August 2008

• SUPREME COURT ON NEGOTIABLE

INSTRUMENTS ACT: The Supreme Court has
ruled that the Negotiable Instruments Act should be
liberally interpreted in cheque bouncing cases as
otherwise tricksters who issue invalid cheques
would benefit by claiming that they did not receive
notice.
• RBI ON EEFC ACCOUNTS: RBI has said that that
there would be no interest payment on Exchange
Earners Foreign Currency Accounts (EEFC) from
November 1. Presently the exporters are permitted
to earn interest on such accounts to the extent of
outstanding balance of $1 million per exporter.
From November, 2008, EEFC Accounts would be
maintained in the form of Non-interest-bearing
current accounts only.
• CAPITAL ADEQUACY NORMS FOR NBFCs: In
order to tighten the regulation of systemically
important non-deposit taking Non-banking
Financial Companies with Asset size of Rs.100
Crore and above, RBI has said that such NBFCs
will have to maintain higher capital to risk weighted
to Asset ratio (CRAR) of 12% against the current
10%.
• LAWYERS CAN ADVERTISE ONLINE: Lawyers,
like other Professionals, can advertise their services
on Internet as the Bar Council of India (BCI)
informed the Supreme Court that it has relaxed the
rules on the issue in view of the changing Global
Scenario.
• OIL BONDS PURCHASES DISCONTINUED:
RBI has decided to discontinue the Special Market
 Operation (SMO) which was offered to Oil
Companies to provide liquidity. They were allowed
to borrow up to Rs.1500 Crore on a single day from
RBI, in view of the unprecedented escalation in
International Crude Prices.
• UNIFORM SECRETARIAL NORMS : Various
Bodies of Company’s Secretaries across the Globe
are working on drafting Uniform Global Secretarial
Standards through the International Federation of
Company Secretaries. This will be a harmonized
Code of Standards for Company Secretaries, just
like the International Financial Reporting standards
for the Accounting Profession.
• GOVT. FUNDS UNDER SOCIAL SECURITY
SCHEME: The Govt decided to provide additional
funds of Rs.1000 Crore to LIC of India to cover
another 1 Crore Rural Landless households under
the Social Security Scheme “Aam Admi Bima
Yojna”.The Union Govt. bears 50% of the premium
of Rs.200 per year and rest of the premium is paid
by the State Govt on behalf of the beneficiaries.
• POSITION OF EXPORTS, IMPORTS AND
TRADE DEFICIT: ( In $ Billion Apr-Jun 2008):
Exports were $ 42.84 billion and imports $ 73.27
billion (giving a growth rate of 22% and 30%
respectively) resulting into trade deficit of $ 30.42
billion.
• SEZ PROPOSALS CLEARED: The Board of
Approval for Special Economic Zones (SEZ) gave
formal approval for setting up of a multi-product
SEZ in Tamilnadu, besides granting a clutch of 22
formal approvals and 6 in-principle approvals.
• NEW CMDs OF PSBs: Govt appointed CMDs of 4
Public Sector Banks as under (1) Mr. K.R.Kamath -
Allahabad Bank (2) Mr. Albert Tauro- Vijaya Bank
(3) Mr. R.S Reddy- Andhra Bank (4) Mr. George
Joseph- Syndicate Bank.
• INDIA TO CONVERGE WITH IFRS: India will go
in for convergence with the International Financial
Reporting Standards (IFRS) in an organized manner
though it will not adopt this “Numero-uno”
Accounting Framework. Currently, India does not
follow IFRS, but its Notional GAAP (Generally
Accepted Accounting Principles) is inspired by
IFRS.
• NEW SCRUTNY NORMS FOR COMPANIES:
According to the new scrutiny norms of CBDT, a
Company could face a tax scrutiny if it had
introduced fresh capital exceeding Rs.50 Lakh last
fiscal during the previous year relevant to
assessment year 2008-09.
• GOVT GETS TOUGH ON DELISTING: Firms in
which Public stake is marginally above the
mandatory requirement for remaining listed, can
delist only if at least 50% of the Public Shareholders
respond to their buyback offer. The clause would
ensure that Promoters do not indulge in frivolous
delisting.
• PUBLIC SECTOR BANKS TO CUT CORNERS:
The Finance Ministry has asked all the Banks and
Insurance Companies to bring down their
operational costs by 10% by reducing expenditure
on programmes that can be avoided.
• MOODY,S –INDIA’S RISKS ON THE RISE:
Global Rating major Moody’s said that
 Government’s deteriorating debt level, mainly due
to oil and fertilizer subsidies, and an inadequate
fiscal response could further increase the downside
pressure on India’s rating. The risks, however, is not
yet to the extent that the Government’s Local
Currency ratings are threatened.
• RBI WANTS RESTRICTIONS ON FOREIGN VC
: RBI has asked the Finance Ministry to prevent
Foreign Investors from manipulating foreign
investment norms by taking to the Venture Capital
route. RBI has suggested to SEBI to set up a
screening mechanism for pending and future
Foreign Venture Capital Investments proposals.
• NOMINATED BOARD DIRECTORS –STOCK
OPTIONS: SEBI has clarified that a Director
nominated by an institution as its Representative on
the Board of Directors of a company is eligible to
participate in the Employee Stock Option Scheme
(ESOS).
• AS 11-INDIA INC PROFITS: Several Blue- Chip
Indian Companies would have reported
substantially lower net-profits for the first fiscal
quarter had they followed Accounting Standard 11
(AS 11) on Forex Borrowings. Under AS 11,
Foreign Exchange gains or losses on borrowings for
fixed assets have to be charged to the Profit and
Loss Account.
• NO WRITE-BACK OF PROVISIONS ON FARM-
LOANS: RBI in a Notification on July 30 mandated
that Banks would not be allowed to write-back the
provisions made on the overdue farm loans. Instead,
the write-back of the provisions would be permitted
only after full settlement of the waiver scheme. This
 was because a provision represented a permanent
loss to the Bank’s balance Sheet on account of
delayed cash flows.
• DGFT RELIEF TO CAPITAL GOODS
INDUSTRY: The Directorate General of Foreign
Trade has amended the Foreign Trade Policy to
provide a measure of relief to the Domestic capital
goods sector. The EPCG Holders by clubbing all
capital goods importers, including second hand
machinery and EPCG holders, may dispose their
machinery in the domestic market only on payment
of applicable duty and import policy in force on
date of such clearance.
• CHINA STEPS UP FOREX FLOW WATCH: China
has updated key foreign exchange rules for the First
Time in 11 Years, hoping to step up monitoring of
fund flows and limit growth of its massive foreign
exchange reserves. The rules allow foreign
companies to issue securities in China. According to
the revised rules, domestic companies will also be
allowed to keep their foreign exchange income
abroad.
• BANKS FACE AUDIT BURDEN ON FARM
LOAN REIMBURSEMENT: According to the
current guidelines of RBI, Banks have to get 20% of
the accounts audited, by a Central Statutory Auditor
in order to get the reimbursement of the first trenche
of Farm Loan from the Government.
• RBI PANEL FOR STT WAIVER ON TRADES: An
RBI Technical Committee has suggested waiver of
Securities Transaction Tax (STT) for trades in
Interest Rate Futures. The Committee in its final
report released said to ensure symmetry between
 cash market in Govt. Securities and Interest Rate
Futures, as also imparting liquidity to the market,
deals in interest rate futures be exempted from STT.
