NTPC may lose up to Rs 30K cr if gas not supplied at $2.34

Amid a bitter battle with elder brother Mukesh Ambani over gas, Anil Ambani today cautioned the government that NTPC would lose up to Rs 30,000 crore if the fuel is not supplied by RIL at the committed rate of $2.34 per mmbtu. Offering to clarify that his group company RNRL's position was in no way against the interests of NTPC, Anil sought an early meeting with Power Minister Sushil Kumar Shinde and said, "We would be delighted if NTPC, a navratna, gets its rightful share of 12 mmscmd of gas for 17 years at a price of $2.34, which was discovered through open transparent international competitive bidding in 2004." Anil wrote a letter to Shinde on July 31 and sought a meeting to discuss the matter.

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Want a loan? Check your Credit Score

Have you been paying your telephone bills on time?

Do you consistently forget the due date for your insurance premiums?

You better watch it! If you ever intend to apply for a loan in future all these aspects are going to count! These are a few of the spruce up elements planned to be implemented in your current credit reports. What's more from next year (2010) there will be a system in place through which you can have access to your credit reports!

Such spruce ups have been made possible through a recent move of the RBI (Reserve Bank of India), which has granted an approval for the registration of CIBIL and a few other credit agencies namely, Equifax, Experian and Highmark under CIC Act (Credit Information Companies (Regulation) Act.

Why a credit report?

The concept of credit reports came into existence to ramp up the credit system and ensure banks have an evaluation system in place to decide if a prospective borrower is credit worthy enough to lend huge sums of money to, in the form of a home loan, car loan, personal loan, etc.

Once the RBI approval comes into effect formally, more credit information on individuals can be accessed, which includes telephone bill payments, insurance premiums etc. This should provide a well rounded study of how an individual manages finances, how they repay their debts, how timely they are with their bill payments, etc.

Access to credit reports - Advantages

There are several advantages to the enhancements set to happen with the existing credit information system. Here are a few of them.

Prevents Identity theft

If an individual's credit card or bank account is being misused, keeping track of one's credit report will help the individual take corrective action before it comes too late or before debts start mounting to unreasonable levels. It can help prevent identity theft and instances of fraudulent transactions to a large extent.

Creates discipline and improves money management skills

Often people opt for loans due to its ready availability without giving thought to their current lifestyle, other commitments and debt liabilities. Also, they fail to account for an emergency fund and a savings plan. All these could fall into perspective once a summary of a person's credit repayment is available in a single log with a score spanning 300-900 points providing a measure of an individual's creditworthiness.

More comprehensive credit reports

RBI's approval is the first step towards more comprehensive credit reports, where more periodic transactions involving money inflow and outflow can be tracked to analyze if an individual adopts a careful and methodical approach to his finances and eventually serve as a financial goal map for an individual who wishes to improve his credit score.

The proof of the pudding is in the eating

The very fact that individuals will soon have access to their credit reports can come as a sigh of relief to loan applicants. If they have a very good repayment track record and an excellent credit score their chances for bargaining for a better interest rate on the basis of their credit report is a viable option. It would also help banks significantly decrease the percentage of defaults by opting to choose a better customer for a more competitive interest rate.

After all it makes better business sense for banks to have a higher percentage of customers who repay on time, every time, at lower interest rates compared to a higher percentage of defaulters with high interest rates.

More credit agency options

Now that they are more credit agencies to choose from, better systems that weed out errors and streamline the existing information systems will be given high priority.Establishing a reputation for being the most accurate credit agency will provide the impetus for credit agencies to overcome the several bottlenecks that will emerge in setting up the infrastructure and the actual process.

Knowledge is Power

Access to credit reports is wonderful news for individuals who wish to apply for a loan but are unable to get one due to a faulty credit report or missing information. Currently, rejected applicants who have been informed by their banks that CIBIL reports were the reason, would need to request for the control number of their credit report from their bank and approach CIBIL for a clarification.

This can be a complicated process, especially if the bank does not provide a valid reason for the reject.With direct access to their credit reports, individuals can directly contact CIBIL for a clarification or correction, even before they approach a bank for a loan. Verification and correction of credit scores can be far easier with such transparency.

The Flip Side

Such intensive credit tracking systems can also stir up a new set of problems to deal with. More often than not technology would play a key role in setting up systems that can source huge volumes of information of a large number of individuals.Credit information is also very sensitive and personal to an individual, which in the wrong hands could prove dangerous.

So credit information sourcing could be a new addition to the number of tracking systems that are slowly but surely evolving in all spheres of our lives.In light of such developments could breach of privacy be one of they key issues we would need to battle in the future?

