Citibank fraud: Puri and family had 18 bank a/cs

After two days of investigations in the multi-crore financial fraud at Citibank, the Gurgaon police have found that the main accused, Shivraj Puri, who was working as the relationship manager, had opened 18 bank accounts in his and his family members' name.

Police said they had managed to get all the documents related to the transactions of the 18 accounts and were studying them before taking any actions against Puri's family members.

"Most of the family members are very old and Shivraj Puri was the one who was handling their bank accounts, so we can't say what was their extent of involvement in the fraud," Gurgaon Police Commissioner S S Deswal said.

Deswal further said the cops had not yet found any evidence to suggest that some other members of Citibank had helped Puri in the fraud in any way.

"The investigations are still on. If we find that there was help provided to him by any member of the bank, we will take action," he added.

According to the FIR filed by Citibank against Puri, he had duped high-networth clients of the company of more than Rs 300 crore.

The police had earlier said Citibank had come to know of the fraud almost a month ago, but it conducted thorough internal investigations before informing the police about the case.

Read more »

Posted in: Moneycontrol

Citibank fraud: Puri and family had 18 bank a/cs

After two days of investigations in the multi-crore financial fraud at Citibank, the Gurgaon police have found that the main accused, Shivraj Puri, who was working as the relationship manager, had opened 18 bank accounts in his and his family members' name.

Police said they had managed to get all the documents related to the transactions of the 18 accounts and were studying them before taking any actions against Puri's family members.

"Most of the family members are very old and Shivraj Puri was the one who was handling their bank accounts, so we can't say what was their extent of involvement in the fraud," Gurgaon Police Commissioner S S Deswal said.

Deswal further said the cops had not yet found any evidence to suggest that some other members of Citibank had helped Puri in the fraud in any way.

"The investigations are still on. If we find that there was help provided to him by any member of the bank, we will take action," he added.

According to the FIR filed by Citibank against Puri, he had duped high-networth clients of the company of more than Rs 300 crore.

The police had earlier said Citibank had come to know of the fraud almost a month ago, but it conducted thorough internal investigations before informing the police about the case.

Read more »

Posted in: Moneycontrol

Claris Lifesciences down 8 pc on BSE

MUMBAI: Drug firm Claris Lifesciences listed at 224.4 rupees on the BSE on Monday, down 1.57 percent from its issue price of 228 rupees a share.

Claris sold 10.78 million shares through its initial public offer (IPO) issue to raise 2.46 billion rupees.

Enam Securities , Edelweiss Capital , JM Financial Consultants and ICICI Securities were the arrangers to the issue.

At 9:28 a.m., shares were trading at 210.7 rupees rupees, down 7.58 percent in a weak Mumbai market.

Read more »

Posted in: Moneycontrol,SPECIAL NEWS

Claris Lifesciences down 8 pc on BSE

MUMBAI: Drug firm Claris Lifesciences listed at 224.4 rupees on the BSE on Monday, down 1.57 percent from its issue price of 228 rupees a share.

Claris sold 10.78 million shares through its initial public offer (IPO) issue to raise 2.46 billion rupees.

Enam Securities , Edelweiss Capital , JM Financial Consultants and ICICI Securities were the arrangers to the issue.

At 9:28 a.m., shares were trading at 210.7 rupees rupees, down 7.58 percent in a weak Mumbai market.

Read more »

Posted in: Moneycontrol,SPECIAL NEWS

CBI searches Nira Radia in telecom graft case

The Central Bureau of Investigation (CBI) investigating a telecoms licence scandal that may have cost India $39 billion and has engulfed its corporate and political elite searched the home and offices of one of the country's most powerful lobbyists.
The government has struggled to contain the fallout from the sale of lucrative mobile phone licences at below-market prices in 2007-08. The scandal has already brought down a telecoms minister and kept parliament deadlocked over demands by the opposition for a full inquiry into what could be the country's biggest graft case.

CBI searched the premises of lobbyist Nira Radia on Wednesday, spokesman R.K. Gaur told Reuters.
The CBI is looking at whether bribes were paid during the licensing process and is investigating Radia, who secret tapes suggested lobbied on behalf of her clients for Andimuthu Raja to stay on as telecoms minister after 2009 federal polls.
The coalition government is not at risk of collapsing but the widening case, which saw Prime Minister Manmohan Singh forced to explain to the top court why he did not act earlier, is a major setback, with analysts and politicians expecting more difficult times ahead and few reform bills passed.
Raja resigned after a state audit report said several rules were flouted when the licences were sold on his watch.
The former minister has not been charged and has said he is innocent and was only following norms. Radia, who was questioned by tax authorities, has said she is cooperating.
While the scandal may not deter investor interest in the rapidly expanding market, analysts say delays could see India fall behind in accelerating its economic growth to levels seen in China, keeping several hundred million Indians in poverty.
The Federation of Indian Chambers of Commerce and Industry said on Tuesday it was worried that corruption among a few in Asia's third-largest economy could damage the country's image.
The standoff has pushed policymaking into limbo, delaying long-awaited reforms such as simplifying the tax code and easing land acquisition for mining, industry and infrastructure.