• YEAR’S LOCK-IN ON GDR CONVERSION:
Foreign Companies looking to list on Indian Stock
Exchanges may find it easier to raise Equity Capital
from India. Companies issuing IDRs will now be
able to redeem them into underlying shares soon
after the float.
• RBI DEFINES NPA IN INTEREST RATE
EXPOSURES: Pursuant to the earlier mandate for
the Banks to calculate their Off-balance sheet
exposures in the interest rate and foreign exchange
derivative transactions and gold, RBI has said that
only the amounts unpaid in cash to the Bank for a
period of 90 days or more would be classified as
NPAs.
• INDUSTRIAL GROWTH IN JUNE SLOWS:
Industrial output registered a modest 5.4% growth
in June 2008 compared with a much higher 8.95%
rise in production recorded a year ago. The growth
in June, however, was higher than the upward-
revised 4.1%growth estimated in May this year.
• EAC PEGS LOWER GDP GROWTH: The Prime
Minister’s Economic Advisory Council (EAC) has
projected GDP Growth at 7.7% for 2008-09,
substantially lower than the 9% growth achieved in
2007-08.This situation has arisen due to global
slowdown in growth, tightening of credit and equity
markets following the US sub-prime crisis and
sharp elevation in global commodity inflation.
• NORMS FOR BULK DEPOSITS NOT
FOLLOWED: The Finance Minister has said that
 Central Public Sector Enterprises appear to be
violating Govt Departmental Guidelines on
placement of funds with Banks. The Finance
Ministry had issued instructions that funds under the
control of Govt Ministries should be placed with
Banks at least to the extent of 60%.
• CURRENT ACCOUNT DEFICIT ALL TIME
HIGH: Ballooning oil import bill and a decline in
capital flows are pushing the current account deficit
to an all time high of 3.2% of the GDP during 2008-
09.The 3.2% current account deficit estimated for
the fiscal is more than double the deficit of 1.5% in
2008.
• PRIVATE PROVIDENT FUNDS ALLOWED TO
INVEST: The new Investment Pattern for Non-
Govt. Provident, Superannuation and Gratuity
Funds has been issued by the Finance Ministry.
They can soon directly invest up to 15% of their
investible funds in shares of companies on which
derivatives are available in the BSE or NSE. It
would come into force from April 1,2009.
• SEBI SIMPLIFIES DEBT LISTING NORMS:
SEBI has simplified the Debt Listing norms. The
new Draft Listing Agreement for debt securities will
consist of a single document that will replace the
existing separate agreements for debentures made
by way of public issue and by way of private
placement.
• ALL SBS BRANCHES TO FUNCTION AS SBI
BRANCHES: The Union Cabinet has approved the
merger of State Bank of Saurashtra with its parent
SBI. Reserve Bank of India has notified that all the
 branches of SBS from August 13 will function as
branches of SBI.
• EXPORTERS-DUTY DRAWBACK RATES: The
Govt had appointed 3-member Committee to be
headed by Dr. Saumitra Chaudhry for formulating
the Duty Drawback rates. The Committee is
understood to have recommended “generally lower
rates” for 2008-09 than those suggested for the
previous year.
• PRIORITY SECTOR LEBEL FOR LOAN
WAIVER: Govt Banks have demanded that the
amount eligible under the farm waiver scheme
should continue to be considered lending to the
Farm Sector till the Govt clears the dues to help
banks to meet the mandatory priority sector lending
target.
• IDR TO ATTRACT SECURITIES
TRANSACTION TAX: Investors of Indian
Depository Receipts (IDR) will be liable to pay
securities Transaction Tax (STT). The Govt. hopes
that clarity on tax related issues will kindle some
interest in the instrument which is still unused by
foreign companies since its launch in 2004.
• SEBI AMENDS QIP GUIDELINES: SEBI has said
that the Qualified Institutional Placement (QIP)
should be based on the average price of the shares
two weeks prior to the issue. The earlier pricing
formula had made the matter worse for investors as
it required to take an average price of six months or
15 days, whichever is higher.
• SEBI NOTIFIES PMS AMENDMENTS: SEBI has
amended the norms for Portfolio Management
Services (PMS) including asking portfolio managers
 to maintain an enhanced net worth of Rs.2 Crore
from Rs.50 Lakh earlier and PMS to keep assets o
their clients in different accounts.
• LARGE US BANK COLLAPSE AHEAD: The
former IMF Chief Economist, Mr. Rogoff said that
the worst of the global financial crises is yet to
come and a large US Bank will fail in the next few
months as the World’s biggest economy hints
further troubles.
• RBI TO REVIEW NORMS FOR FOREIGN
BANKS: RBI would undertake a wholesome review
regarding the roadmap to liberalise norms for
foreign banks in the country. Under first phase of
liberalization in the banking sector, allowed by RBI,
foreign banks can establish presence by way of
setting up a wholly-owned subsidiary (WOS) or
conversion of existing branches into a WOS.
• GOVERNMENT ALLOWS SAVINGS BONDS AS
COLLATERAL: The Govt has allowed the use of
Govt approved Savings Bonds as collateral for
taking loans from commercial banks. Accordingly,
the holders of these bonds will be entitled to create
pledge or lien in favour of Sheduled Banks in
accordance of Section 28 of the Government
Securities Act 2006.
• COMMODITY BOURSES TO MEET FOREIGN
EQUITY NORMS: The Govt has asked Commodity
Exchanges to divest foreign equity that exceeds
limit prescribed under the foreign investment norms
before June 20, 2009. The Centre had fixed a
composite ceiling at 49% with the condition that
investment under portfolio investment scheme will
 be limited to 23% and that under the foreign direct
investment scheme to 26 %.
• SERVICE CHARGES TO BE ON NOTICE
BOARDS: In order to improve the banking services
and financial literacy in the country, RBI has
prescribed a comprehensive notice board format for
bank branches to inform the customers about the
interest rates, service charges and grievance
redressal mechanism.
• IRDA REVAMPS INVESTMENT NORMS:
Insurance Regulatory and Development Authority
(IRDA) has notified new investment norms that
provide more flexibility to insurance companies for
parking funds in debt instruments offered by banks
and allows more money to flow into IPOs.
• SUPREME COURT-APPOINTMENT OF
ARBITRATOR: The Supreme Court has clarified
that while appointing arbitrators, the terms of
Agreement between the parties should be adhered
to. The courts should not straightway appoint an
arbitrator at the request of one party.
• PLAN FOR NEW ACCRUAL SYSTEM OF
ACCOUNTING: The Union Govt is planning to
introduce new Accrual System of Accounting for
Govt accounts so as to make the country’s financial
system more transparent and accountable. The Govt
has already prepared a road map for its
implementation. The new system will also help in
overcoming the asset-liability mismatch.
• IDBI CAPITAL PLANS TO SET UP CREDIT
BUREAU: IDBI Capital Market services Ltd., a
wholly owned subsidiary of IDBI Ltd., plans to set
up a Credit Information Bureau as a Joint venture
 with CARE(Credit Analysis and Research Ltd.).
The data information bureau will work on the same
lines as Credit Information Bureau (India)
Ltd.(CIBIL).