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South Indian Bank takes major strides in the north

Call it a case of an institution outgrowing the dreams of its founders, and even its brand name. Thrissur-based South Indian Bank – whose founders dreamed that the institution would grow beyond the borders of Kerala and have a presence all over south India and named it accordingly – is witnessing a rapid expansion of branches in the north and in a few years will have a significant percentage of its branches in the north, west and east of the country.

The bank opened its 300th branch in Kerala here today, taking the national branch count to 546, but more significant is the bank’s swift expansion of network in the north. Last year it opened a branch in Jammu, and over the past month new branches have been opened at Faridabad, Najafgarh and Indirapuram. Also on the bank’s radar are centers like Shillong, Meerut, Bhilai and Jamshedpur, among other locations.

“We are planning eight more branches in and around Delhi and with a string of new branches across the country in the recent past, we are now present in 25 states”, SIB managing director V A Joseph told ET. Not content with its current network of branches that will reach 575 at the end of this fiscal when 29 more are added by March 2010, SIB has chalked out a 4-year plan that will see the branch network reach 750 by 2013.

Of the 250 branches that will be opened between 2010 and 2013, as many as 150 will be in the north of the country, throwing another puzzle about the very brand name of the bank. “We are adding branches at a quick pace, but fact remains that a vast section of the people in the country is still to have any reasonable access to a bank branch”, says Mr Joseph.

According to the bank’s projections, by 2013 the target is to reach business volumes of Rs 75,000 crore, a branch network that is 750 strong, the same number of ATMs, and an employee strength of 7,500. Mr Joseph said the bank would continue recruiting in the range of roughly 600 staffers per year leading up to 2013, to reach the employee level of 7,500 by that year. SIB had a net profit of Rs 60.11 crore for the first quarter of the current fiscal, up 56% from the Rs 38.62 crore net profit in the corresponding period last year.

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UCO may float Rs 850-cr follow-on issue, non-life JV

UCO Bank may float an Rs 800-850 crore follow-on issue during the third quarter of the current fiscal. The bank has also decided to float a non-life joint venture (JV) company by September. “The proposed issue will have a Rs 136 crore face value and if we consider a premium of Rs 50 per share, we may easily be able to raise Rs 800-850 crore during this quarter,” said SK Goel, chairman and managing director, UCO Bank.

He was talking to reporters at a press conference to announce the company’s first-quarter results. Currently, the government holding in UCO Bank is 64%. After the follow-on issue, the government’s holding will come down to 51%. Talking about different possibilities of raising capital, Mr Goel said: “About Rs 750 crore is slated to come from the Centre as part of the recapitalisation fund.

Additionally, we have headroom for another Rs 800 crore for tier-II capital.” On the plans to float a non-life JV, Mr Goel said: “Now that the economy is rebounding, we’ve decided to take the general insurance business plans. A JV is likely to be floated with a foreign insurer by September 2009.” Talking on the first-quarter financials, Mr Goel said: “Operating and net profit for the quarter ended June 2009 are up by 36% and 34% to Rs 310.3 crore and 178.9 crore, respectively.

The bank’s total business, including overseas business, grew 26% to Rs 1,68,808 crore during the period under review.” Total deposits and advances rose 28.37% and 22.71% to Rs 1,00,428 crore and Rs 68,380 crore, respectively. Investments, on the other hand, rose 37.44% to Rs 32,688 crore. Interest earned for the period rose 26% to Rs 2,331.46 crore. Total income for the bank rose 29% to Rs 2,583.68 crore during the period under review against Rs 1,999.16 crore in the previous corresponding period.

Income from treasury operations for the period was Rs 658.16 crore against Rs 530.64 crore in the previous period. Corporate and wholesale banking during the first quarter was Rs 948.27 crore against Rs 763.05 crore in the previous period. Income from retail banking touched Rs 966.93 crore against Rs 763.05 in the previous corresponding period.

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StanChart set to buy RBS' SME business in India, China, Malaysia

Standard Chartered is set to seal a deal to buy Royal Bank of Scotland’s retail and small and medium enterprises (SME) operations in India, China and Malaysia, two people familiar with the development said. The deal, which could cost the UK-based bank around $250 million, is likely to be announced in a fortnight, said a dealmaker close to the negotiations.

The businesses on offer are a perfect strategic fit for StanChart, which earns more than 70% of its income and over 80% of its operating profit from Asian operations. RBS had put its retail and SME business in nine Asian countries on the block earlier this year. The Indian operations of RBS, which continue to run under the ABN Amro brand name pending regulatory approval, will account for a bulk of the consideration.

The talks, which are taking place in London, may conclude by early next week. Current discussions relate to the extent of the losses that RBS will fund in the next 12 to 18 months, said a senior bank executive. There are also some HR issues in China and Malaysia that need to be addressed. The retail and SME portfolio under the ABN brand in India is around Rs 11,500 crore, of which the retail portfolio is around Rs 6,800 crore.

