Sensex drops 73 points ahead of RBI policy meet

 Economy
Dec 172012
 

The author has posted comments on this articlePTI | Dec 17, 2012, 05.22PM IST
MUMBAI: The BSE benchmark Sensex today closed 73 points lower on profit-selling in blue-chips, including HDFC group firms and the IT pack, amid a lower GDP growth projection for current fiscal even as some are expecting RBI to spring a surprise tomorrow.

The 30-share Sensex resumed lower at 19,290.92 and hovered in a narrow 130-point range, before ending at 19,244.42, a loss of 72.83 points or 0.38 per cent.

Similarly, the NSE 50-share Nifty also moved down by 21.70 points, or 0.37 per cent, to 5,857.90.

Brokers said trading sentiment dampened after government lowered the growth projection for the current financial year to 5.7-5.9 per cent from 7.6 per cent estimated earlier.

Moderating inflation has raised hopes of rate cut by the Reserve Bank tomorrow, but experts believe it is more likely to cut the Cash Reserve Ratio for banks than go for rate cut.

HDFC and HDFC Bank shares slipped 1.6-1.8 per cent. Most investors remained cautious and refrained from enlarging any fresh positions before the RBI mid-quarterly policy meeting tomorrow, brokers added.

However, ICICI Bank and SBI shares gained 0.6-1 per cent. “Market is likely to stay cautious in anticipation of the RBI move tomorrow. Rates are most likely to remain unchanged …yet some are expecting RBI to spring a surprise,” said Amar Ambani, Head of Research, IIFL.

Reliance Industries and ITC fell 0.6-0.8 per cent on profit-booking activity. Bharti Airtel, which fell 3.7 per cent, was the worst performer in Sensex today.

Weak sentiment from Europe also hit domestic markets on concerns over the so-called US fiscal cliff.

IT stocks, including TCS and Wipro fell in 1.4-2.8 per cent. Infosys also dropped 0.56 per cent on growth worries, dealers said.

Sensex down by 33 points in early trade

 Economy
Dec 162012
 

Sensex

Stocks of consumer durables, capital goods and FMCG sectors fell due to profit-booking.

The author has posted comments on this articlePTI | Dec 17, 2012, 09.52AM IST

MUMBAI: The BSE benchmark Sensex declined by over 33 points in early trade on Monday as investors preferred to book profits ahead of the RBI’s mid-quarter monetary policy review on Tuesday.

Besides, a mixed trend on Asian bourses also dampened the trading sentiments here.

The 30-share barometer, which gained 87.99 points in the previous session, fell by 33.22 points, or 0.17 per cent, to 19,284.03. Stocks of consumer durables, capital goods and FMCG sectors fell due to profit-booking.

Similarly, the wide-based National Stock Exchange index Nifty shed 19.40 points, or 0.32 per cent, to 5,860.20.

Brokers said besides profit-booking by speculators after gains on Friday, a cautious approach ahead of the Reserve Bank of India’s mid-quarter monetary policy review on Tuesday and a mixed trend on the Asian boures influenced the trading sentiments.

In the Asian region, Japan’s Nikkei Index gained 1.62 per cent, while Hong Kong’s Hang Seng index down 0.25 per cent in early trade. The US Dow Jones Industrial Average ended 0.27 per cent down on Friday on uncertainty over the fiscal cliff.

High bad debts temporary: SBI

 Economy
Dec 152012
 

The author has posted comments on this articlePTI | Dec 15, 2012, 07.02PM IST
NEW DELHI: Attributing rising bad debts to economic slowdown, State Bank of India (SBI) today said high Non-Performing Assets (NPAs) are ‘temporary’.

“NPAs continue to be a challenge. But I don’t want to put a number to it. I can only tell you that large part of the NPAs is really because of the external economy and I would think that they are temporary only,” SBI Managing Director Diwakar Gupta told reporters on the sidelines of the Delhi Economics Conclave here.

SBI’s NPAs rose to 5.15 per cent in the second quarter ended September, from 4.19 per cent over the year-ago period because of deteriorating asset quality.

He said the bank has made adequate provisioning norms. “We have been providing in excess of the prudential provisions. Whatever Reserve Bank asked us to provide, we have been providing that, plus a little more.” Gupta said.

The Reserve Bank recently increased the provisioning for standard restructured assets for banks to 2.75 per cent from 2 per cent.

Replying to a query on Kingfisher Airlines revival plans, the SBI managing director said there is no need to panic as long as there are assurances from the airline.

“Kingfisher has been a good airline at some point of time. They are going through their set of problems. And there is no reason for bankers to panic as long as they say that they are looking for a solution. The assurance only is that they are trying,” he said.

SBI is the lead banker in the 17-lenders consortium that extended Rs 7,000 crore loans to the now grounded Kingfisher.