Tape Recordings
The telecoms scandal is the biggest of a series of corruption cases that have battered Singh and his Congress party, straining relations with coalition allies and giving the main opposition Bharatiya Janata Party (BJP) a shot in the arm.
It comes along with the publication of several hours of conversations between Radia and Raja, leading industrialists, politicians and journalists, where they speak of swinging deals, granting favours and ministers taking bribes.
Her influence across corporate India is well known and stems largely from the fact that her firm represents tycoons Ratan Tata and Mukesh Ambani and their respective companies. Tata is among India's most powerful and respected businessmen and Ambani is the world's fourth richest man, according to Forbes magazine.
The recordings do not suggest wrongdoing by Tata or Ambani.
CBI's Gaur also said agents were searching the homes and offices of former telecoms regulator Pradip Baijal, who is now associated with Radia's firm.
The uproar has sparked fears of a witchhunt against Indian industry, which the prime minister on Tuesday sought to calm when he told a conference that his government would provide a "level playing field for private businesses, free from fear or favour".
Singh called on Indian firms to address an "ethical deficit".
Singh also faces trouble from the BJP's threat of blocking the February budget session of parliament if the government does not set up a special parliamentary committee to investigate the 2G telecoms case, which will make it tough to pass legislation.

Read more »

Posted in: Moneycontrol

CBI searches Nira Radia in telecom graft case

The Central Bureau of Investigation (CBI) investigating a telecoms licence scandal that may have cost India $39 billion and has engulfed its corporate and political elite searched the home and offices of one of the country's most powerful lobbyists.
The government has struggled to contain the fallout from the sale of lucrative mobile phone licences at below-market prices in 2007-08. The scandal has already brought down a telecoms minister and kept parliament deadlocked over demands by the opposition for a full inquiry into what could be the country's biggest graft case.

CBI searched the premises of lobbyist Nira Radia on Wednesday, spokesman R.K. Gaur told Reuters.
The CBI is looking at whether bribes were paid during the licensing process and is investigating Radia, who secret tapes suggested lobbied on behalf of her clients for Andimuthu Raja to stay on as telecoms minister after 2009 federal polls.
The coalition government is not at risk of collapsing but the widening case, which saw Prime Minister Manmohan Singh forced to explain to the top court why he did not act earlier, is a major setback, with analysts and politicians expecting more difficult times ahead and few reform bills passed.
Raja resigned after a state audit report said several rules were flouted when the licences were sold on his watch.
The former minister has not been charged and has said he is innocent and was only following norms. Radia, who was questioned by tax authorities, has said she is cooperating.
While the scandal may not deter investor interest in the rapidly expanding market, analysts say delays could see India fall behind in accelerating its economic growth to levels seen in China, keeping several hundred million Indians in poverty.
The Federation of Indian Chambers of Commerce and Industry said on Tuesday it was worried that corruption among a few in Asia's third-largest economy could damage the country's image.
The standoff has pushed policymaking into limbo, delaying long-awaited reforms such as simplifying the tax code and easing land acquisition for mining, industry and infrastructure.

Tape Recordings
The telecoms scandal is the biggest of a series of corruption cases that have battered Singh and his Congress party, straining relations with coalition allies and giving the main opposition Bharatiya Janata Party (BJP) a shot in the arm.
It comes along with the publication of several hours of conversations between Radia and Raja, leading industrialists, politicians and journalists, where they speak of swinging deals, granting favours and ministers taking bribes.
Her influence across corporate India is well known and stems largely from the fact that her firm represents tycoons Ratan Tata and Mukesh Ambani and their respective companies. Tata is among India's most powerful and respected businessmen and Ambani is the world's fourth richest man, according to Forbes magazine.
The recordings do not suggest wrongdoing by Tata or Ambani.
CBI's Gaur also said agents were searching the homes and offices of former telecoms regulator Pradip Baijal, who is now associated with Radia's firm.
The uproar has sparked fears of a witchhunt against Indian industry, which the prime minister on Tuesday sought to calm when he told a conference that his government would provide a "level playing field for private businesses, free from fear or favour".
Singh called on Indian firms to address an "ethical deficit".
Singh also faces trouble from the BJP's threat of blocking the February budget session of parliament if the government does not set up a special parliamentary committee to investigate the 2G telecoms case, which will make it tough to pass legislation.

Read more »

Posted in: Moneycontrol

Land scam: Raid at LIC; Central Bank manager held

New Delhi, Nov 24: Shocking bribery and land scam cases have been unearthed as CBI on Nov 24 informed that they conducted raid at LIC offices in Mumbai, Delhi, Kolkata and Chennai and arrested 8 officials of public sector banks and financial companies

including General Manager of the Central Bank.