Losses and provisions in these business for the last calendar year stood at around $160 million (around Rs 770 crore). Despite losses, StanChart is keen on ABN Amro because of its one-million customers. It is also interested in Van Gogh, the premium banking service offered by ABN Amro to high net worth individuals. Both the banks have kept RBI informed about the due diligence and sale process. The StanChart spokesperson said, “We always look at opportunities in our footprint markets but, as you would expect, we don’t comment on any specific opportunities we may be looking at.”

“The sale process of the retail and commercial assets in Asia has advanced well; however, due to regulatory constraints and the confidentiality of the process, we will not comment on any individual bidders or elements of the transaction process until its completion,” said the RBS spokesperson. An earlier proposal by RBS to sell 26 of its 31 branches in India had to be shelved because RBI refused to transfer branch licences.

StanChart is likely to receive some of the branches in order to service retail customers. Out of these 26 branches, around 10 are in cities where StanChart does not have operations. In some of the other locations, the bank may need more branches, as ABN’s existing branches are far from StanChart’s. StanChart currently has the largest number of branches in the country at 90, and may get another 18 from the deal. Given the fact that it is the UK government, with its 70% ownership of RBS, which is selling the bank’s Asian units, RBI may take a lenient approach this time around.

The transfer of branch licences, however, may not figure in the sales agreement. The business RBS will continue to do in India include wholesale debt and debt capital market business, M&A, equities research and trading, markets and treasury, corporate banking, cash and trade business and private banking business. In China, RBS has around 13 branches while StanChart has around 55. StanChart may get only around five or six of these branches if the regulators approve the takeover.

The portfolio in China is a mix of more wealth and commercial banking. In Malaysia, the gain would be minimal for StanChart, where RBS has four branches. StanChart is one of the few banks to have been relatively insulated from the global financial crisis, as most of its income comes from emerging markets in Asia and Africa.

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Indian Bank revises interest rate on NRE deposits

• Public sector Indian Bank has announced revision of interest rates on FCNR (B) and NRE deposits with effect from tomorrow.
• For FCNR (B) deposits, in US Dollar the revised interest rate has been fixed at 2.50 per cent for deposits of one year and above but less than two years (2.61 % existing).
• The revised interest rate has been fixed at 2.56 per cent for deposits of two years and above but less than 3 years (2.53 per cent existing).
• It has been fixed at 3.17 per cent for deposits of three years and above but less than 4 years (3.12 percent existing).
• The revised interest rate has been fixed at 3.64 percent for deposits of four years and above but less than 5 years (3.57 percent existing) and at 4.00 percent for deposits of 5 years only (3.93 percent existing), a bank release said.
• For NRE term deposits, the revised interest rate has been fixed at 3.25 per cent for one year and above but less than two years (3.36 % existing); at 3.31 percent for two years and above but less than 3 years (3.28 % existing) and at 3.92 percent for deposits of 3 years and above and upto 5 years (existing 3.87 per cent), the release added.

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17% jump in jobs in National Capital Region

Shrugging off recession worries, the national capital region (NCR) has recorded a 17.1 percent surge in jobs creation in the first four months of this fiscal against the last four months of the previous fiscal, according to a study by a business body.

The study, Job Opportunities in the National Capital, conducted by the Associated Chamber of Commerce and Industry of India (Assocham) concludes that during April-July 2009, as many as 49,750 openings were created in the NCR of Delhi, Gurgaon, Noida, Greater Noida, Ghaziabad and Faridabad against 42,501 openings in the last four months of 2008-09. Releasing the study, Assocham secretary general D.S. Rawat said that 46.4 percent of the new jobs were in the Delhi region.

As per the chamber's findings, job creation in the satellite towns of NCR - Gurgaon, Noida, Ghaziabad and Faridabad - registered a staggering growth rate of 49.5 percent in the first four months of 2009-10 over the last four months of the previous fiscal, whereas the Delhi region witnessed a decline of 6.4 percent during the same period. However, the number of newly created jobs in the NCR as a whole increased from 42,501 during December-March 2008-09 to 49,750 during April-July 2009, a growth rate of over 17.1 percent.

Among the satellite towns, Gurgaon created the maximum new job opportunities with a 23.1 percent share in the total, followed by Noida/Greater Noida (20 percent), Ghaziabad (5.6 percent) and Faridabad (4.9 percent). A sector-wise analysis shows the IT/ITES sector created the maximum number of jobs with a share of 27.5 percent of the total, followed by the academics sector (nearly 17 percent) and the banking, financial service and insurance (BFSI) sector (14.5 percent).

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