The lender has an exposure of Rs 1,500 crore to the Kingfisher Airlines, which has not been serviced since January, 2012.

Kingfisher has not reported any profit since its inception in 2005. It has debt over Rs 7,000 crore.

Gupta also said the Reserve Bank in its mid-quarter monetary policy review on December 18, 2012 should consider cutting both repo rate and the cash reserve ratio (CRR).

“As a banker, I can always say that our wish-list is that rate should change, they should reduce. Both repo and CRR,” he said.

Repo is the rate at which RBI lends money to the banks. It is at 8 per cent currently.

He said the RBI has already reduced the CRR fairly, though some more cut would be good.

“CRR has already been brought down significantly by the Reserve Bank, if they do a little more that will be great. Repo cut will actually bring down rate systematically in the system. So deposits will be cheaper therefore people will lend cheaper. Overall there will be a downward bias which has been required,” he added.

CRR is the portion of deposits banks have to mandatorily park with the RBI, which is at 4.25 per cent currently.

Old format cheques can be used for another 3 months

 Economy
Dec 142012
 

The author has posted comments on this articlePTI | Dec 14, 2012, 08.05PM IST
MUMBAI: Bank account holders can continue to use their old format cheques for another three months as RBI has extended the deadline for banks to issue new cheques with uniform security features till March next year.

The Reserve in a notification today said, “Taking into consideration representations, it has been decided to extend the time up to March 31, 2013 for banks to ensure withdrawal of non-CTS 2010 Standard cheques and replace them with CTS-2010 standard cheques.”

While most of the banks have confirmed that they are issuing only multi-city or payable at par CTS-2010 standard cheques at present, representations have been received from various stakeholders requesting for extension of the time beyond December 31, 2012, it said.

As per earlier direction to all banks, RBI had fixed December 31 as the last date for phasing out non-CTS (Cheque Truncation System) 2010 Standard cheques.

The homogeneity in security features of CTS 2010 standard cheques will act as deterrent against frauds, and the fixed field placement specifications facilitate straight-through-processing at drawee banks’ end through the use of optical or image character recognition technology.

The introduction of new cheque standards ‘CTS 2010’ was warranted on account of several developments in the cheque clearing namely growing use of multi-city and payable-at-par cheques at any branch of a bank, increasing popularity of speed clearing for local processing of outstation cheques and implementation of grid based CTS for image-based cheque processing etc.

RBI said it may be noted that the residual non-CTS-2010 Standard cheques that get presented in the clearing system beyond this extended period will continue to be accepted for the clearing but will be cleared at less frequent intervals, it said.

The modalities, charges applicable if any, etc. are being discussed with stakeholders and a separate communication will follow in this regard, it added.

RBI tweaks CAR norms for NBFCs

 Economy
Dec 122012
 

The author has posted comments on this articleTNN | Dec 13, 2012, 05.45AM IST
MUMBAI: Stocks of finance companies rose in intra-day trade on Wednesday on news that BJP had reached an agreement with the government on passing the Banking Regulation Amendment bill.

Stocks of companies that were keen on banking licence, including Reliance Capital and Larsen & Toubro Finance Holdings, closed more than 4% higher. Others such as M&M Finance and Shriram Transport Finance were up in intra-day trade but closed almost flat. Although the government has been nudging RBI to issue a few bank licences to corporate houses, the central bank has been holding back on the grounds that the centre should first enact amendments to the Banking Regulation Act giving more powers to the central bank.

Among other things the amendments will give RBI the power to supersede bank boards. It will also allow the central bank to inspect books of conglomerates that have a bank in their group. Once the amendments are in force any potentially large investor in a bank will need to take RBI permission before buying shares.

While Banking Regulation Bill raises hopes for NBFCs, there are also new regulatory challenges. RBI has issued new prudential norms based on recommendations of a committee headed by Usha Thorat. The new norms require NBFCs to have a tier-one capital adequacy ratio (CAR) of 12% by April 2014. At present, the tier-I requirement is 7.5% for NBFCs except those in infrastructure where it is 10% and for those lending against gold where it is already 12%.

Non-banking finance companies are also required to adhere to the same norms as banks for classifying an advance as a bad loan. At present , if a borrower does not repay a loan for 180 to 360 days the advance has to be classified as a bad loan compared to 90 days for banks. “It has been decided that the asset classification and provisioning norms should, in a phased manner, be made similar to that of banks for all registered NBFCs irrespective of size. The same will be implemented in phases, viz; a 120-day norm shall be applied from April 01, 2014 to March 31, 2015 and a 90-day norm thereafter. A one-time adjustment of the repayment schedule which shall not amount to restructuring will, however, be permitted,” RBI said.