Sunday, 22 September 2013

VRITTAM (15 SEP 2013 - 21 SEP 2013)

20:47  VRITTAM  No comments Draft Company rules mandate rationale for high salaries, hikes

The government has proposed to limit the number of investors in private placement schemes to 200 persons with a minimum investment size of Rs 50,000 each in a financial year, the rules suggest that it should be made mandatory for listed companies to give their rationale behind salaries and hikes given to top management personnel vis-a-vis the performance of the company.

Costlier lending likely, say banks

Banks could raise their lending rates following RBI's monetary policy announcement on Friday as tight liquidity could increase cost of funds.

Bankers welcome Raghuram Rajan-led RBI's repo rate hike

Bankers welcomed the Reserve Bank of India (RBI) Governor Raghuram Rajan's mid-quarter monetary policy announcements and termed them as "a balanced and a pragmatic move" which will reduce banks' borrowing costs.

Raghuram Rajan tracking Indian rupee 'minute-by-minute', says it's not stable yet

After hitting a lifetime low of 68.85 against the dollar on August 28, the rupee has recovered aggressively to become the best performing Asian unit in the last fortnight.

Deadlock over RBI's 80:20 gold import norm ends

The problem was that of interpretation of 80:20. This means that at least 20 per cent you have to give for exports. So, somewhere it was misinterpreted that you cannot export more than 20 per cent. One can export more than 20% of imports.

RBI repo rate hike pours cold water on auto makers' festive season hopes

"The industry had been hoping for a recovery through the ensuing festive season, anticipating an improvement in markets. But this move comes as a surprise dampener to all these expectations," Society of India Automobile Manufacturers (SIAM) said in a statement. Market analysts, however, said the repo rate hike should not have much impact on the auto sector.

Raghuram Rajan wants 'bullet-proof' shield for India against US Fed

"What we need to do is put our house in order before it (tapering) comes back. The postponement of tapering is only that, a postponement. We must use this time to create a bullet-proof national balance sheet and growth agenda, which creates confidence in citizens and investors alike," RBI Governor, Raghuram Rajan said.

RBI repo rate hike: Indian realty developers unhappy with Raghuram Rajan, say will impact housing

Expressing disappointment over RBI Governor Raghuram Rajan's decision to hike the key policy rate, real estate developers said this would lead to increase in finance cost and also affect housing demand during the festive season.

RBI or SEBI should create awareness against ponzi schemes: SBI

Recently, the West Bengal based Saradha Group has been accused of duping investors of their savings running into thousands of crores of rupees.

Fed makes room for RBI

The more immediate impact of the Fed’s decision not to taper, however, is to give RBI more room to ease policy rates.

SBI increases base rate to 9.80 pct, makes loans costlier

The country's largest lender, State Bank of India, said it increased its base rate, or the minimum rate of lending, to 9.80 per cent, a day ahead of the RBI's policy review. SBI increased spreads on auto and home loans by as much as 0.20 pct. All top private sector lenders, including ICICI Bank, HDFC Bank and Axis Bank, had hiked rates to protect net interest margins.

Outlook: Indian rupee likely seen higher to US dollar, RBI monetary policy review meet key

The US Federal Reserve's decision to press ahead with its asset-buying gives India's battered rupee a reprieve and creates space at a policy review on Friday for its Reserve bank of India (RBI) to scale back some of the measures put in place to support the currency.

Indian rupee could appreciate to 59 against US dollar: Fitch

The basis of Ind-Ra's (India Ratings & Research, a Fitch group company) expectation of INR appreciation is based on economic developments in the last one to two months of this fiscal and the likely developments in the remaining months.

FIPB clears Axis Bank's proposal to raise FDI limit beyond 49 pct

The FIPB (Foreign Investment Promotion Board) approved raising the foreign equity holding in Axis Bank to 62 per cent from 49 per cent, subject to the condition that the holding of foreign institutional investors does not exceed 49 per cent.

Indian rupee gains 142 paise to 61.96 against dollar on Fed's surprise decision

RBI acts tough on offshore forex trading on Internet

In a circular issued late on Tuesday, the Reserve Bank of India (RBI) asked banks to advise customers not to undertake forex trading on foreign websites that offer currency contracts by accepting margins through credit card and online money transfer mechanisms. The RBI also asked banks to close the credit card or online bank account of a customer that is found to be in violation of the rule.

RBI asks banks to allot different product code to dormant accounts

Because State and central governments have expressed difficulties in crediting cheques/Direct Benefit Transfer/Electronic Benefit Transfer/scholarships for students, Zero Balance Accounts, into accounts opened for the beneficiaries under various central/state government schemes but had been classified as dormant/inoperative due to non-operation of the account for over two years.

RBI tightens norms for lending against gold jewellery

In order to standardise the valuation and make it more transparent to the borrower, it has been decided that gold jewellery accepted as collateral will have to be valued at the average of the closing price of 22 carat gold for the preceding 30 days as quoted by the Bombay Bullion Association (BBA).

Foreign banks to provide upfront loans to wealthy NRIs for Indian dollar deposits

Foreign banks will provide upfront financing for wealthy non-resident Indian clients to entice them to place bulky dollar deposits back home in response to India's drive for dollar funding to defend its weak currency.

State Bank of Patiala opens all women in Chandigarh

Achal Kumar Gupta, Managing Director, State Bank of Patiala said that this is the third all women branch of State Bank of Patiala after Bathinda and Patiala.

Foreigners allowed to carry up to Rs10K beyond immigration desk

RBI today permitted foreigners to carry up to Rs 10,000 beyond immigration desk to the duty free area in airports for miscellaneous expenditures, but they will have to dispose the Indian currency before boarding plane.

Credit Suisse sees Indian rupee at 57-58 levels to US dollar

Rupee may see a sharp appreciation on the back of measures taken by RBI and government as the decline was largely driven by “fear trade”, analysts at Credit Suisse said.

Click on the picture below and find what you need to know Balanced and pragmatic
Given all the domestic and global cross-currents at play, RBI has done the best it could.
By Sajjid Chinoy, chief India economist, JP Morgan.

To know why government takes to ‘cattle class’ again, click on the slideshow below Shadow Banking
·         The term ’shadow banking system‘ was first used in 2007, and gained popularity  during and after the 2008 financial crisis, as it highlighted the bank-like functions  performed by entities outside the regular banking system.
·         The more comprehensive definition, as adopted by the Financial Stability Board (FSB), i.e., ‘credit intermediation involving entities and activities (fully or partially) outside the regular banking system’ has been globally accepted.
·         This definition has two important components:

o   First, non-bank financial entities or entities outside the banking system that engage in the ‘bank like’ activities of maturity transformation, undertaking credit risk transfer and using direct or indirect financial leverage.

o   Second, activities such as securitization, securities lending and repo transactions that act as important sources of funding for non-bank entities.

·         Thus, shadow banks comprise entities which conduct financial intermediation directly, such as finance companies or NBFCs, and entities which provide finance to such entities, such as mutual funds.
·         Globally, shadow banking entities could be covered under the broad heads of (i) Money Market Funds, (ii) Credit investment Funds, Hedge Funds, etc. (iii) Finance Companies accepting deposits or deposit like funding, (iv)  Securities brokers dependent on wholesale funding, (v) Credit insurers, financial  guarantee providers and (vi) Securitisation vehicles.
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