SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI



THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

RBI to take ‘every necessary step’ to stem rupee slide
Mumbai, June 21
The Reserve Bank of India on Friday stepped in to assure investors it would take adequate steps to protect the rupee. "We are watching and monitoring the situation. Every neccessary step (to check the rupee slide) will be taken," RBI deputy governor H.R. Khan told reporters on the sidelines of an event here.

Gold falls to 3-week low; rupee fall cuts physical demand
Mumbai, June 21
Gold extended losses on Friday to hit their lowest level in three weeks, but a weaker rupee limited the downside in prices, keeping away physical importers amid tight supplies.

GMR seeks $1.4 billion in damages from Maldives
Singapore, June 21
Indian infrastructure major GMR on Friday sought a compensation of US $1.4 billion from Maldives for the "wrongful termination" of its 25-year contract to develop and operate the Male International Airport.

CCEA okays 5% stake sale in Neyveli Lignite
New Delhi, June 21
The cabinet on Friday cleared government's 5 per cent stake sale in Neyveli Lignite Corporation Ltd, which would help garner around Rs 466 crore to the exchequer. "The Cabinet Committee on Economic Affairs (CCEA) has cleared 5 per cent stake sale of Neyveli Lignite through an offer for sale," sources said.


EARLIER STORIES


Reliance Cap joins govt’s effort to curb gold imports
Mumbai/New Delhi, June 21
Reliance Capital abruptly halted gold sales and investments in its gold-backed funds on Friday, the latest squeeze on rampant demand that has prompted India to try to curb imports.

Home prices highly inflated; aggressive lending dangerous: HDFC chief
New Delhi, June 21
Terming current home prices as highly inflated in the country, including in smaller cities, industry leader Deepak Parekh on Friday asked builders to focus on affordable housing, rather than luxury homes, and said it is a dangerous thing to lend aggressively to developers.

 





Top








 

RBI to take ‘every necessary step’ to stem rupee slide
Central bank stops Re on brink of 60/$, monitoring movement 
Tribune News Service

Mumbai, June 21
The Reserve Bank of India on Friday stepped in to assure investors it would take adequate steps to protect the rupee. "We are watching and monitoring the situation. Every neccessary step (to check the rupee slide) will be taken," RBI deputy governor H.R. Khan told reporters on the sidelines of an event here.

He stated the central bank was coordinating with the finance ministry on the issue. "The Reserve Bank is in touch with the finance ministry on the issue," he added.

However, Khan refused to comment on questions whether the central bank would float NRI (nonresident Indian) bonds to mobilize foreign exchange from the vast Indian diaspora scattered around the world.

"The RBI will take all short-term, medium-term and long-term measures when appropriate," he added.

Simultaneously in Delhi Finance Minister P. Chidambaram has been quoted as telling that the government would be more proactive in protecting the Indian currency.

“The government is not happy with the rupee situation. The Reserve Bank of India will take necessary actions on the rupee,” he said.

The comments, which came at a time when the central bank was reported to have sold dollars to shore up the rupee, helped the Indian currency improve against the dollar. From a close of Rs 59.58 against the dollar, the rupee went up to Rs 59.14 in early trade before settling marginally lower.

However analysts are doubtful whether the Reserve Bank alone can stem the tide against the rupee.

The buzz in financial circles is that the finance ministry and the central bank will unveil some form of bond offering to mobilize foreign investment to shore up the country's foreign exchange reserves. These schemes are expected to be announced as early as next week, analysts felt.

Banking analysts went on to warn that the central bank could even increase rates if the rupee continued to fall since it would increase inflationary expectations.

On Monday, the central bank held on to interest rates and warned that further monetary easing would depend on the movement of the rupee. With the rupee expected to fall further to Rs 62 in the medium term, the banking industry expects the central bank to reverse its stand on reducing interest rates.

NO NEED TO PANIC: There is no need to react and panic over the rupee's fall, Finance Minister P. Chidambaram said on Friday, a day after the Indian unit hit an all-time low against the dollar, adds Reuters.

The rupee had slumped to a record low of 59.9850 to the dollar on Thursday, following the United States Federal Reserve's statement on its plan to wind down the monetary stimulus.

"We are not insulated from what is happening in the rest of the world," Chidambaram said at a press conference. "My request is we should not react and panic. It is happening around the world."

Chidambaram said policymakers were monitoring the rupee and the Reserve Bank of India would do whatever was needed to stem the fall.

The rupee has been one of the worst performing currencies in Asia following a global selloff triggered by fears that the US Federal Reserve might start tapering off its support for the economy.