Sources informed that Chief Executive Officer (CEO) of LIC Housing Finance; the General Manager of Central Bank of India; and the Deputy General Manager of Punjab Bank in Delhi are among the eight top detained officials.

Following the news, Indian markets once again crashed drastically as NSE Nifty lost 69 points while closing on Nov 24.

Read more »

Posted in: Moneycontrol,National News

Land scam: Raid at LIC; Central Bank manager held

New Delhi, Nov 24: Shocking bribery and land scam cases have been unearthed as CBI on Nov 24 informed that they conducted raid at LIC offices in Mumbai, Delhi, Kolkata and Chennai and arrested 8 officials of public sector banks and financial companies

including General Manager of the Central Bank.

Sources informed that Chief Executive Officer (CEO) of LIC Housing Finance; the General Manager of Central Bank of India; and the Deputy General Manager of Punjab Bank in Delhi are among the eight top detained officials.

Following the news, Indian markets once again crashed drastically as NSE Nifty lost 69 points while closing on Nov 24.

Read more »

Posted in: Moneycontrol,National News

Sensex down 21 pts; Astra Microwave jumps 5% on bonus news

The market, which showed some signs of a recovery, has drifted down a bit again this afternoon following a fresh round of selling in some blue chip stocks. The Sensex is down 21 points or 0.1% at 20,911.48, while the Nifty is down with a loss of 14.70 points or 0.23% at 6286.85.
Among Sensex stocks, Tata Motors rules firm with a sharp gain of 3.2% with impressive quarterly numbers keeping investor sentiment upbeat. Mahindra & Mahindra has also gained over 3% on sustained buying at the counter.


Wipro has notched up a gain of 1.3%. Infosys Technologies ,ONGC, Reliance Infrastructure, NTPC and HDFC Bank are up with modest gains. Hero Honda, Reliance Industries and Tata Consultancy Services are up marginally.
Nifty stocks BPCL, Reliance Capital, Reliance Power, GAIL India, Sun Pharmaceuticals and Cairn India are up in positive territory. Suzlon Energy and SAIL are trading flat.
Hindalco remains deep down in negative territory with a sharp loss of 3.3%. IDFC, Ambuja Cements, Punjab National Bank, Cipla, Bharti Airtel, Kotak Bank, BHEL, State Bank of India, ACC, Hindustan Unilever, ICICI Bank and Axis Bank are trading lower by 1% - 2%.
Jindal SAW Ltd has received Letter of Awards aggregating to more than Rs 600 crores (around $35 million) for supply of Large Diameter Pipes for domestic and export markets. The major order is from South East Asia market. With these orders, the total order book of the company stands at Rs 4,000 crores ($ 900 million). The metal stock is currently trading 1.8% down at Rs 219.
Va Tech Wabag Ltd has received an Letter of Intent worth Rs 290 crores to provide complete water systems for Kakatiya and Rayalaseema Thermal Power Project under Balance of Plants package as a part of consortium. The total cost of the project is Rs 290 crores. The scope of the work includes complete water system for Kakatiya Thermal power project and complete water system for Rayalaseema Thermal Power Projects, which includes recycling system. The tenure for implementation of the project is 30 months. Despite the order win, the Va Tech Wabag stock is down 1.35% at Rs 1685
Shares of Astra Microwave Products Ltd are up nearly 5% at Rs 74 following the company's board approving the Issue of Bonus shares in the ratio of 1:2.


Coal India continues to trade weak. The stock, which made a strong debut last Thursday and extended its gains the next session, has been struggling since Monday with investors going in for some profit taking. At Rs 323.60, the stock is now down by about 0.75% Over 15.5 million shares have been traded so far at the Coal India counter on the National Stock Exchange today.
Jet Airways has moved up by 2.6% on strong volumes. On NSE, the Jet Airways counter has recorded a turnover of nearly Rs 220 crore on a volume of 2.4 million shares.

Read more »

Posted in: Moneycontrol,National News

Sensex down 21 pts; Astra Microwave jumps 5% on bonus news

The market, which showed some signs of a recovery, has drifted down a bit again this afternoon following a fresh round of selling in some blue chip stocks. The Sensex is down 21 points or 0.1% at 20,911.48, while the Nifty is down with a loss of 14.70 points or 0.23% at 6286.85.
Among Sensex stocks, Tata Motors rules firm with a sharp gain of 3.2% with impressive quarterly numbers keeping investor sentiment upbeat. Mahindra & Mahindra has also gained over 3% on sustained buying at the counter.


