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Banks lost Rs 1,078 cr in frauds in 2007

New Delhi, March 04: Admitting a rise in the number of frauds in the banking sector, Finance Minister P Chidambaram on Tuesday said banks in India lost about Rs 1,078 crore due to frauds, including credit card frauds, during last year.

"While the total number of frauds as reported by banks is increasing, there is a reduction in the total amount involved over the last three years," Chidambaram told the Rajya Sabha.

In reply to a question raised by Shobhana Bhartia and Prof Alka Balram Kshatriya on rising economic offences in banks, the Finance Minister said the number of bank frauds have gone up from 12,374 in 2005 to 22,280 in 2007.

However, the total amount involved in frauds declined from Rs 1,385.91 crore to Rs 1,077.84 crore during the same period, he said.

Loss to public sector banks was Rs 793 crore due to around 3,000 frauds, followed by Rs 224 crore to private banks in over 12,000 frauds and Rs 60.75 crore to foreign banks in more than 7,000 cases last year, Chidambaram said.

In order to prevent such frauds, he said, the RBI has asked the banks to set up Fraud Prevention Task Forces, apart from constituting special committees of board members to exclusively monitor large value frauds of Rs 1 crore and above.

Referring to guidelines issued to banks by the RBI last month, Chidambaram said the financial institutions should independently assess the risk while issuing credit cards to customers.

Stocks Pull Off Lows As Ambac Rumors, Comments From Amazon, Cisco, Encourage Bargain Hunting


NEW YORK (AP) -- Wall Street closed mixed Tuesday, recuperating from a sharp plunge as investors snapped up bargain stocks on rumors that a bond insurer rescue plan is progressing and upbeat comments from Cisco Systems Inc.

Earlier in the session, the market sank after Merrill Lynch lowered its full-year earnings prediction for Citigroup Inc., which a Dubai fund executive said will need to raise more cash to stay in business. Another damper on trading was Intel Corp., which lowered its forecast for first-quarter profit margins.

But in afternoon trading, the stock market showed signs of optimism. The financial sector regained some steam after CNBC reported that a plan to save the bond insurer Ambac Financial is advancing nicely.

Technology stocks rebounded too after a Dow Jones Newswires report that Cisco CEO John Chambers said he is "even more comfortable" with the long-term growth targets the company has outlined.

Wall Street is jittery, however, and as the volatility of the past several months has proved, the market's optimism can quickly turn to pessimism from one day to the next. While some investors search for bargains when stocks sink, the overall market is plagued by persistent worries about the bad debt held by the world's banks.

"What we're seeing is a very nervous market, and nervousness breeds volatility," said Anthony Conroy, managing director and head trader for BNY ConvergEx Group. "It took years to put this stuff on their books -- it's not going to come off quickly."

The Dow Jones industrial average fell 45.10, or 0.37 percent, to 12,213.80, after tumbling more than 200 points earlier in the day.

Broader stock indicators finished mixed, also rebounding off their lows of the session. The Standard & Poor's 500 index fell 4.59, or 0.34 percent, to 1,326.75, while the Nasdaq composite index rose 1.68, or 0.07 percent, to 2,260.28.

Bond prices sank as stocks regained their footing. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.63 percent from 3.56 percent late Monday.

Wall Street has been extremely turbulent as it tries to gauge whether the economy is in recession -- and whether investors have been too optimistic about corporate profits bouncing back in the second half of the year.

"The soft economy creates a difficult profit environment for most firms. And with investors' skepticism at high levels, they are quick to sell," said Alan Gayle, senior investment strategist at Trusco Capital Management.

Citigroup, a Dow component, fell 99 cents, or 4.3 percent, to $22.10, after hitting a new nine-year low. The head of a government-owned investment firm in Dubai said Citigroup would need to raise more than nearly $20 billion it has already nabbed over the past few months to fix its debt problems.

Financial companies are poring over their books to determine what loans remain sound, what debt might be in trouble, and how much all of it is worth. A precipitous slowdown in the housing market last year revealed the fallacy upon which many loans were made -- the belief that home prices would continue to rise and that consumers could always wipe away their debts by refinancing.

Now, banks are not only strapped with souring mortgages, but the prospect of big losses from other types of consumer and corporate debt.

Though some banks rebounded on the Ambac rumor, other banks declined alongside Citi, including Dow components Bank of America Corp. and JPMorgan Chase & Co. Bank of America fell $1.05 to $79.62, and JPMorgan fell 63 cents to $39.19.