MARCH 2008
• US-FED BENCHMARK RATE : The Federal
Reserve US, lowered its Benchmark interest rate by
0.75% 2.25%.
• E-PAYMENT OF DIRECT TAXES
MANDATORY: The Finance Ministry has said that
for the Corporate Sector in the country, electronic
payment of direct taxes has become mandatory from
April 1. This payment norm would also apply to tax
audit assesses.
• MF ENTRY-EXIT LOADS: SEBI has scrapped
loads (entry as well as exit) charged by Mutual
Funds on bonus units and units allotted on
reinvestment of dividend with effect from April 1.
The logical argument made against such loads is
that it is investor’s money that has contributed to the
earnings and that investors are not entering the
scheme afresh, so charging an entry load does not
make any sense.
• WAIVER FOR KISAN CREDIT CARDS:
Government has clarified that farmers who took
loan through Kisan credit cards will also be eligible
in the scheme announced in the Budget.
• INSTITUTIONAL INVESTORS : SEBI has said
that Institutional Investors will have to pay margin
on their share transactions in the cash segment from
April 21, in the same way as applicable to other
investors. SEBI has also operationalised short
 selling and securities lending and borrowing from
the same date.
• RBI GROUP FOR MONTHLY, FIXED BASE
INFLATION RATES: The RBI Study Group
suggested introduction of monthly and fixed base
inflation rates, in addition to the annual rate, to fully
capture price rise and the impact on seasonal factors
on prices of goods and commodities.
• MEDICLAIM FOR SENIOR CITIZENS: IRDA has
asked all Public Sector General Insurance
Companies to ensure that the renewal premiums
charged to the Senior Citizens on Mediclaim
Policies should not be “Exorbitant”. Renewal
premium chares should not exceed 50-75% of the
premiums charged prior to the revision.
• RBI FIAT TO URBAN CO-OP BANKS ON ATM:
RBI has said that users of ATM card of Urban Co-
operative banks will have free access to ATMs of
other banks with effect from April 1, 2009. ATM
Card users could be charged a maximum of Rs.20
per transaction for cash withdrawal from ATMs of
other Banks.
• SUPREME COURT RULING ON ARBITRATION
AGREEMENTS: The Supreme Court has ruled that
if the parties to a contract agree on the Arbitrator,
the place of arbitration and the court for deciding
disputed questions, these should be adhered to.
• SUPREME COURT-RETIREMENT WAGE NOT
THE CRITERIA: The Supreme Court has ruled that
while computing the financial loss due to the death
of a bread winner in a motor vehicle accident, the
Tribunal should not consider his income at the time
 of his future retirement, but the income at the time
of mishap.
• RAJAN COMMITTEE ON FINANCIAL SECTOR
REFORMS: Mr. Raghuram Rajan, Chairman of
Rajan Committee said that while there is a case for
separate sectoral regulators like RBI, IRDA,
PFRDA, logically both corporate and Government
Bond Markets should come under SEBI. A single
Regulator will encourage the growth of currency,
bond and interest rate derivative markets, none of
which are present in India.
• SUPREME COURT RULING ON DEGREE-
DIPLOMA: Setting aside the Maharashtra High
Court order, the Supreme Court has ruled that a
Diploma is a lower qualification than a Degree.
Once a candidate possesses a Degree, then he has to
be given preference as against a candidate who
possesses a Diploma.
• RBI SUPPORTS FARM LOAN WAIVER
SCHEME: RBI has supported the Loan Waiver
Scheme and implementing it in a manner that would
strengthen the Banking System rather than weaken
it. RBI, Govt and the Banks will work together in a
manner that the goals and objectives of the Scheme
are achieved.
• FRAUD REPORTING NORMS TIGHTENED:
RBI has tightened the fraud reporting norms for
Deposit-Taking Non- Banking Financial
Companies. In the case of cash shortage of more
than Rs.10,000, such NBFCs will have to report it
as a fraud even if the fraudulent intention is not
detected.
• SUPREME COURT VERDICT ON CLAIM
REVIVAL: The Supreme Court has said that even
after signing a discharge voucher for an insurance
amount, the claim can be revived if the agreement is
proved to be under coercion or against free will.
• BANKS, CO-OPS TO SUBMIT DETAILS OF
OVERDUE FARM LOANS: RBI has asked all
Public Sector banks to submit by March 14
comprehensive lists of dues fro Small and Marginal
Farmers and other borrowers of Agricultural loans.
NABARD has also asked all Co-ops and RRBS to
submit similar lists by March 14.
• SUPREME COURT-SEBI BOARD TO
DERCOGNISE BOURSES: The Supreme Court has
upheld SEBI’s powers to delegate withdrawal of
recognition of the Stock Exchanges to its members.
• RBI OBJECTS TO BILATERAL TRADE
AGREEMENTS: After political opposition to
bilateral trade agreements, RBI has also objected to
it and their concerns are grounded in the need for a
more liberal regime for the Banking and Financial
Sector.
• FRAUDS COST BANKS: Union Finance Minister
has said that Banks in India lost about Rs.1, 078
Crore due to frauds, including on Credit Cards,
during the last year. Although the number of bank
frauds have gone up from 12,374 in 2005 to 22,280
in 2007, the total amount involved in frauds
declined from Rs.1,395.91 Crore to Rs.1,077.84
Crore during the same period.
• SAARC : INDIA PRUNES NEGATIVE LIST TO
500 ITEMS: India announced the pruning of
negative list from 744 items to around 500 items for
 the least developed country members of the South
Asian Association for Regional Cooperation
(SAARC), thereby enlarging the scope of Duty-free
entry to the export items from these countries.
• LIC HOUSING TO OFFER REVERSE
MORTGAGE LOANS: LIC Housing Finance Ltd.
will now offer Reverse Mortgage loans for senior
citizens above 60 years. The property evaluated for
the loan should have at least 20 years of residual
life. The maximum loan balance will be restricted to
90% of the value of the property and loan balance
will include interest till maturity.
• PAN MUST FOR ALL MARKET OPERATIONS:
The Union Finance Minister said that for all types
of transactions in the Financial Market, Permanent
Account Number (PAN) would henceforth be
mandatory. However this would be applicable
subject to suitable threshold exemption limits.
• TAX CLARIFICATIONS ON REVERSE
MORTGAGE FOR SENIORS: Union Finance
Minister clarified that income received from
Reverse Mortgage would not be treated as income.
Similarly it would not amount to “Transfer” under
the provisions of Income Tax Act. Thus the sum
received from the scheme will be exempted from
Income Tax.
• RBI TO DIVEST STAKE IN NABARD: RBI has
decided to divest its entire stake of 72.5% in
NABARD to the Centre. RBI has been gradually
divesting its stake in Public Sector Banks to avoid a
conflict of interest. It has also been said that RBI’s
stake is unlikely to have any impact on rural credit
delivery or on NABARD’s monitoring mechanism.
• SENSEX, NIFTY AMONG WORLD’S WORST
PERFORMERS: Indian Equities are among the
Worst Performers in the Global Markets since
January 2008. Among the major markets only Hong
Kong markets have seen as much negative growth
this year as the benchmark indices Nifty and
Sensex.