Wipro has notched up a gain of 1.3%. Infosys Technologies ,ONGC, Reliance Infrastructure, NTPC and HDFC Bank are up with modest gains. Hero Honda, Reliance Industries and Tata Consultancy Services are up marginally.
Nifty stocks BPCL, Reliance Capital, Reliance Power, GAIL India, Sun Pharmaceuticals and Cairn India are up in positive territory. Suzlon Energy and SAIL are trading flat.
Hindalco remains deep down in negative territory with a sharp loss of 3.3%. IDFC, Ambuja Cements, Punjab National Bank, Cipla, Bharti Airtel, Kotak Bank, BHEL, State Bank of India, ACC, Hindustan Unilever, ICICI Bank and Axis Bank are trading lower by 1% - 2%.
Jindal SAW Ltd has received Letter of Awards aggregating to more than Rs 600 crores (around $35 million) for supply of Large Diameter Pipes for domestic and export markets. The major order is from South East Asia market. With these orders, the total order book of the company stands at Rs 4,000 crores ($ 900 million). The metal stock is currently trading 1.8% down at Rs 219.
Va Tech Wabag Ltd has received an Letter of Intent worth Rs 290 crores to provide complete water systems for Kakatiya and Rayalaseema Thermal Power Project under Balance of Plants package as a part of consortium. The total cost of the project is Rs 290 crores. The scope of the work includes complete water system for Kakatiya Thermal power project and complete water system for Rayalaseema Thermal Power Projects, which includes recycling system. The tenure for implementation of the project is 30 months. Despite the order win, the Va Tech Wabag stock is down 1.35% at Rs 1685
Shares of Astra Microwave Products Ltd are up nearly 5% at Rs 74 following the company's board approving the Issue of Bonus shares in the ratio of 1:2.


Coal India continues to trade weak. The stock, which made a strong debut last Thursday and extended its gains the next session, has been struggling since Monday with investors going in for some profit taking. At Rs 323.60, the stock is now down by about 0.75% Over 15.5 million shares have been traded so far at the Coal India counter on the National Stock Exchange today.
Jet Airways has moved up by 2.6% on strong volumes. On NSE, the Jet Airways counter has recorded a turnover of nearly Rs 220 crore on a volume of 2.4 million shares.

Read more »

Posted in: Moneycontrol,National News

Hold Infosys Technologies; target of Rs 3125: Nirmal Bang

 

Nirmal Bang has recommended hold rating on Infosys Technologies with a target of Rs 3125 in its October 15, 2010 research report.

“Infosys Technologies, Q2 FY11 results reflect the improvement in the recovery of demand from the US and the Europe. The company is seeing an improved traction in Retail, BFSI and Energy & Utility verticals among its US clients. Also, Europe is witnessing an uptick in demand with an incremental spending in Manufacturing, BFSI and Retail segments. In Europe, manufacturing has shown a healthy growth particularly in Switzerland, Germany and France as companies attempt to achieve cost efficiency through better systems. During the quarter, growth was led by Retail segment where in Infosys caters to 8 out of the top 10 retailers in US and 5 out of the top 10 retail companies in Europe.”

“The company has won 9 transformational which few are in excess of USD 100 million. Attrition has declined on a sequential basis, but it still remains a concern and Infosys plans to hire around 40,000 employees during FY 2011 to build up capacity in expectation of an increased demand in future. Overall, the Management remains optimistic in short term and have a cautious view over the long term as budgets for FY 2012 are yet to be finalized. The exchange rate remains a major concern as the recent appreciation of rupee will impact the company’s profitability in near term.”

“Infosys Technologies Q2 FY11 revenues grew 12.1% QoQ to Rs 6947 crore beating its guidance of Rs 6626 on the back of improving demand. Revenue was above our estimates because of higher volumes & an increase in pricing during the quarter. EBITDA margin improved to 33.3%. (+167 bps QoQ) The increase in topline was reflected in the improved EBITDA margins. PAT increased by 16.7% QoQ to Rs 1737 in Q2 FY11 because of improvement in the EBITDA margin and foreign exchange gains. PAT exceeded our estimate reflecting higher-than-expected revenues.”

“At the current price of Rs 3076, Infosys is trading at a PE of 25.34x on FY 2011 EPS & 21.66x on FY 2012 estimated EPS. Based on our estimated EPS of Rs 142.02 for FY 2012 and our target PE multiple of 22.0x we arrive at a target price of Rs 3125 per share for Infosys. Therefore, the company looks fairly valued at current levels and doesn’t offer much upside from current levels in near term. Considering the improved scenario for the IT sector, we recommend to HOLD the stock Infosys,” says Nirmal Bang research report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management.Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read more »

Posted in: INDIA news,Moneycontrol

Hold Infosys Technologies; target of Rs 3125: Nirmal Bang

 

Nirmal Bang has recommended hold rating on Infosys Technologies with a target of Rs 3125 in its October 15, 2010 research report.

“Infosys Technologies, Q2 FY11 results reflect the improvement in the recovery of demand from the US and the Europe. The company is seeing an improved traction in Retail, BFSI and Energy & Utility verticals among its US clients. Also, Europe is witnessing an uptick in demand with an incremental spending in Manufacturing, BFSI and Retail segments. In Europe, manufacturing has shown a healthy growth particularly in Switzerland, Germany and France as companies attempt to achieve cost efficiency through better systems. During the quarter, growth was led by Retail segment where in Infosys caters to 8 out of the top 10 retailers in US and 5 out of the top 10 retail companies in Europe.”