Ambac rose 78 cents, or 7.9 percent, to $10.72, while MBIA Inc., another bond insurer, rose 36 cents, or 2.9 percent, to $12.98.

After calming words from its CEO, Cisco recovered from its lows to close down 11 cents at $24.29.

Another Nasdaq stock, Amazon.com, shot up $2.91, or 4.7 percent, to $65.34 on comments from its chief financial officer about the online retailer's 2008 revenue forecast that the market interpreted positively.

Dow component Intel also rebounded, finishing down a penny at $20 a share.

Wall Street is particularly anxious over the technology sector, which was very strong in 2007 and is now one of the weakest in the market along with financials.

"Long term, tech will remain an important sector, but it is a cyclical sector and can be very volatile," Gayle said. "If there is a belief that our economy -- and the global economy -- is going to move to a slower pace of growth, then cyclical industries like tech are going to be impacted."

The dollar weakened against most other major currencies, while gold prices rose.

Light, sweet crude fell $2.93 to settle at $99.52 a barrel on the New York Mercantile Exchange.

Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange. Consolidated volume came to 4.61 billion shares, up from 3.99 billion shares on Monday.

The Russell 2000 index of smaller companies fell 3.24, or 0.47 percent, to 680.98.

Overseas, Japan's Nikkei stock average edged up less than 0.01 percent. Britain's FTSE 100 fell 0.87 percent, Germany's DAX index fell 2.17 percent, and France's CAC-40 finished down 1.41 percent.

Rel Energy buyback may help listing of group firms

Mumbai, March 05: Reliance Energy's plans for a share buy-back seem aimed at restoring some lustre to the Anil Dhirubhai Ambani Group after the dismal stock market debut of its Reliance Power business last month, analysts said.

The group is awaiting approval to list another company on the stock market, and shoring up sentiment in a souring market appears to be a key purpose of the buy-back, which will be considered by Reliance Energy's board on Wednesday.

"They are doing this basically to create a positive sentiment for the Anil Ambani group companies. Otherwise, buyback per se doesn't make sense," said Shankar Sharma, vice-chairman and joint managing director at First Global Securities.

"They don't have cash from operations for the buyback."

The company did not say why it was buying its own shares.

Reliance Communications has filed initial papers with the stock market regulator to sell 10 percent of Reliance Infratel and is expected to raise USD 1 billion-USD 1.5 billion, and it is also looking to list its newly formed Reliance Globalcom unit, which owns its international operations.

Reliance Power tanked on debut in February in a huge disappointment to investors after a frenzy to be part of India's biggest initial public offering. The USD 3 billion issue fully subscribed in less than one minute.

To appease investors, Anil Ambani announced a special bonus issue for Reliance Power shareholders, excluding the company's founders, which includes Reliance Energy.

The buy-back appears to be a similar move. Reliance Energy shares quadrupled last year, but have fallen more than 40 percent from a record of 2,631.70 rupees in January.

"There is a dichotomy in this buy-back announcement. On one side the owners are pumping money in the company for expansion and on the other it is returning cash to investors saying that it does not have any better use of it," said Mehul Mukati, analyst with Emkay Share and Stock Brokers Ltd.

In January, Reliance Energy approved the issue of 43 million warrants, convertible into shares by July next year, to a company that is owned by Anil Ambani.

The warrants can be converted to shares by July 2009 at 1,822.08 rupees each, which analysts say may be a benchmark for the buy-back price. Reliance Energy shares closed at 1,485.55 rupees on Monday, their lowest close since Oct. 22.

"Probably Ambani feels that Reliance Energy's stock price was undervalued and may offer to buy shares at a price same as his own purchase through warrants," said Nikunj Doshi, investment manager at Envision Capital.

Shares of Reliance Energy, which has transferred its future power projects to Reliance Power, are already commanding a premium, trading at 38 times their forecast earnings, against 21 times for NTPC Ltd, which generates a quarter of India's power.

Rival Tata Power trades at a multiple of 42, and shares in Reliance Industries, India's largest listed company which is run by Anil's estranged elder brother, trade more than 24 times forward earnings, Reuters data shows.

Tatas to invest USD 500mn in Wimax

New Delhi, Mar 04: Tata Communications on Tuesday announced an investment of 500 million dollars for its wireless broadband venture on Wimax platform and has partnered with US-based Telsima Corporation for equipments.