• SMALL SAVINGS TURN NEGATIVE : According
to data collected by the Controller General of
Accounts, for the first time perhaps, net collections
of small savings have become negative at
Rs.10,587.40 Crore against the budget estimate of
Rs.41100 Crore. It means that the fresh collections
from small savings this fiscal were not adequate
enough to make good the repayment of investments
which matured and then ensure a surplus in the
National Small Savings Fund (NSSF) which
administers small savings scheme.
• HDFC BANK, CBOP SEAL LARGEST
BANKING MERGER: HDFC Bank approved the
acquisition of Centurion bank of Punjab (CBOP) for
Rs.9, 510 Crore in the largest merger in the financial
sector in India. However the merged entity would
still be two-fifth the size of the country’s second
largest lender, ICICI Bank. CBOP shareholders will
get one share of HDFC Bank for every 29 shares
held by them.
• WORLD BANK APPROVES HP ROAD
TUNNELS: The World Bank has approved 6 new
road tunnels in Himachal Pradesh. The DPR of the
Road Tunnel Projects is expected to be complete by
April this year. Besides, the World bank has also
 sanctioned Rs.1,365 Crore to widen some two lane
roads into to four-lane ones.
• FCEBs INTO SHARES–METHOD TO
CALCULATE ACQUISITION COST: The Govt
has spelt out the method for calculating acquisition
cost under the Foreign Currency Exchangeable
Bonds (FCEB) Scheme. The Finance Bill 2008 has
provided that the cost of acquisition of shares
received upon conversion of the Bond would be the
price at which the corresponding bond was
acquired. It has also been provided that conversion
of FCEBs into shares would not be treated as
“Transfer” within the Income Tax Law.
• LOAN WAIVER: The Union Finance Minister has
said that whatever loans are written off, an
equivalent liquidity will be provided to the Banks
concerned.
• WORLD BANK AND JAPAN BANK TO GIVE
ASSISTANCE: The World Bank and Japan Bank of
International Cooperation will provide financial
assistance to the tune of about Rs.380 Crore for the
different forest related projects in the Haryana. As
per the Forest survey, Forest cover in Haryana had
increased from 6.2% to 7.4%.
• POSITION OF EXPORTS, IMPORTS AND
TRADE DEFICIT: Cumulatively, value of Exports
for April 2007 to January 2008 at $124.19 billion
was 21.62 % higher than $102.11 billion during the
corresponding months of the previous fiscal.
Imports during first ten months at $191.60 billion
showed a growth of 29.63% over the level of
$147.81 billion during corresponding period of the
previous fiscal. Trade Deficit during the first 10
 months zoomed to $67.41 billion which was higher
than which was higher than the deficit of $45.70
billion during April-January 2007
• CREDIT DERIVATIVES EXPOSURE DETAILS
REQUIRED: While the actual losses of Indian
banks on account of Sub-Prime impact are yet to be
ascertained, RBI have sought more details on their
overseas transaction and investments. According to
banking sources, the Banks may face a problem if
their individual Overseas units suffer losses due to
the fall in the value of the investments. This may
force the Banks to provide for additional capital.
• WORLD BANK LOAN FOR BIHAR: The World
Bank has decided to give Rs.400 Crore, first
instalment of $225 million (Rs.877 Crore) of its
development policy loan, which is likely to be
credited in the Bihar Government’s account by
March 31.
• CAPITAL GOODS PRODUCTION GROWTH
RATE SLUMPS: After growing a healthy rate of
24.5% in November 2007 and a good turn out at
16.6% in December, the Capital Goods Sector
growth slumped to just 2.1% in January 2008.
Economists believe that industry could be running
into a capacity constraint as far as machinery and
equipment are concerned.
• FARMERS DEBT RELIEF FUND: A sum of
Rs.10,000 Crore out of Rs.60,000 Crore farm loan
waiver has been included in the third and final batch
of supplementary demands for grants for the current
fiscal.Rs.10,000 Crore would be utilized for the
creation of “Farmers Debt Relief Fund” towards the
Debt waiver and Debt Relief Schemes for farmers to
 cover all agricultural loans disbursed by Scheduled
Commercial banks , RRBs and Cooperative Credit
Institutions up to March 31,2007 and remained
unpaid till February 29,2008.
• FARM DEBT WAIVER-BANKS TOGET TWO-
THIRD IN CASH: The financial package is largely
frontloaded. As much as Rs.25, 000 Crore will be
disbursed in July-August 2008 and another Rs.15,
000 Crore in June-July 2009. In terms of the lending
institutions, an estimated 55% of the package would
be to borrowers from Cooperative Institutions, 35%
from Scheduled Commercial banks and 10% from
RRBs.
• FOREX RESERVES CROSSES $300 BILLION
MARK FIRST TIME: Forex Reserves rose by
$2.225 billon for the week ended March 7,2008 to
$303 billion and thus crossed the $300 billion for
the first time mainly due to the upward movement
in major global currencies such as Euro and Yen.
• SBI LOSS ON CREDIT DERIVATIVES: The Govt
has said that State Bank of India has suffered a loss
of Rs.1 Crore in the Overseas Credit Derivatives
market.
• FED OPENS LENDING WINDOW TO WALL
STREET FIRMS: The Federal Reserve, acting
urgently over the weekend to stabilize financial
markets, approved a cut in its emergency lending
rate to 3.25% from 3.50% -a new lending facility
immediately available to Wall Street Firms. The
Central bank took the extremely rare step to calm
panicked markets by offering to provide cash to
financially squeezed Wall Street Investment Houses
–basically becoming a lender of last resort for them.
• ICICI SELLS RETAIL ASSETS TO IDBI
TRUSTEESHIP: ICICI Bank has sold Retail Assets
worth Rs.4,895.90 Crore to the Special Purpose
Vehicle “Investment Vehicle for Structured
Transaction 1508” floated by IDBI Trusteeship
Services Ltd.
• NO UNCOVERED FOREX EXPOSURE-YES
BANK: Yes Bank Ltd, partly owned by Rabobank
Group of the Netherlands has no uncovered
exposure in the foreign exchange derivative
business because there have been unfounded
rumours on this issue.
• INFRASTRUCTURE INDUSTRIES GROWTH
SLUMPS: The cumulative growth rate in the 6 Core
Infrastructure Industries during April-January 2008
declined to 5.5% as against 8.9% in the same period
last fiscal.
• BANK OF BARODA's BAHARIN BRANCH:
Bank of Baroda, which established offshore
Banking Unit in Bahrain in 1980 and closed it in
1993 due to foreign exchange crisis in India, has
been issued licence by the Central Bank of Bahrain.
• ASSISTANCE HIKED FOR HOUSING UNDER
INDIRA AWAAS YOJANA: The Union cabinet
gave its nod for hiking the unit assistance provided
to the Rural BPL Households for construction of a
dwelling unit under the Indira Awaas Yojana. The
Unit assistance for an IAY house in plain areas
would be increased to Rs.35, 000 fromRs.25,
000.For difficult/hilly areas, the assistance would go
up from Rs.27, 500 to Rs.38, 500. For up gradation,
assistance will go uptoRs.15,000 from Rs.12,500
across the country.