“The company has won 9 transformational which few are in excess of USD 100 million. Attrition has declined on a sequential basis, but it still remains a concern and Infosys plans to hire around 40,000 employees during FY 2011 to build up capacity in expectation of an increased demand in future. Overall, the Management remains optimistic in short term and have a cautious view over the long term as budgets for FY 2012 are yet to be finalized. The exchange rate remains a major concern as the recent appreciation of rupee will impact the company’s profitability in near term.”

“Infosys Technologies Q2 FY11 revenues grew 12.1% QoQ to Rs 6947 crore beating its guidance of Rs 6626 on the back of improving demand. Revenue was above our estimates because of higher volumes & an increase in pricing during the quarter. EBITDA margin improved to 33.3%. (+167 bps QoQ) The increase in topline was reflected in the improved EBITDA margins. PAT increased by 16.7% QoQ to Rs 1737 in Q2 FY11 because of improvement in the EBITDA margin and foreign exchange gains. PAT exceeded our estimate reflecting higher-than-expected revenues.”

“At the current price of Rs 3076, Infosys is trading at a PE of 25.34x on FY 2011 EPS & 21.66x on FY 2012 estimated EPS. Based on our estimated EPS of Rs 142.02 for FY 2012 and our target PE multiple of 22.0x we arrive at a target price of Rs 3125 per share for Infosys. Therefore, the company looks fairly valued at current levels and doesn’t offer much upside from current levels in near term. Considering the improved scenario for the IT sector, we recommend to HOLD the stock Infosys,” says Nirmal Bang research report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management.Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read more »

Posted in: INDIA news,Moneycontrol

Indian millionaires zoom by 42,800

India added more than 42,800 US dollar millionaires last year, taking the total number in the country to more than 127,000 — and the phenomenon is only going to grow further as high economic growth is sustained.

What’s more, India, China and other Asia-Pacific regional economies are collectively set to outpace developed countries in spawning high net-worth individuals (HNIs), wealth manager Merrill Lynch and consulting firm Capgemini said in a report released on Tuesday.
“Moving forward, China and India will lead the way in the region with economic expansion and HNI growth likely to keep outpacing more developed economies” it said.
The Asia-Pacific Wealth Report 2010 noted that the total amount held in assets by Indian millionaires accounted for more than $477 billion last year, up 53.6 per cent on the year. That is R21.5 lakh crore.
“The increasing confidence by Indian HNIs facilitated by the strength of the underlying economy which grew 6.8 per cent in 2009 has resulted in a surge in HNI wealth in the region,” said Pradeep Dokania, chairman, Merrill Lynch, Wealth Management, India.
Asia-Pacific as a whole outpaced Europe in the amount of wealth on play as the invested/investible corpus totalled $9.7 trillion, compared with Europe’s $9.3 trillion, it added.
“Asia-Pacific’s HNI population matching Europe’s for the first time highlights the region’s growth potential, with China and India at the forefront and Japan remaining an important market,” said Dokania.
The share of real estate dropped in 2009, while fixed-income investments went up. Equities and cash assets remained stable.

Read more »

Posted in: BUSINESS NEWS,Moneycontrol

Indian millionaires zoom by 42,800

India added more than 42,800 US dollar millionaires last year, taking the total number in the country to more than 127,000 — and the phenomenon is only going to grow further as high economic growth is sustained.

What’s more, India, China and other Asia-Pacific regional economies are collectively set to outpace developed countries in spawning high net-worth individuals (HNIs), wealth manager Merrill Lynch and consulting firm Capgemini said in a report released on Tuesday.
“Moving forward, China and India will lead the way in the region with economic expansion and HNI growth likely to keep outpacing more developed economies” it said.
The Asia-Pacific Wealth Report 2010 noted that the total amount held in assets by Indian millionaires accounted for more than $477 billion last year, up 53.6 per cent on the year. That is R21.5 lakh crore.
“The increasing confidence by Indian HNIs facilitated by the strength of the underlying economy which grew 6.8 per cent in 2009 has resulted in a surge in HNI wealth in the region,” said Pradeep Dokania, chairman, Merrill Lynch, Wealth Management, India.
Asia-Pacific as a whole outpaced Europe in the amount of wealth on play as the invested/investible corpus totalled $9.7 trillion, compared with Europe’s $9.3 trillion, it added.
“Asia-Pacific’s HNI population matching Europe’s for the first time highlights the region’s growth potential, with China and India at the forefront and Japan remaining an important market,” said Dokania.
The share of real estate dropped in 2009, while fixed-income investments went up. Equities and cash assets remained stable.