The company will invest 500 million dollars by 2010 in Wimax Technology and is in talks with investors to sell minority stake in retail business, Tata Communications retail business unit president Shankar Prasad told reporters here.

Besides, it has selected Telsima to provide Wimax Infrastructure and Subscriber Equipment Solutions to deploy Commercial Wimax Network, with 3,000 base station sectors already getting deployed, which will enable customers to access video, education, music and business services, he added.

Tata Communications is the first to launch broadband services on the Wimax platform on a large scale for retail consumers in India.

In the initial phase, Tata Communications` Wimax Network will offer broadband internet access and content services to enterprises and residential customers in Delhi, Mumbai, Pune, Bangalore, Chennai, Hyderabad, Cochin, Chandigarh, and Kolkata.

By the end of 2008, the company plans to have enabled Wimax retail broadband service in about 15 cities.

China vows to control inflation

Beijing, March 05: China's premier called for "powerful measures" to rein in inflation that is battering ordinary Chinese and warned of risks from a global slowdown and the US credit crisis.

In an annual policy speech to legislators Wednesday, Premier Wen Jiabao said a top priority will be cooling sharp price rises blamed on shortages of key food items. He said Beijing will use price controls and credit curbs to hold annual inflation to 4.8 percent.

"To fulfill this task, we must take powerful measures to increase effective supply while curbing excessive demand," Wen told members of the National People's Congress. He warned that China faces "considerable inflationary pressure."

Chinese leaders worry that high inflation could erode rising living standards and hurt China's large numbers of rural and urban poor — people that Wen and President Hu Jintao have vowed to help.

Inflation began shooting up in mid-2007, reaching 7.1 percent in January — the highest rate in 11 years — led by an 18.2 percent jump in food prices. Economists expect it to rise further before peaking in coming months as efforts to boost food supplies start to show results.

Wen said Beijing will stick to a tight monetary policy and improve financial controls to restrain fast credit growth that authorities worry could fuel inflation or ignite a debt crisis.

The 4.8 percent inflation target is equal to last year's consumer price rise, showing the difficulties the government faces as the economy grows rapidly. Rising consumer and business demand, coupled with shortages last year of pork and grain, is pushing up prices of food, land and other inputs to the country's price index.

Overall, Wen said the government was sticking to its normal planning target for economic growth of 8 percent, well below outside forecasts of up to 10.5 percent following 2007's torrid 11.4 percent expansion. The government often sets a low initial target for budget purposes and raises it as the year progresses.

"The primary task for macro-economic regulation this year is to prevent fast economic growth from becoming overheated growth and keep structural price increases from turning into significant inflation," Wen said.

The premier also promised to make China's exchange rate system more flexible — a step sought by Washington and other trading partners that say Beijing keeps its currency undervalued, fueling the growth of its huge trade surplus. But Wen gave no details on how fast China's yuan might be allowed to rise in value.

Wen warned that China's export-driven economy faces risks from slowing global growth, the US credit crisis, high oil prices and increasing protectionist sentiment abroad.

"The current imbalance in the global economy is only getting worse and global economic growth is slowing, making international competition even fiercer," the premier said. "All this could adversely affect China's economic development.

Good news about China.

The Yuan appreciation part is good news indeed. Had to happen. China has been playing this devaluation game for too long & now it's backfiring on them (Nature has a wonderful way of correcting imbalances).
But they may also raise int rates (to curb money flow) This will give our Nandi another reason not to lower rates despite exhortations to the contrary by Mahadev. But ultimately i think (the offshore) Bhringi will force him as the rate differential becomes too large threatening more $ inflows.

But all this shows that high growth too can have it's own set of problems & threats. While the US faces problems of degrowth China is faced with an ugly specter arising out of growth! (Maybe the Left has done the country a favour after all by keeping reforms & hence growth under reins)

Regards,
Kalyan.

hi rakesh,
you are giving a lot of information.it is a surprise with so many posts and views...that still this thread is not rated...ok first i will start.

thanks a lot.a person with dignity.

Stocks Extend Gains After Better-Than-Expected Reading on Service Sector Calms Recession Fears


NEW YORK (AP) -- Stocks rose Wednesday after a stronger-than-expected reading on the health of the service sector calmed some investors fears about the frailty of the economy.
The Institute for Supply Management report showed activity in the service declined in February but the decrease wasn't as steep as Wall Street had feared. The ISM index of non-manufacturing activity came in at 49.3. Analysts had expected a reading of 46.5, according to Dow Jones Newswires.