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Vijaya Bank raises PLR and deposit rates

Bangalore, June 30: Public Sector Vijaya Bank on Monday announced a 0.25 percent hike in the benchmark prime lending rate to 13.25 percent and up to 0.50 percent increase in deposit rates with effect from Tuesday.

The asset liability management committee arrived at the decision at a meeting on Monday, a statement from the bank said.

Under domestic term deposits of 180 days up to 364 days, interest rates have been raised by 50 basis points from 7.5 percent to eight percent, while for deposits of one year to less than two years, the bank has raised interest rate from 8.8 percent to nine percent.

During the last fortnight itself, the bank had effected a 30 basis points hike in the 'one to less than two years' category.

"Our focus has been to moderate the impact of inflation on interest rates charged to the borrowers and at the same time, suitably reward the depositors," Vijaya Bank Chairman and Managing Director Prakash P Mallya said.

HDFC, ICICI hike home & other loan rates

Mumbai, June 30: Home, auto and other retail loans will cost up to 0.75 percent more, with lenders HDFC Bank, ICICI bank and SBI on Monday announcing an increase in interest rates following the Reserve Bank squeeze on money supply.

HDFC will raise its minimum-floating rate for home loans by 0.75 percent to 11 percent for new customers from 10.25 percent from Tuesday, while the existing customers will have to shell out 0.50 percent more at 10.75 percent.

The new fixed rate would be 14 percent, up 0.75 percent.

ICICI Bank increased its benchmark floating rate for retail customers, including home loan borrowers, by 0.75 percent to 13.50 percent from today.

For existing floating rate customers, the increase will be effective from tomorrow, the bank said.

The existing fixed rate customers, whose loans are fully disbursed, will, however, not be impacted by the increase and they will have to pay the prevailing rate.

ICICI Bank has also announced increase in benchmark rate for corporate by 0.75 percent to 16.50 percent.

HDFC Bank also increased its deposit rates by 0.50 percent across most maturities, while ICICI bank raised interest rates on fixed deposits of less than Rs 15 lakh by 0.50-1 percent with effect from tomorrow.

The announcement by two banks came close on the heels of similar announcement by the largest lender SBI.

In Ghaziabad this morning, SBI chairman O P Bhatt said interest rates on all loans linked to prime lending rate will rise by 0.50 percent. These include housing and auto loans.

Other banks like PNB, Bank of India and Vijaya Bank too have already announced an increase in their prime lending rates following tighter monetary stance by RBI to tame double digit inflation.

HDFC Bank attributed the rise in loan rates to liquidity crunch.

"This is in line with the rates of interest in the economy which have hardened due to rising inflation and shrinking liquidity in the domestic market," a statement by the lender said.

Continuing its fight against inflation, which has now touched 11.42 percent for the second week of June, RBI had raised the short term lending rate to banks (repo) and mandatory cash reserve of banks with the central bank (CRR) by 50 basis points each, putting pressure on interest rates.

The RBI had already raised repo rate by 0.25 percent earlier this month. Besides, it had raised CRR by 0.75 percent in three phases.

Bankers expect the central bank to further tighten money supply in its quarterly review of credit policy, slated for July 29.

SAIL maintains commitment of holding price line

New Delhi, July 01: Amid reports that steel prices have soared in over a month, state-run Steel Authority of India Ltd (SAIL) on Tuesday said it maintained the prices for the domestic market during June at the same level as that of May, in line with its commitment of holding the price line.

The steel giant also urged the user industries and trading channels to ensure that the price benefit was passed on to the ultimate consumers.

SAIL said it has been continuously striving to make enough steel available in domestic market.

"In June, SAIL increased supply in the domestic market by approximately 32 per cent with sales touching 1.08 million tons," a statement from SAIL said.

It added that during April-June quarter, SAIL supplied almost 9 per cent more steel in the domestic market as compared to the corresponding period last year.

IDBI Bank hikes lending, deposit rates

Mumbai, July 01: Public sector lender IDBI Bank on Tuesday raised its Benchmark Prime Lending Rate (BPLR) and interest rates on various maturity deposits, by 0.5 percent and 0.25-0.75 percent respectively.

With this, the BPLR of the bank now stands at 13.75 percent, with effect from today, IDBI's chief financial officer, R K Bansal told agencies here.

"We decided to hike our lending rates after most of our peer banks did so. Also, there was an urgent need to hike the deposit rates given the impact of high inflation rates on customers," Bansal said.