Read more »

Posted in: BUSINESS NEWS,Moneycontrol

RBI permits corporations to work as rural agents of banks

New Delhi/Mumbai: The Reserve Bank of India (RBI) on Tuesday allowed firms to play the role of an intermediary to spread banking in rural areas, in a move aimed at making banking services available to the unbanked.
RBI, in its guidelines for business correspondents (BCs), allowed individuals, non-governmental organizations, cooperative societies, post offices and companies with “large and widespread retail outlets” to become BCs, but kept non-banking financial companies (NBFCs) out of it.
One reason behind the move, according to people familiar with how NBFCs work, could be that these firms, including microfinance institutions, lend money in rural India. If they are allowed to mobilize deposits on behalf of banks and at the same time continue with their business of lending money, there could be a conflict of interest.
Telecom companies, fertilizers and oil marketing companies, and fast moving consumer goods makers with exposure to rural markets are likely to take the plunge following RBI’s move.
According to the guidelines, BCs will raise deposits; disburse tiny loans; recover bad loans; sell micro insurance, mutual funds, pension products and other third-party products; and receive and deliver small value remittances.
Their activities will be “within the normal course of banking business”, but conducted at places other than the bank premises and automated teller machines.
The distance between the BC and the base bank branch should not exceed 30km in rural, semi urban and urban areas, and 5km in metropolitan areas, RBI said.
RBI’s guidelines did not specify the fee structure, but noted the banks may pay “reasonable commission, which may be reviewed periodically”.
“Commission structure, or incentive mechanism, should be devised in a manner that mere increase in the number of clients served or the transaction volume does not drive the commission,” it said, adding that the remuneration should combine fixed and variable parts.
Experts familiar with BC activities are not very excited about the model as yet.
Bindu Ananth, president of IFMR Trust, a non-profit organization promoted by ICICI Bank Ltd, said the big challenge for BCs in India is to find a product mix that makes business sense.
“I think it will move the needle only if NBFCs and people who specialize in this business are allowed. Manufacturing companies have long stopped taking public deposits and will continue to concentrate on their core business,” said D. Muthukumaran, head (group corporate finance) at Aditya Birla Management Corp. Pvt. Ltd.
Abhishek Sinha, chief executive officer (CEO) of Eko India Financial Services Pvt. Ltd, a BC for the country’s top two banks—State Bank of India and ICICI Bank—said this move will bring in investments and expand scale of operations of BCs.
Currently, about 36,000 BCs are being employed by banks, besides less than a dozen institutions such Eko India and Financial Inclusion Network and Operations Ltd (Fino). Banks manage the individual BCs on their own. Once corporations are allowed to enter this space, they will be able to organize them better and take care of the security aspects as the job involves collection and disbursement of money.
The banks will, however, continue to be “fully responsible for the actions of the BCs and their retail outlets/sub agents”, the RBI guidelines said.
Access Development Services, a not-for profit organization that provides technical assistance to microfinance firms, had some time back carried a survey on viability of BCs and found them struggling.
“It was because of high operating costs,” Vipin Sharma, CEO of Access, said.
“Banks also need to look at ways to make the whole BC model more viable. The recent move to free up lending rates for small ticket sizes can serve as a catalyst to make the BC model more viable by allowing correspondents to cover costs,” he added.
About 50% of India’s population does not have bank accounts. In rural India, the coverage among the adult population is 39% against 60% in urban India. This doesn’t necessarily mean that 60 out of every 100 Indian adults in cities have bank accounts as many people operate multiple accounts.
Only 5.2% of the country’s 650,000 villages have bank branches even though 39.7% of the overall branch network of Indian banks, or 31,727, are in rural India.
Only 34% of people with annual earnings less than Rs. 50,000 in urban India had a bank account in 2007. The comparative figure in rural India is even lower, 26.8%.
To handle this, banks have been aggressively opening “no-frill accounts”, that require very low or zero minimum balance.
However, a 2009 study by Skoch Development Foundation, a strategy and management consultancy, says only 11% of 25.1 million such basic banking accounts, opened between April 2007 and May 2009, are operational.

Read more »

