RBI governor rules out rate cut for now
FM sees key role for states in reforms
City bourse deactivates 140 terminals
IDBI to sell Sidbi stake at a premium
United Air service set to resume

New Delhi, March 17: 
Reserve Bank of India governor Bimal Jalan today ruled out any immediate cut in the bank rate or the cash reserve ratio (CRR) but said such a move may be considered in the future.

“Not right now,” Jalan told reporters after the meeting of RBI board with finance minister Yashwant Sinha, when asked if the apex bank would reduce the bank rate and CRR from the present levels. However, he did not rule out a revision in the bank rate in the next fiscal saying “we are always thinking about it (of reducing the bank rate). We want to maintain it (low interest rate regime).”

RBI slashed the bank rate (the rate at which RBI lends money to banks) twice by 50 basis points during February-March to seven per cent from eight per cent and also reduced the CRR by 50 basis points.

On the issue of alleged price rigging prior to the announcement of merger of UTI Bank and Global Trust Bank (GTB), he said “all the issues being raised will be looked into, including their swap ratio.” Jalan said the bank would take a final view of allowing the UTI-GTB merger once all information was available from Sebi.


New Delhi, March 17: 
Union finance minister Yashwant Sinha today asked the Reserve Bank of India to involve the state governments in the reform process. He reiterated the government’s commitment to move ahead with reforms despite the present political crisis.

Speaking at the annual board meeting of the RBI, Sinha asked the board to understand the significance of the political economy. There should be a professional approach to the economic matters because in a democracy, politics cannot be separated from economics, he added.

He expressed hope that the Finance Bill 2001-02 will be passed in time. “As long as we have majority in the Lok Sabha, the Finance Bill will be passed,” he said.

Sinha explained that the implementation of the second phase of the reforms have become complex due to the tough action required and the legislative changes involved.

He emphasised the government’s commitment towards reforms.

“I do not think reform programme or the reformist tone is a question of majority. I think we are leaner, meaner and more determined to continue with the reform process,” he said.

The finance minister is hopeful of a higher revenue collection in March than in February. “If there is further shortfall in the revenue figures than the revised estimates, there will be a matching savings in the non-plan expenditure,” he said.

He indicated that the government’s borrowings will not exceed the target. Regarding the banks exposure to the stock markets, Sinha said that the banks have parked less than 2 per cent against the RBI limit of 5 per cent of total credit.

The central bank expressed satisfaction with the budget at today’s board meet. Sinha said that the government is concerned with the strong implementation of policies, as well as, the ongoing projects.

“We will not let any administrative and bureaucratic bottleneck come in the way of reforms,” he said.


Calcutta, March 17: 
At least 140 broking terminals have been “deactivated,” even as the Calcutta Stock Exchange is out to fix responsibility for the unprecedented payment crisis on the bourse.

A CSE official said the authorities are in the process of taking punitive measures, which include issuing suspension orders against the defaulting brokers.

“The payment crisis has snowballed to such an extent that harsh steps will have to be taken against the brokers responsible for it,” the official said. He refused to divulge the number of brokers against whom the bourse intends to issue suspension orders.

However, sources said orders will be issued against at least 30 brokers, including a few on the board of directors.

CSE has already withdrawn Rs 22 crore from the trade guarantee fund to meet the payment shortfall for settlement number 149.

CSE executive director Tapas Dutta said the exchange had to invoke bank guarantees and fixed deposits of defaulting brokers.

“These adjustments,” he said, “helped the exchange overcome a potential payment crisis from taking place for two consecutive settlements.” Dutta said the pay-out was being carried out as per schedule.


Calcutta, March 17: 
The Industrial Development Bank of India (IDBI) will divest its 51 per cent holding in Small Industries Development Bank of India (Sidbi), a wholly-owned subsidiary, at a premium of Rs 20 per share. The paid up share capital of Sidbi is Rs 450 crore.

According to the divestment plan, IDBI will transfer 23 crore out of the 45 crore shares of Sidbi of Rs 10 each to banks and financial institutions at a premium of Rs 20.

The entire divestment procedure will be completed within June, Sidbi chairman and managing director P.B. Nimbalkar said.

Addressing a press conference here today, Nimbalkar said, “It has been decided by the government that IDBI will hold 49 per cent stake in Sidbi and the remaining 51 per cent will be held by banks like State Bank of India (SBI) and FIs, including LIC and GIC.”

“Once the process is over, Sidbi will have to pay dividends to other shareholders. It will also lose the tax-free status enjoyed by a wholly-owned subsidiary,” Nimbalkar said. “Till date we had been transferring all our earnings to the general reserves after paying our only shareholder IDBI,” he added.

Sidbi along with a Mauritius-based company Intech Venture Group (IVG) is setting up a $ 50 million fund to assist Indian software units in venturing abroad. Sidbi will contribute $ 30 million in two tranches and the remaining $ 20 million will be arranged by IVG.

Nimbalkar said the bank needs Rs 1,500 crore line of credit for financing the SSI sector this year.

“We may issue Rs 500 crore priority sector bonds to the banks if they fail to achieve their stipulated priority sector lending obligation. Mostly private sector and foreign banks fail to achieve the target. Some nationalised banks also default,” he said

“Secondly we will privately place non-priority sector bonds. And thirdly we may come up up with bonds for the general public with a put and call option of one year to 18 months,” he said.

Information technology is an area where the bank will invest more. It has set up 16 state level venture funds with a corpus of Rs 135 crore. “We are considering to contribute to the venture capital fund being set up by Webel and WBIDC.”

Sidbi has also contributed Rs 50 crore towards the Rs 100 crore national fund for software and information technology.


Calcutta, March 17: 
United Airlines is targeting a 60 to 70 per cent load factor as it resumes its ‘round-the-world’ service out of New Delhi from April 1.

The flight from New Delhi via Hong Kong will take the quickest route to reach the west coast of the United States and could attract larger business traffic, according to Michael J. Purchon, general manager of United Airlines’ Indian operations.

The world’s largest airline operator will also introduce a number of features to enhance travelling comfort for all categories of passengers in Boeing 747s, Purchon said.

The specially designed interiors of the ‘round-the-world’ flight segments will have a 14 United First suite, where seats will recline 180 degrees at the flick of button.

Each of these seats will be equipped with ample shelf and storage space, handy flex lamps, a personal phone and a laptop power source with modem, personal video system that lets one choose from 20 films. Each of these suits is next to the aisle, thereby giving easy exit when one decides to stretch one’s legs and walk over to greet a business associate.

United Airlines had started its India operations in December 1995, but suspended the Delhi operations in 1999 due to the Asian economic slowdown.

Apart from custom-made seating arrangements and other in-flight comforts, UA will introduce an improved menu to cater to the tastes of Indian passengers.


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