Revision in deposit rates will come into effect from July 4.

Earlier, market leaders State Bank and ICICI Bank had upped their BPLRs after the Reserve Bank announced a hike in its key rates to contain inflation.

The inflation is expected to stay in double-digits in the next 3-4 months given the high international crude and commodity prices, Bansal said.

"This would have an impact on the domestic interest rate regime as banks are now forced to give higher rates for their depositors," Bansal said.

With the PLR hike, rates of all IDBI loans linked to the benchmark rate will go up, he said.

Similarly, the hike in deposit rates will be applicable to almost all maturities.

IDBI bank had recorded a net profit of Rs 729 crore for the financial year ended March 31 while the aggregate balance sheet size, during the period, stood at Rs 1,30,694 crore.

BOI hikes term deposit rates by 0.25-0.6 percent

State-owned Bank of India on Tuesday hiked its deposit rates by 0.25-0.6 percent across various tenures with effect from July 2.

Deposits up to Rs 10 crore and having a tenure of 1-2 years, will now attract an interest rate of 9.25 percent (8.85 percent), BOI said in a press release issued here.

Similarly, for deposits having maturity 2-3 years and 3-5 years, the rates have been revised to 9.25 percent (8.85 percent) and 9.5 percent (8.9 percent), the bank said.

For deposits having maturity period, five years and above, the new rate will be 9.5 percent (8.9 percent), the bank said.

The revision will be applicable to the short term deposits having a tenure 6 months to one year also, BOI said.

RelMoney enter into wealth mgmt biz

New Delhi, July 01: To cash in on the growing number of millionaires in the country, Reliance Money, the financial services arm of the ADAG Group, on Tuesday forayed into wealth management services.

The wealth management platform with a host of unique features would be available to high networth individuals having investible surplus of over Rs 25 lakh, Reliance Money CEO Sudip Bandyopadhyay told reporters here.

Currently, high networth population of the country is about 1.3 million which is set to grow to 2 million in the next three years, he added.

According to industry studies, the population of high networth individuals (HNIs) in the country is expected to grow to over two million in India, holding over 510 billion dollar in liquid assets, by 2011.

Under the portfolio, the company would include services like tax planning and assessment, real estate, art advisory, investment in art fund and estate planning, he said.

It would also have a separate module which would cater to the financial planning needs of senior citizens.

"The wealth management market in India is growing faster. We plan to expand the overall pie by also focusing on tier ii and tier iii cities," Bandyopadhyay said.

To start with, the company plans to offer the service in 21 cities and towns in the country, he said.

The company through this new offering would also tap 25 million NRIs (non-resident Indians) and PIOs (person of Indian origins) customer base from its overseas offices in UAE, Oman and Hong Kong for the new service offering.

Nano manufacturing at Singur to start in Q4
2 Jul, 2008, 0103 hrs IST, ET Bureau


MUMBAI/Kolkata: Tata Motors expects to start manufacturing of its much-hyped mini car Nano at Singur in the fourth quarter of this calendar year. The high volumes of Nano is expected to dramatically change Tata Motors’ market position, reach and visibility, said company chairman Ratan Tata in the latest annual report. The Singur manufacturing facilities would be expanded to meet domestic and global demand in the future.

Mr Tata’s expectation comes amidst the widespread concern about the performance of commercial vehicles and passenger cars in the near future due to higher fuel prices, increased raw material costs and rising interest rates.

Tata Motors, the country’s largest truck maker, is working on new variants of the world’s cheapest car Nano to overcome challenges posed by high fuel prices, which could negatively impact vehicle sales, Mr Tata said.

Tata Motors has also started developing new variants of Nano to meet environmental and fuel price challenges, as also market requirements of several international markets. The move comes in the run-up to the scheduled roll out of the gasoline-powered Nano from Singur.

According to Tata Motors spokesperson Debasish Ray: “Variants mean technologies other than gasoline engine which is being currently used in the Rs 1-lakh car that is slated to be rolled out of the Singur factory during the later part of 2008. He, however, declined to divulge more details on Nano variant.


“New variants of Nano are under development to meet the new environmental and fuel price challenges, as also the market requirement of several international markets,” Ratan Tata said in a statement made in the 63rd annual report of Tata Motors.

In the commercial vehicle segment, Tata Motors had registered a 5.5% growth over the previous year, but lost marketshare.