Posted in: Moneycontrol

RBI permits corporations to work as rural agents of banks

New Delhi/Mumbai: The Reserve Bank of India (RBI) on Tuesday allowed firms to play the role of an intermediary to spread banking in rural areas, in a move aimed at making banking services available to the unbanked.
RBI, in its guidelines for business correspondents (BCs), allowed individuals, non-governmental organizations, cooperative societies, post offices and companies with “large and widespread retail outlets” to become BCs, but kept non-banking financial companies (NBFCs) out of it.
One reason behind the move, according to people familiar with how NBFCs work, could be that these firms, including microfinance institutions, lend money in rural India. If they are allowed to mobilize deposits on behalf of banks and at the same time continue with their business of lending money, there could be a conflict of interest.
Telecom companies, fertilizers and oil marketing companies, and fast moving consumer goods makers with exposure to rural markets are likely to take the plunge following RBI’s move.
According to the guidelines, BCs will raise deposits; disburse tiny loans; recover bad loans; sell micro insurance, mutual funds, pension products and other third-party products; and receive and deliver small value remittances.
Their activities will be “within the normal course of banking business”, but conducted at places other than the bank premises and automated teller machines.
The distance between the BC and the base bank branch should not exceed 30km in rural, semi urban and urban areas, and 5km in metropolitan areas, RBI said.
RBI’s guidelines did not specify the fee structure, but noted the banks may pay “reasonable commission, which may be reviewed periodically”.
“Commission structure, or incentive mechanism, should be devised in a manner that mere increase in the number of clients served or the transaction volume does not drive the commission,” it said, adding that the remuneration should combine fixed and variable parts.
Experts familiar with BC activities are not very excited about the model as yet.
Bindu Ananth, president of IFMR Trust, a non-profit organization promoted by ICICI Bank Ltd, said the big challenge for BCs in India is to find a product mix that makes business sense.
“I think it will move the needle only if NBFCs and people who specialize in this business are allowed. Manufacturing companies have long stopped taking public deposits and will continue to concentrate on their core business,” said D. Muthukumaran, head (group corporate finance) at Aditya Birla Management Corp. Pvt. Ltd.
Abhishek Sinha, chief executive officer (CEO) of Eko India Financial Services Pvt. Ltd, a BC for the country’s top two banks—State Bank of India and ICICI Bank—said this move will bring in investments and expand scale of operations of BCs.
Currently, about 36,000 BCs are being employed by banks, besides less than a dozen institutions such Eko India and Financial Inclusion Network and Operations Ltd (Fino). Banks manage the individual BCs on their own. Once corporations are allowed to enter this space, they will be able to organize them better and take care of the security aspects as the job involves collection and disbursement of money.
The banks will, however, continue to be “fully responsible for the actions of the BCs and their retail outlets/sub agents”, the RBI guidelines said.
Access Development Services, a not-for profit organization that provides technical assistance to microfinance firms, had some time back carried a survey on viability of BCs and found them struggling.
“It was because of high operating costs,” Vipin Sharma, CEO of Access, said.
“Banks also need to look at ways to make the whole BC model more viable. The recent move to free up lending rates for small ticket sizes can serve as a catalyst to make the BC model more viable by allowing correspondents to cover costs,” he added.
About 50% of India’s population does not have bank accounts. In rural India, the coverage among the adult population is 39% against 60% in urban India. This doesn’t necessarily mean that 60 out of every 100 Indian adults in cities have bank accounts as many people operate multiple accounts.
Only 5.2% of the country’s 650,000 villages have bank branches even though 39.7% of the overall branch network of Indian banks, or 31,727, are in rural India.
Only 34% of people with annual earnings less than Rs. 50,000 in urban India had a bank account in 2007. The comparative figure in rural India is even lower, 26.8%.
To handle this, banks have been aggressively opening “no-frill accounts”, that require very low or zero minimum balance.
However, a 2009 study by Skoch Development Foundation, a strategy and management consultancy, says only 11% of 25.1 million such basic banking accounts, opened between April 2007 and May 2009, are operational.

Read more »

Posted in: Moneycontrol

Rupee at 4-and-a-half month high on robust inflows

The rupee strengthened to its highest level in four-and-half months on Monday, riding a wave of foreign buying in local stocks. The dollar's losses against major currencies also helped.
At 10:43 a.m. (0513 GMT), the partially convertible rupee was at 45.085/095 per dollar after hitting 45.08, which was its highest since May 14, and firmer than 45.25/26 at close on Friday.

Foreigners have pumped USD 4.5 billion into Indian shares this month, taking net investment so far in 2010 to USD 17.4 billion. The inflows had lifted the rupee 1.3 percent last week, its best rally in three months.
Vikas Chittiprolu, a senior foreign exchange trader with state-run Andhra Bank, said foreign interest was expected to stay robust with a slew of initial public offerings (IPOs) lined up this week.
Sea TV Network, Bedmutha Industries and Ashoka Buildcon that together aims to raise up to $82 million are among the IPOs lined up this week. State-owned Coal India Ltd, the world's largest coal miner, is expected to hit the market in October to raise up to USD 3 billion.
"But since it's the month-end, we will see bidding from oil and importers keeping the gains momentum checked," he said.
Oil is India's biggest import and refiners are the largest buyers of dollars in the local currency market with their demand tending to peak at the end of each month when they make payments.
Indian shares climbed more than 1 percent to a fresh 32-month high as economic data in the U.S. bolstered sentiment across Asian markets.
The dollar hovered near five-month lows on the euro and eight-month lows against a basket of currencies on Monday, pausing after steep losses last week and keeping the euro from pushing to new highs above USD 1.3500.
Most Asian units too rose versus the dollar.
"By and large exporters have not yet hedged beyond 3 months and so technically the market is still not hedged enough. If stocks remain bid, then some day this week, we expect rupee to touch 45," said Hitendra Dave, head of global markets at HSBC India.
One-month offshore non-deliverable forward contracts were quoted at 45.30, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, MCX-SX and United Stock Exchange were at 45.10, 45.0975 and 45.10 respectively, with the total traded volume on the three exchanges at about USD 2.2 billion.