 DECEMBER 2007
o US-FED BENCHMARK RATE : The Federal
Reserve US, lowered its Benchmark interest
rate by a quarter point to 4.25%. The Bank also
pared the discount rate by a quarter point to
4.75%
o PROMISED BENEFITS CAN NOT BE
DENIED—SUPREME COURT: The Supreme
Court has ruled that the Govt. can not
withdraw benefits given to the entrepreneurs
while inviting investments for industrial
development of specific areas. Unless it is in
public interest, such withdrawal is unfair and
arbitrary.
o RBI SETS UP PANEL TO REVIVE SICK
MSMEs: The RBI has constituted a working
group for the revival and rehabilitation of sick
Micro, Small and Medium Enterprises
(MSME). The Working Group, to be headed by
PNB CMD (Chakraborty), would primarily
look at units which turned sick because of
credit related problems.
o CERTIFICATION MUST FOR MARKET
ADVISORS : In a bid to improve the quality of
services available to investors, SEBI has made
Certification mandatory for all market
participants handling investor’s money and
acting as advisors.
o SEBI ALLOWS SHORT SELLING : SEBI has
allowed short selling of shares by all classes of
investors, both institutional and retail. Short
selling had been banned by SEBI in the wake
of the Ketan Parekh scam in 2001.
o CRIMINAL CASE OF BOUNCED CHEQUE
: Setting aside the conflicting rulings among
the High Courts, the Supreme Court has
declared that a criminal case of bounced
cheque under the Negotiable Instruments Act
could normally be compromised and the
accused person need not be punished.
o HABITUAL ABSENTEEISM RULING : The
Supreme Court has ruled that habitual
absenteeism from work is a gross violation of
discipline justifying dismissal.
o ENCASHMENT NORMS FOR JOINT
TERM- DEPOSIT : The Finance Ministry has
relaxed encashment norms for joint holder type
term deposits under the Tax Saving Bank Term
Deposit Scheme. In the event of the death of
the first holder, CBDT has allowed the joint
holder to encash the term deposit before its
maturity. Hitherto, the scheme did not permit
any encashment of term deposits before the
expiry of five years.
o NORMS FOR CORPORATE BONDS: SEBI
has relaxed guidelines for issue of corporate
bonds through the public issue route. The new
norms permit companies to come out with
bonds with below investment grade popularly
known as “junk” bonds.
o RBI FOR DIFFERENTIAL REALTY LOAN
CAPS : RBI has asked banks to set separate
limits for lending to residential and commercial
real estate within their overall exposure to the
sector, while specifying norms to be followed
for lending to the realty sector. Banks were
 also told to explicitly state in their Loan Policy
the minimum internal rating required for
builders and developers.
o SERVICE CHARGES NOT WAGES : The
Supreme Court has ruled that tip or service
charge paid by customers to the hotel staff did
not amount to “Wages” and could not be taken
into account for payment of premium to the
Employees State Insurance (ESI) Corporation
by the Industrial Establishment.
o SIDBI STOPS REFINANCE FACILITY TO 3
SFCs: - Following the recent guidelines of
RBI, directing that no refinance should be
provided to State Financial Corporations unless
they improve their Capital Adequacy Ratio,
SIDBI has stopped refinance facility to Punjab,
Haryana and Himachal Pradesh Financial
Corporations. The CAR of the PFC, HPFC and
HFC for the year 2006 stood negative.
o 5 PSBs TO HAVE MAJORITY STAKE IN
PAYMENT CORPORATION : 5 Public Sector
Banks – SBI, PNB, Canara Bank, BOB and
Union Bank of India will have the majority
stake in a new company to be incorporated to
undertake the payment and settlement work,
currently being done by RBI. Initially, the
proposed company, National Payments
Corporation of India –will take over the RBI-
run Clearing Houses in the 4 Metros- Delhi,
Calcutta, Mumbai and Chennai.
o WORLD BANK SUPPORT FOR CGFTMSE :
The Credit Guarantee Fund Trust for Micro
and Small Enterprises has started a risk sharing
 fund with $5 million support from World Bank.
The proposed guarantee fee for the World Bank
supported scheme would be 0.75% of the loan
amount as against existing guarantee fee of
1.5% and annual service fee of 0.75%.
o IDENTIFICATION NUMBER NECESSARY
FOR DIRECTORS : The Union Ministry of
Corporate Affairs has said that possession of
Director’s Identification Number (DIN) is
necessary for any person to become a director
in a company, a step intended to ease tracking
of office holders of firms that close overnight.
o CBEC GIVEN POWERS TO APPOINT
STANDING COUNSELS : In a move that may
help fast-track Govt response to Indirect Tax
litigations, the Central Board of Excise and
Customs (CBEC) has been given powers to
appoint standing counsels to handle litigation
of Indirect Taxes before various High Courts.
Hitherto, the standing counsels appointments
were decided by the Law Ministry.
o INTEREST FREE LOANS EXTENDED TO
SUGAR MILLS: The Central Govt. decided to
give interest free loans to sugar mills that are
facing a crisis after prices of the sweetener fell
following a record output, for helping them pay
dues to sugarcane farmers. Mills will have to
repay the loans in 4 years, including a
moratorium of 2 years.
o NDS FOR NON-DEPOSIT NBFCs : RBI
allowed the systematically important Non-
deposit taking NBFCs to be recognized as
Qualified Entities for accessing the Negotiated
 Dealing System, using the constituent
subsidiary general ledger route.
o CIBIL MEMBERS CAN HAVE CREDIT
SCORE OF BORROWERS: CIBIL and
TransUnion, a US-based analytics firm, have
created a generic credit score for the Indian
Borrower. While this score is currently used
only by lenders, borrowers may also soon be
able to use this to bargain for better rates, once
the Credit information Act is passed.
o RBI CUTS PRIORITY SECTOR TARGETS
FOR UCBs : RBI has slashed the priority
sector lending target for Urban Cooperative
Banks (UCBs) to 40% from 60%of adjusted
bank credit to bring regulatory norms for them
on a par with that for commercial banks. The
revised target norm will come into effect from
April 01, 2008.
o CA FIRM CANNOT GET TAX DEDUCTION
: The Supreme Court has ruled that a firm of
Chartered Accountants could not claim income
deduction for depreciation of the buildings
providing residential accommodation for its
employees as they are “professionals” and not
doing business.
o PF INVESTMENT IN STOCKS : The Pension
Fund Regulatory and Development Authority
(PFRDA) has given its nod for investments
upto 5% of the funds under the new pension
System (NPS) in stock markets and another
10% in equity linked mutual funds.
o CCEA NOD FOR HANDLOOM
DEVELOPMENT SCHEME : The Cabinet
 Committee on Economic Affairs (CCEA) has
given approval for implementing the Integrated
Handlooms Development Scheme as a
Centrally Sponsored Plan Scheme in the 11th
Plan. The total cost involved is Rs.790 crore.
o SBI STOPS HONOURING IRANIAN
LETTERS OF CREDIT: - Buckling under US
pressure, SBI has stopped honoring Iranian
LCs hurting trade between India and the West
Asian Nation. Earlier this year, many Banks
from Japan, Switzerland and other European
countries had withdrawn from Iran after US
sanctions on Iranian Banks. SBI says that all
international banks operating in the US are
subject to certain regulations and India is no
exception.
o URBAN COOP. BANKS CAN LEND
AGAINST GOLD : According to RBI
Notification, Urban Cooperative Banks can
now sanction gold loan not exceeding Rs.1
lakh with bullet repayment option. The period
of loan should not exceed 12 months from the
date of sanction and the interest would be
charged to the account at monthly rests.