Although the company launched several new models and variants of commercial vehicles last year, it was unable to exploit its full market potential due to inadequate deliveries of powertrains and components from major suppliers. In passenger car segment, delays of the main streamline of the new Indica and Indigo passenger cars contributed to decline in sales and marketshare of the company.

Mr Tata said these challenges appeared daunting, but the year ahead will be no more daunting than the challenges they have faced in difficult years in the past. “The people in Tata Motors who have faced adversity and major crisis have delivered products which were not considered possible and found solutions for situations which have thwarted many an organisation,” Mr Tata added.

Mr Tata also said the acquisition of the Jaguar and Land Rover brands will add “global scale, profits and visibility to Tata Motors, enabling it to take its place in the global auto industry as a credible international automobile company”.

It completed the acquisition of the two iconic car brands from Ford Motor in June for $2.3 billion. To fund the acquisition, Tata Motors is raising Rs 7,200 crore via three separate rights issues, and an additional $500-600 million through an international offering of securities. Mr Tata also said it has to absorb the cost of acquiring Jaguar and Land Rover and deal with their integration during the year.

The company mentioned in the annual report that it had invested Rs 600 crore in its wholly-owned subsidiary Tata Motors Finance and Rs 601 crore in Fiat India in FY08. The company had also invested Rs 179 crore by subscribing to the rights issue of Tata Steel last year that was launched to part finance the steel company’s acquisition of Corus for $12.9 billion.

'RCOM's MTN deal doesn't breach pact'
2 Jul, 2008, 0000 hrs IST,


NEW DELHI: Leading law firm Amarchand & Mangaldas (AMSS) is learnt to have given a clean chit to Anil Ambani-owned Reliance Communications (RCOM) over the company’s ongoing spar with Mukesh Ambani-owned Reliance Industries (RIL) on its proposed deal with South Africa’s largest telecom company, MTN.

ET has learnt that AMSS, after having examined the non-compete agreement between the two Ambani brothers in 2006, has told the Anil camp that elder brother Mukesh cannot use his first right of refusal to stall a RCOM-MTN deal, in case both telecom companies went ahead with their plans for a proposed reverse merger.

RCOM sources said the telco had sought legal opinion from three leading law firms on this issue including Amarchand & Mangaldas. The legal opinion comes even as international media has reported that MTN was concerned that the proposed merger, where RCOM would become its subsidiary, may be delayed and even go off-track on account of the spat between the Ambani Brothers.

RCOM’s 45-day exclusivity period for talks with MTN lapses on July 9. Unconfirmed reports doing the rounds on Tuesday said MTN would extend the deadline only if RCom provided proof that the legal spat between the Ambani brothers would not derail the $80-billion merger.

RCOM sought legal opinion after RIL claimed that it held the first right of refusal (RoFR) in case the telecom company is sold to a third party. While RIL has maintained that its right of first refusal to any stake sale stems from a proviso in the non-compete agreement linked to the process of demerger of the Reliance empire in 2006. The Anil Ambani faction has repeatedly rejected this claim.

Industry sources said the Reliance Communications-MTN deal could be restructured to avoid any legal complications. The current structure of the deal envisages a takeover of RCOM by MTN, where Anil Ambani would sell his 66% stake in the Indian telco for a 35% stake in the combined entity. Sources said both sides were open to junking this model and going in for a direct merger where RCOM would takeover MTN.

Indian economy, mkt lose trillion-dollar status
2 Jul 2008, 0338 hrs IST,

NEW DELHI: On Monday, India had a trillion-dollar economy and a trillion-dollar stock market. A day later, it had neither. The culprit: a vicious cycle set off primarily by high international oil prices that refuse to come down below $140 per barrel. BSE closed on Monday with a market capitalization of about $1.02 trillion. On Tuesday, a fall of 500 points in the Sensex and a gain of 32 paise for the dollar against the rupee saw that figure drop to $970 billion.

Similarly, the country's GDP for 2007-08, pegged at Rs 43,02,654 crore, translated into just over $1 trillion at Monday’s exchange rate. With the dollar on Tuesday breaching the Rs 43 mark, the economy is down to $995b. High oil prices have triggered a domino effect that has ultimately robbed India of the trillion-dollar tags. The impact was visible on the export-import data released on Tuesday.

High oil prices have seen India’s oil import bill surging to $16.5b for April-May this year, up 49% from the figure for the same months of 2007. As a result, the overall import bill has risen by 32% to $48.8b. Despite exports growing at a healthy 22%, that has meant the gap between imports and exports - the trade deficit - has gone up by 48% to $20.6b.