Read more »

Posted in: Moneycontrol

Rupee at 4-and-a-half month high on robust inflows

The rupee strengthened to its highest level in four-and-half months on Monday, riding a wave of foreign buying in local stocks. The dollar's losses against major currencies also helped.
At 10:43 a.m. (0513 GMT), the partially convertible rupee was at 45.085/095 per dollar after hitting 45.08, which was its highest since May 14, and firmer than 45.25/26 at close on Friday.

Foreigners have pumped USD 4.5 billion into Indian shares this month, taking net investment so far in 2010 to USD 17.4 billion. The inflows had lifted the rupee 1.3 percent last week, its best rally in three months.
Vikas Chittiprolu, a senior foreign exchange trader with state-run Andhra Bank, said foreign interest was expected to stay robust with a slew of initial public offerings (IPOs) lined up this week.
Sea TV Network, Bedmutha Industries and Ashoka Buildcon that together aims to raise up to $82 million are among the IPOs lined up this week. State-owned Coal India Ltd, the world's largest coal miner, is expected to hit the market in October to raise up to USD 3 billion.
"But since it's the month-end, we will see bidding from oil and importers keeping the gains momentum checked," he said.
Oil is India's biggest import and refiners are the largest buyers of dollars in the local currency market with their demand tending to peak at the end of each month when they make payments.
Indian shares climbed more than 1 percent to a fresh 32-month high as economic data in the U.S. bolstered sentiment across Asian markets.
The dollar hovered near five-month lows on the euro and eight-month lows against a basket of currencies on Monday, pausing after steep losses last week and keeping the euro from pushing to new highs above USD 1.3500.
Most Asian units too rose versus the dollar.
"By and large exporters have not yet hedged beyond 3 months and so technically the market is still not hedged enough. If stocks remain bid, then some day this week, we expect rupee to touch 45," said Hitendra Dave, head of global markets at HSBC India.
One-month offshore non-deliverable forward contracts were quoted at 45.30, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, MCX-SX and United Stock Exchange were at 45.10, 45.0975 and 45.10 respectively, with the total traded volume on the three exchanges at about USD 2.2 billion.

Read more »

Posted in: Moneycontrol

Volkswagen spends Rs 6cr on 'talking newspaper': Sources

A talking newspaper woke up 25 lakh readers of The Times of India and The Hindu across metros on Tuesday. We're talking about Volkswagen's latest media innovation for its luxury sedan, the Vento. Sources told CNBC-TV18’s Animesh Das and Sweta Sriram that the company has spent close to Rs 6 crore on the exercise.
Volkswagen has done it again. The German automaker, which has been making a lot of media noise since October 2009, has managed to get everyone talking with this new campaign. 25 lakh readers across five cities were either fascinated or taken aback this morning, when their newspaper spoke to them, telling them about the Vento.

We hear each device costs around Rs 5. Add that to the base price of a full page ad on the ToI, along with other ancillary costs, and the price per paper comes out at around Rs 40. By these calculations, it appears that Volkswagen has spent around Rs 6 crore on just one day.
But people in the know including Divya  Gururaj, MD, MediaCom, which is the media agency for Volkswagen India disagree.
The bottom line is that no one is talking about the exact spend. However, one thing is clear: The company has been stepping on the gas in terms of advertising campaigns—from its first-ever newspaper roadblock in October 2009 to tricks like a hole in the paper in March 2010 to a talking newspaper—each to drive towards firmly blipping on the Indian consumer's radar.

Read more »

Posted in: Moneycontrol,National News

Volkswagen spends Rs 6cr on 'talking newspaper': Sources

A talking newspaper woke up 25 lakh readers of The Times of India and The Hindu across metros on Tuesday. We're talking about Volkswagen's latest media innovation for its luxury sedan, the Vento. Sources told CNBC-TV18’s Animesh Das and Sweta Sriram that the company has spent close to Rs 6 crore on the exercise.
Volkswagen has done it again. The German automaker, which has been making a lot of media noise since October 2009, has managed to get everyone talking with this new campaign. 25 lakh readers across five cities were either fascinated or taken aback this morning, when their newspaper spoke to them, telling them about the Vento.

We hear each device costs around Rs 5. Add that to the base price of a full page ad on the ToI, along with other ancillary costs, and the price per paper comes out at around Rs 40. By these calculations, it appears that Volkswagen has spent around Rs 6 crore on just one day.
But people in the know including Divya  Gururaj, MD, MediaCom, which is the media agency for Volkswagen India disagree.
The bottom line is that no one is talking about the exact spend. However, one thing is clear: The company has been stepping on the gas in terms of advertising campaigns—from its first-ever newspaper roadblock in October 2009 to tricks like a hole in the paper in March 2010 to a talking newspaper—each to drive towards firmly blipping on the Indian consumer's radar.

Read more »

Posted in: Moneycontrol,National News