o NO CURB ON FOREIGN BANK
EXPANSION : The share of Foreign Banks as
a percentage of the assets of India’s Banking
Sector currently stands at a higher level against
the mandated World Trade Organization
(WTO) requirement of just 15%. However the
country has not put any restriction on the entry
of new foreign banks, since it wants a
 reciprocal gesture as Indian Banks increasingly
are planning to expand overseas.
o RBI RULES FOR FOREIGN VC’s : RBI has
spelt out that foreign venture capital funds will
get registration to invest in India only if they
chip in a part of the investment upfront. Till
date, the Regulator has been insisting on end-
use restrictions. This only meant that foreign
funds have to give undertakings that they will
not invest in the Indian property market. The
condition now being laid down relates to some
credible capital commitment before a formal
registration can be obtained.
o PANEL MOOTS FAST TRACK COURTS
FOR LOAN DEFAULT DISPUTES : Banks
may have access to a new means of loan
recovery if the recommendations of a Working
Group appointed by IBA are accepted by RBI
and the Govt. The IBA’s suggestions include
setting up of Fast Track Courts on the lines of
Lok Adalat to facilitate the speedy recovery of
loans and repossession of property within the
existing legal framework.
o ULTRA MEGA POWER DEVELOPERS NOT
TO BID FOR ANOTHER PROJECT : A
Parliamentary Committee has suggested that
developers of Ultra Mega Power Projects
(UMPP) who have already bagged one Project
should not be allowed to bid for another on the
basis of the same balance sheet on which the
earlier Project was won. A Project having a
capacity of 4,000 MW or more is called an
Ultra Mega Power Project.
o NABARD WORKING GROUP ON
TRAINING NEEDS OF RRB PERSONNEL:
NABARD has constituted a Working
Committee under the Chairmanship of its ED,
Sh.Amresh Kumar on capacity building
requirements of Personnel of Regional Rural
banks. The Group will identify the areas of
improvement, prioritise the training and
capacity building exercise for RRB Staff.
o NO PLAN TO RAISE GOVT. STAKE IN
PSBs: - The Govt. has no plans to raise its
stake in Public Sector Banks to74% across the
Board, as it would require large infusion of
funds. The Govt’s Equity holding is currently
below 74% in most of PSBs. It is above 74%
only in respect of Bank of
Maharashtra(76.77%), CBI (80.21%),
UCO(74.98%), Indian Bank(80%), United
Bank of India and Punjab & Sindh Bank(100%
respectively).
o BANKS KEY FINANCIALS : According to
RBI, Gross NPAs as a percentage of gross
advances declined to 2.5% from 3.3% at the
end of March2006. The CRAR (at 12.3%) was
placed significantly above the stipulated
minimum of 9%. Hence in terms of two crucial
soundness indicators, capital and asset quality,
the Indian Banking Sector remained
comfortably placed at the end of March 2007.
o BANKS PREFER G-SECS : Banks have
invested more money in Govt. Bonds than they
have lent to corporates, individuals and farmers
this financial year. According to the latest
 figures with RBI, bank investment in govt.
bonds and other approved securities during
April-November9,2007 was Rs.1,57,915 crore
against loans at Rs.1,35,267 crore. As against
this, during the same period of last year, banks
invested Rs.42,520 Crore in bonds and gave
loans worth Rs.1,64,694 Crore.
o LOSS MAKING RRBs DECREASED : Net
profits of RRBs declined to Rs.596 Crore
during 2006-07 against Rs.617 Crore during
2005-06. The Profit making and Loss making
RRBs also declined to 81(111) and 15(22)
respectively. The number of total RRBs stood
at 96(133) during 2006-07.
o LARGEST SECURITIZATION DEAL : ICICI
Bank has carried out the largest rated
securitization transaction for an amount of
Rs.1, 929.90 Crore. The securities are backed
by the ICICI bank’s new and used car loan
receivables and have been issued by Indian
Retail ABS trust under the bank’s securitization
programme.
o BANKS REFUSE DOLLAR LOANS TO
EXPORTERS: Banks have stopped giving
dollar loans to exporters. According to Banking
Industry Officials, they can no longer afford to
offer dollar loans as their own foreign currency
credit lines have dried up. Indian banks have
been drawing foreign currency credit lines
from international banks to lend to local
exporters.
o SYNDICATE BANK PUTS MTN ISSUE ON
HOLD: The Global Sub-prime meltdown has
 cast its shadow on Syndicate Bank’s planned
cross-border capital raising through Medium
Term Notes (MTN) for $125 million.
o URBAN CO-OPS GETTING MORE
DEPOSITS: According to RBI Report, the
deposits of Urban Co-operative Banks started
to rise from 2005-06 onwards, reversing the
declining trend of 2004-05. The deposits
increased from Rs.1,14,060 crore in 2005-06 to
Rs.1,20,983 Crore the following year,
compared to the slip from Rs.1,10,256 Crore in
2003-04 to Rs.1,05,021 Crore in 2004-05.
o SBI INSTANT REMMITANCE FACILITY:
State Bank of India has launched an Instant
Transfer Facility that it claims is the fastest
way for members of the Indian Community in
Singapore to remit funds back to their
Homeland. Remittance services offered by
banks usually take between 15 minutes and a
few working days.
o PSU BANKS STAKE NOT AS INDIRECT
FOREIGN HOLDING: In a move that comes
as a relief for companies in which public sector
banks or financial institutions hold stake, the
Govt is planning of exempt investment by PSU
Banks and FIs with foreign equity holding
from calculation of indirect foreign equity
holding in an Indian Company.
o POSITION OF EXPORTS, IMPORTS AND
TRADE DEFICIT: Exports during April-
October 2007 rose 20.89% to $85.58 billion,
while imports were up 25.31% at $129.99
 billion. Trade deficit for April-October was
estimated at $44.40 billion.
o STATUTORY AUDITORS FOR PSU
BANKS: - RBI will continue to appoint
Statutory Auditors for Public Sector Banks for
the current fiscal year. There were some doubts
about empanelling of Statutory Auditors this
year as some Banks have been demanding
autonomy in the appointments.
o UNUSED LOANS TO COST FIRMS DEAR:
From this year, banks are required to set aside
capital for unused portion of loans under the
New Capital Adequacy Guidelines. So far, only
amount of loans drawn attracted capital
adequacy norms. Now banks plan to charge a
levy on unutilized portion of credit.
o SEBI ABOLISHES LOAD ON BONUS,
REINVESTED UNITS : In a major victory for
investors who have been losing a part of their
legitimate earnings for no reason, SEBI has
said that as per decision taken by AMFI
(Association of Mutual Funds in India) not to
charge entry/exit loads for Units given as
bonus or against reinvested dividends.
o RBI FINES CO-OPERATIVE BANK : RBI
has imposed a penalty of Rs.1,00,000 on Shri
Parola Co-operative Bank Ltd based in
Jalgaon, Maharashtra for violating the directive
on credit exposure limits for individual and
group borrowers and loans to directors and
their relatives.
