking transactions.

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RBI said that rupee-based domestic services would be provided and “use of mobile banking services for cross border inward and outward transfers is strictly prohibited.”

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RBI And Its Policies – Part 1

Hello Friends, last month we witnessed loads of action with the RBI’s monetary policy being laid down.

However here we bring more on the RBI policies and projections.

RBI policies and projections

RBI policies and projections

 

The Reserve Bank of India (RBI) laid the groundwork on Tuesday i.e. on 27th Oct in its monetary policy for a rise in interest rates by tightening credit to the commercial property sector, lifting its inflation forecast and warning of the threat of asset price bubbles.

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The RBI had injected in massive liquidity in the banking system in the past one year or so to help revive the domestic economy in the aftermath of the global financial crisis.

For now, the Reserve Bank has decided to keep the policy repo rate unchanged at 4.75 per cent, the reverse repo rate unchanged at 3.25 per cent and the (Cash Reserve Ratio) CRR of banks unchanged at 5 per cent of their (NDTL).


The following measures constitute the first phase of ‘exit’:

– The Statutory Liquidity Ratio (SLR), which has earlier been reduced from 25 per cent of NDTL to 24 per cent, is being restored to 25 per cent.

-The limit for export credit refinance facility, which was raised to 50 per cent of eligible outstanding export credit, is being returned to the pre-crisis level of 15 per cent.

The two unconventional refinance facilities:

(i) special refinance facility for scheduled commercial banks; and

(ii) special term repo facility for scheduled commercial banks [for funding to Mutual Funds (MFs), Non-banking Financial Companies (NBFCs), and Housing Finance Companies (HFCs)] are being discontinued with immediate effect.

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Further, the liabilities of scheduled banks arising from transactions in Collateralized Borrowing and Lending Obligations (CBLO) with Clearing Corporation of India Ltd. (CCIL) would now be subject to the maintenance of the CRR.

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Stay Tuned for more on this in our coming blogs.

We would cover Monetary Projections of RBI and Economy scenario and indicators at the moment.