The widening trade deficit has added to the demand for dollars and hence seen the dollar gaining strength against the rupee. As recently as the beginning of March this year, the dollar was worth less than Rs 40. On Tuesday, it gained 32 paise to close at Rs 43.27, the first time RBI’s reference rate has crossed the 43-rupee mark since April 5 last year.

With oil prices, inflation and the trade deficit rising and the rupee falling against the dollar at a time when the US currency is losing out to others, there was little to cheer the stock market, which had another bad day, the Sensex shedding 500 points to close below 13,000, again for the first time since April 5 last year.

Technical bounce sees Sensex score 703 points
2 Jul, 2008, 1840 hrs IST

MUMBAI: The sun was shining bright on Dalal Street on Wednesday as equities put up the best show in over three months latching on to positive cues from Europe. Indices recovered from a three-day losing streak as traders bought stocks with the belief that the market has possibly bottomed out.

"After sharp sustained declines, a recovery was on the cards. But the quantum of the rise was quite surprising. This was the work of short covering combined with fresh buying by short term traders," said DD Sharma, senior vice president at AnandRathi.

Even if only for a day, concerns over escalating oil prices and its impact on inflation and interest rates, vis-à-vis the performance of India Inc, were forgotten. In fact, reports that the Samajwadi Party is likely to come to the rescue of the government if the Left parties withdrew support on the issue of the US nuclear deal, also lifted sentiment.

National Stock Exchange's Nifty settled at 4093.35, up 5.05 per cent or 196.6 points. The index touched a high of 4107.15 and low of 3848.25 intra-day.

Bombay Stock Exchange's Sensex ended 5.42 per cent or 702.94 points at 13,664.62 after sharp swings to a high of 13,712.31 from an intra-day low of 12,822.75.

Mid-caps and small-caps also picked up pace. The BSE Mid-cap and Small-cap indices ended 3.3 per cent and 1.91 per cent respectively. Market breadth, which was negative through the day, ended in favour of the advances. On BSE, 1586 shares gained and 1094 fell.

Among the biggest blue chip gainers was realty heavyweight DLF, which rose over 15 per cent after the company announced it the proposal of a buy back shortly.

"This could be a sign of things to come for certain large-caps, given the way their share prices have been eroded. For the market, this is certainly a positive thing," AnandRathi's Sharma said.

Other major gainers in the frontline were Reliance Infrastructure (12.6%), HDFC (11.1%), ONGC (8.12%) Larsen & Toubro (7.33%) and Tata Steel (6.89%).

Apart from the blue-chips, real estate shares created waves adding 12.22 per cent to the BSE Realty Index. Heading the advance were Ansal Infrastructure (up 28.18%), Akruti City (19.98%), HDIL (19.22%) and India Bulls Real Estate (14.27%).

India Infoline (up 18.13%), Edelweiss Capital (16.07%) and Praj Industries (13.75%) also deserved mention.

Meanwhile, markets in Europe were also trading with gains. At the time Indian market closed, the FTSE 100 was up 1.57 per cent in the UK, the DAX 30 added 1.11 per cent in Germany and the CAC 40 was 0.67 per cent higher in Franc

Reliance Petro enters top 10 valued firms club
Mumbai July 02, 2008, 19:02 IST

Mukesh Ambani Group firm Reliance Petroleum today entered the coveted club of the top ten most valued firms in the country, with its shares surging over five per cent on the Bombay Stock exchange.



Reliance Petroleum has joined the club which includes Reliance Industries, ONGC, Bharti Airtel, Reliance Communications among others, with a gain of over Rs 3,800 crore in its market capitalisation that stood at Rs 78,525 crore.

Yesterday, Reliance Petroleum marketcap had stood at Rs 74,720.73 crore.


The scrip today surged five per cent to close at Rs 174.50, against its yesterday's close of Rs 166, after touching an intra-day high of Rs 176 on the BSE. Over two crore shares of Reliance Petroleum changed hands at the bourse.


The market cap charts are topped by Mukesh Ambani Group flagship firm Reliance Industries with a market valuation of Rs 3,11,531 crore, followed by ONGC with Rs 1,82,755.96 crore and Bharti Airtel at Rs 1,41, 281.72 crore.

Other firms in the top ten club are NTPC, Infosys Technologies, NMDC, MMTC, Reliance Communications and TCS.