November 2007
o 13TH FINANCE COMMISSION : The former
Finance Secretary and Advisor to the Finance
Minister, Dr. Vijay Kelkar has been appointed
as the Chairman of the 13th Finance
Commission.
o FAST TRACK COURTS FOR LOAN
DEFAULT DISPUTES : Banks may access a
new means of loan recovery if the
recommendations of a Working Group
appointed by the Indian Bank’s Association are
accepted by RBI and the Government. The
IBA’s suggestions include setting up of Fast
Track Courts on the lines of Lok Adalat to
facilitate the speedy recovery of loans and
repossession of property within the existing
legal framework.
o GOVT. INFUSION IN PSU BANKS : The
Govt. may infuse about Rs.10,000 Crore as
equity capital in Nationalized Banks in
addition to an identical amount in the country’s
Largest Lender, SBI. Nationalized Banks with
the Govt. holding closer to the floor of 51% are
likely to receive the capital infusion support.
o BANKS CAN ACT AS LINK BETWEEN
FARMERS AND FUTURE MARKETS: -
Banks, Agriculture Universities, NGOs and
other organizations can act as an interface
between farmers and future trading market.
o RBI WEB SITE FOR YOUNG : RBI has
launched a Financial Education Web-site which
is aimed at teaching the basics of banking,
finance and central banking to children of
different age groups.
o SUPREME COURT EASED SECURITY
DEPOSIT NORMS :- The Court has stated that
even if a State Electricity Board promises to
pay interest on Security Deposits to Corporate
Customers, it can change terms in case of
budgetary or financial constraints.
o RESIDENT INDIANS MAY GET TO TRADE
IN CURRENCY FUTURES: A Panel
appointed by RBI has recommended trading in
currency futures on dedicated exchanges by
Residents. A exchange future is an exchange-
traded derivative that allows investors to sell or
buy a currency at a fixed price on a future date.
To begin with, future trading would be allowed
only in Rupee-dollar contracts.
o NO RIGHT TO BANK ACCOUNT INFO :
Noting that agreements entered into by
Banking Enterprises with its customers were
matters of “Commercial Confidence”, the
Central Information Commission (CIC) has
ruled out disclosure of information pertaining
to bank account details under the Right to
Information Act.
o SEC SCRAPS ACCOUNTING RULE FOR
FOREIGN COS : The US Securities and
Exchange Commission scrapped a requirement
that foreign companies reconcile financial
statements with US accounting rules, part of an
effort to increase cross border investing.
o PENSION SCHEME FOR SENIOR
CITIZENS : The Govt. formally launched an
Old Age Pension Scheme which is expected to
benefit around 16 million citizens above the
 age of 65 and living below the poverty line
(BPL) The Indira Gandhi National Old Age
Pension Scheme seeks to provide Rs.200 per
month as the Central Govt’s contribution and
matching amount by the State to each
beneficiary.
o SEBI MOOTS SEPARATE EXCHANGE FOR
SMEs: SEBI has cleared the proposal for a
separate stock market for listing Small and
Medium Enterprises (SMEs). SEBI would
select one Entity which would satisfy its
eligibility criteria.
o NORMS FOR SHORT SALES RELAXED: In
a bid to increase participation in and impart
greater liquidity to the Govt security markets,
RBI has extended “short sale” and “when
issued” transactions to platforms other than the
Negotiated Dealing System –Order Matching
(NDS-OM) platform. The relaxation now
allows the participation of brokers and direct
trades between bank or primary dealers.
o TUFS EXTENDED FOR ENTIRE 11TH
PLAN PERIOD : The Govt has announced the
continuation of the Technology Up-gradation
Fund Scheme (TUFS) for the entire period of
the 11th Five Year Plan(2007-12) The decision
is expected to help the textile sector in
achieving the targeted growth rate of 16% and
make an investment of Rs.1,50,600 Crore in
the plan period.
o NO FIIs ON COMMODITY EXCHANGE
BOARDS: Foreign Institutional Investors
(FIIs) will not be allowed to get a berth on the
 Boards of Commodity Exchanges. The Govt
has proposed that FIIs can pick up 24% stake
in commodity exchanges. The Foreign Direct
Investment (FDI) ceiling for commodity
exchanges would be 25% -short of the
minimum stake required for veto power.
Therefore the overall foreign investment in
commodity exchanges would be capped at
49%.
o US FED's BASEL-II RULES :The US Federal
Reserve has approved final rules for
implementing the Basel-II International
Banking Accord, which will require the
Nation’s largest Banks to tie their capital
reserves closer to their risks.
o RBI WARNS BANKERS ON EXCESSIVE
CHARGES: RBI has threatened the bankers to
extend the Usurious Loans Act (ULA) if RBI
receives customer complaints about
unreasonably high interest rates. The ULA was
enacted to prevent the civil courts from being
used to enforce loans that carry excessively
high rates. Banks are currently exempt from
the ULA because of an overriding clause in the
Banking Regulation Act that put interest rates
charged by banking companies outside judicial
scrutiny.
o WORKING GROUP ON FARM DEBT : RBI
has constituted an Internal Working Group
under the Chairmanship of Mr. V.S.Das,
Executive Director of RBI, in order to examine
the recommendations of the Radhakrishana
Expert Group on Agricultural Indebtness.
o CHINA RAISES BANK RESERVE RATIO
AGAIN : China’s Central Bank has raised 0.5
percentage point in bank’s reserve ratios and
bring the ratio for big banks to 13.5%. This
hike is 9th this year and took effect on Nov
26.China has also raised benchmark interest
rates 5 times this year in an effort to keep bank
deposit rates from lagging far behind inflation.
o BANKS ALLOWED PREF. SHARE ISSUE:
RBI has allowed the Banks, facing pressure on
their capital due to the increasing demand for
credit, to raise Tier-I and upper Tier-II capital
through Preference Shares. Perpetual Non-
cumulative Preference Shares (PNCPS) will be
treated on par with Equity and the coupon
payable on these instruments will be treated as
dividend. All other types of Preference Shares
will be treated as liabilities and the coupon
payable will be treated as interest.
o NORMS ISSUED FOR STOCK OPTIONS
VALUATION: The Finance Ministry has
brought out guidelines for computation of fair
market value (FMV) of employee stock options
(ESOPs) for the purpose of levy of fringe
benefit tax (FBT). In case of shares of
companies not listed in recognized stock
exchange, the FMV would be the value of the
share in a company as determined by a
merchant banker on the “Specified date” (Date
of vesting of option or any date not more than
180 days earlier than the vesting date). In case
of shares of a listed companies, the FMV
would be the average of the opening price and
 closing price of the share on the vesting date
on that Stock Exchange.
o BANKS' INVESTMENT CATEGORISATION
: Banks have sought status quo for
categorization of investments in their
portfolios. Currently, investments are
categorized as Held-to maturity(HTM),
Available –for-sale (AFS) and Held-for
Trading (HFT). Under current guidelines of
RBI banks are allowed to hold up to 25% of
their Demand and Time Liabilities in the HTM
category. Investments are valued on the basis
of acquisition costs.
o BANK OF BARODA LAUNCHES GOLD
COIN SALES : Bank of Baroda launched the
selling of gold coins at its branches.
o RBI WANTS BAN ON AUTOMATIC FDI IN
REALITY: RBI has asked the Govt to allow
FDI into the sector only after clearance from
the Foreign Investment Promotion Board
(FIPB).
o SBI ‘EASY’ CARD PAYMENT OPTION: SBI
Card announced “Pay-cash” payment option
for its customers through Easy Bill payment
outlets in India.
o NEW BASE YEAR FOR INDUSTRIAL
PRODUCTION : A new set of indices for
measuring growth in industrial production, SSI
sector performance and calculation of
consumer prices in urban areas is likely to be
the first off the block and may cover over 800
item groups with a new base year of 1999-
 2000. The current IIP has 1993-94 as its base
year and covers about 400 items.
o NEW EXECUTIVE DIRECTORS OF RBI:
The RBI has two new Executive Directors Mr.
G.Gopalakrishna and Mr. H.R.Khan
(Previously Chief General Managers of RBI).
Their appointment has come into effect from
October 26, 2007.
o STERLISATION TAX TO STEM ECB
FLOWS : RBI and Finance Ministry are
working on a concept paper that will look at
the feasibility of levying a sterilization tax on
External Commercial Borrowings (ECB).The
paper will also look at auctioning the limited
foreign loans quota to help moderate ECB
inflows, which are currently running at over
$25 billion a year.
o NCAER RAISES GDP GROWTH
ESTIMATES :- The National Council of
Applied Economic Research (NCAER) has
revised its projection of Gross Domestic
Product (GDP) growth for the current fiscal to
8.9% from its earlier estimates of 8.5%.
o SBI TO HIRE RECOVERY OFFICERS: SBI
would hire 3000 marketing and recovery
officers whose job profile would include
recovery of loans.
o POSITION OF EXPORTS, IMPORTS AND
TRADE DEFICIT: Growth in India’s exports-
valued at $72.2 billion in the first half of the
fiscal-decelerated to 18.52% compared to a
sharp 27% to $60.8 billion recorded in the
comparable period of the previous fiscal.
 Cumulative value of imports during April-Sept
07 was $109.2 billion against $87
billion(growth 25.51%). Trade Deficit for Apr-
Sep.07 was estimated at $36.92 billion ($26.02
bn last half Year).
o LOAN AGREEMENTS WITH WORLD
BANK : The World Bank has signed 3 loan
agreements with India for total assistance of
$944 million towards 3 projects in the critical
areas of rural finance, vocational training and
restoration of water bodies.
o FIRST POWER TRADING EXCHANGE
LAUNCHED: Power Trading Corporation and
Financial Technologies, promoter of the Multi
Commodity Exchange, have launched the
Country’s First Power Trading Platform
“Indian Energy Exchange”(IEX) with an initial
investment of Rs.25 Crore.
o LACK OF AWARENESS HAMPERS E-
PAYMENT: As per suggestions in the first
Review of Payment and Settlement Systems in
India 2006-07 released by RBI, lack of
awareness of the payment products is one
reason for slow progress.
o CORPORATION BANK IN TIE-UP FOR
MONEY TRANSFER: UAE Exchange &
Financial Services and Corporation Bank will
facilitate money transfer between the 2
countries through Money Gram services to tap
the Indian population.
o RBI CANCELS REGISTRATION OF 12
COS. RBI has cancelled the certificate of
registration of 12 companies, so far, this year.
o SBI BOARD OKAYS PENSION BENEFIT
TO SBS EMPLOYEES: SBI has decided to
provide pension benefit to employees’ of State
Bank of Saurashtra. This third benefit is in
addition to gratuity and provident fund for SBS
employees.
o ICICI BANK SELLS 45% BAD HOME
LOANS TO ARCIL: ICICI Bank has sold
roughly 45% of its sticky home loans to the
Asset Reconstruction Company India Ltd.
(ARCIL) in a first step towards creating a
market for retail loans that have turned bad.
The Bank has sold Rs.360 Crore of Non-
performing home loans at a price around the
book cost.
o ICICI BANK FINED RS.55 LAKH BY
HIRING “GOONS”: In a judgment that
reinforces RBI’s recent warning to banks on
the strongarm tactics of their collection agents,
the State Consumer Commission has slapped a
fine of Rs.55 Lakh on ICICI Bank for trying to
recover a vehicle loan by hiring “Goons”.
o SBI BEGINS SALE OF GOLD CONS: - SBI
had launched a pilot project for sale of the gold
coins in September at 24 branches in
Ahemdabad, Chennai and Hyderabad circles.
o MARKET SHARE OF PSBs IN DEPOSITS :
Over the past 8 years, the share of Private
Banks in deposits has little more than doubled
from 12.6% to 26.7%. The market share of
PSBs in majorcentres fell from 54.5% to
46.4% between 1999 and 2007. During the
 same period, the share of SBI and its associates
fell from 18.7% to 17.1% in the Metros.
o HSBC WINS MALAYSIAN ISLAMIC BANK
LICENCE: The Malaysian Unit of HSBC
Holdings Plc. has won a licence to set up a
standalone Islamic Banking unit in the country
and is the First Foreign Bank to have done so.
o ICICI LOMBARD BAGS AWARD: ICICI
Lombard has bagged the “General Insurance
Company of the Year” at the 11th Asia
Insurance Industry Awards 2007 in Singapore.
ICICI Lombard is a 74.26 Joint Venture
between ICICI Bank and Canada based Fairfax
Financial Holdings Ltd.
o 7 GMs ELEVATED AS EXECUTIVE
DIRECTORS: The Govt has elevated 7
General Managers from various Public Sectors
Banks to the post of Executive Directors,
filling up top level vacancies in certain banks.
o TOP 3 US BANKS AGREE ON $75 BILION
BACK UPFUND: The top 3 US Banks, Bank
of America, CitigroupInc and JPMorgan Chase
& Co. have agreed on the structure of a backup
fund of at least $75 billion to stabilize credit
markets.
o FOREX FOR INFRASTRUCTURE GETS IN-
PRINCIPLE RBI NOD: RBI has given an in-
principle nod to invest 5 billion dollars of
Foreign Exchange Reserves annually in
infrastructure projects through two subsidiaries
of India Infrastructure Finance Company
Ltd.(IIFCL). Approval has been given in
respect of the Special Purpose Vehicle (SPV) to
 be established to borrow funds from the RBI
and lend to Indian Companies implementing
Infrastructure projects in India or to co-finance
their ECBs for such projects solely for
expenditure outside India.
o BARTERCARD : The dated barter system,
where products and services used to be traded
in cashless transactions, is set to get a new
lease of life in India with World’s Largest
Exchange for such trade, foraying in the
country. Australia-based Barter card said that it
would commence India operations early in
2008 and the licence for the country has been
already sold.
o NEW AUCTION NORM FOR PDs:- RBI has
said that primary Dealers will have to make a
minimum bid equal to the minimum
underwriting commitment for the additional
competitive underwriting auction. Currently,
such dealers are required to bid for 3% of the
notified auction amount for the additional
competitive underwriting auction.
o US FED RESERVE's QUARTERLY
ECONOMIC REPORTS: Federal Reserve has
announced sweeping changes to the way it
communicates with investors and the markets,
by moving to a Bank of England style
Quarterly Report of economic prospects.
o SYNDICATE BANK’S ONLINE LOAN
SCHEME :- Syndicate Bank has become the
First Bank in the country to launch a new
facility for online submission of requests
seeking credit facilities by the Small and
Medium Enterprises (SMEs), students for
higher education loan under the Syndvidya
Scheme and others.