Rupee’s weakness affects India credit profile, says Moody's

The rupee's weakness reflects domestic economic challenges, primarily a high current account deficit and lower capital flows, but does not significantly impact India's foreign debt repayment capacity, Moody's told Reuters on Friday. "Given the very low level of foreign currency debt owed by the Indian government, rupee depreciation does not significantly affect sovereign debt repayment capacity," said Atsi Sheth, vice-president of the sovereign risk group at Moody's Investors Service, in an e-mailed response. "However, it is a reflection of macroeconomic challenges, which do affect the country's credit profile." Sheth said Moody's current rating of "Baa3" for India - the lowest investment-grade level - incorporates macroeconomic imbalances and recent trends in the current account, capital flows, and the exchange rate. The rupee had slumped to a record low of 59.9850 to the US dollar on Thursday, as the country's record high current account deficit is exacerbating its vulnerability in an emerging market rout. Moody's currently has a "stable" outlook on India's ratings, in line with Fitch Ratings. Standard & Poor's maintains a "negative" outlook. — Reuters

Top

 

Gold falls to 3-week low; rupee fall cuts physical demand

Mumbai, June 21
Gold extended losses on Friday to hit their lowest level in three weeks, but a weaker rupee limited the downside in prices, keeping away physical importers amid tight supplies.

The most-active gold for August delivery on the Multi Commodity Exchange (MCX) was 0.29 per cent lower at Rs 26,790 per 10 grams. It earlier hit a low of Rs 26,727, a level last seen on May 30.

A weaker rupee kept the downside in prices limited. The currency plays an important role in determining the landed cost of the dollar-quoted yellow metal.

"The market is quiet. There is no demand due to the rupee. The picture will be clear only after August," said Suresh Hundia, president emeritus, Bombay Bullion Association.

Demand offtake revives in August as the festivals and weddings season starts. — Reuters

Top

 

GMR seeks $1.4 billion in damages from Maldives

Singapore, June 21
Indian infrastructure major GMR on Friday sought a compensation of US $1.4 billion from Maldives for the "wrongful termination" of its 25-year contract to develop and operate the Male International Airport.

The claim was today filed before an Arbitration Court here and a final order in the matter is likely to come out by end of March next year.

According to sources, the papers for the claim runs into 75 pages besides various annexures and attachments.

The figure of $1.4 billion was reached after taking into account loss of profit, payments made to subcontractors besides others.

Sources said the arbitration process will go on and the Maldivian government along with the Maldivian Airport Co Ltd, both parties in the suit, will give their responses.

The over $500 million airport project contract awarded to GMR for modernizing and operating the Ibrahim Nasir International Airport (INIA), signed in 2010 during the previous regime of Mohamed Nasheed, was "unilaterally" terminated by the current government on November 27 last year.

The airport was taken over by the Maldives Airports Company Limited after a high-voltage legal tussle in which GMR had initially got a stay order on the termination from the Singapore High Court.

However, the Singapore Supreme Court ruled on November 6, a day before the notice period expired, that Maldives has the power to take over the airport on Nov 6.

The abrupt termination of the contract had raised tempers between India and Maldives which had till then said it will go for an amicable solution to the airport issue.

Various political parties, all coalition members of the current regime headed by President Mohamed Waheed, had carried out a series of protests and campaigns against the Indian company.

Maldivian government's stand was that the contract was terminated because it was "void ab initio"" (invalid from the outset) and hence the government does not have to bear any compensation for the termination.

Earlier this week, Maldives' anti-graft watchdog had ruled out any corruption in the leasing of the international airport to GMR.

However, the government had said, "The report does not change the government stand that the contract given by former President Mohamed Nasheed was illegal.

"The contract was not terminated on the ground that there was corruption but because it was done against the law of the land". — PTI

Top

 

CCEA okays 5% stake sale in Neyveli Lignite

New Delhi, June 21
The cabinet on Friday cleared government's 5 per cent stake sale in Neyveli Lignite Corporation Ltd, which would help garner around Rs 466 crore to the exchequer. "The Cabinet Committee on Economic Affairs (CCEA) has cleared 5 per cent stake sale of Neyveli Lignite through an offer for sale," sources said.

The department of disinvestment had moved Cabinet seeking sale of over 7.8 crore shares, or 5 per cent, through an offer for sale (OFS) route in the Tamil Nadu-based miner.

Shares of Neyveli Lignite today were trading at Rs 59.80, up 3.64 per cent, on the Bombay Stock Exchange. At the current market price, the stake sale could fetch around Rs 466 crore to the exchequer.

The Cabinet Committee on Economic Affairs had earlier this month deferred a decision of stake sale in Neyveli Lignite Corp.

Tamil Nadu Chief Minister Jayalalithaa had last month written to Prime Minister Manmohan Singh, opposing disinvestment in the integrated mining-cum-power generating company. She had said divestment in the company would lead to labour unrest and disruption of power supply from Neyveli.

The disinvestment department had communicated to the Cabinet Committee on Economic Affairs that there is no other option but to divest the stake in the company as it is the only way to make the company compliant with the minimum public shareholding norm.

Capital markets regulator Securities & Exchange Board of India (SEBI) has set a deadline of August 2013 for all listed central public sector units to have a minimum 10 per cent public shareholding.

Jayalalithaa had suggested delisting of Neyveli Lignite Corp or amending the Securities Contracts (Regulation) Rules, 1957, to make a special exemption for the company from the minimum public shareholding rule. — PTI

Top

 

Reliance Cap joins govt’s effort to curb gold imports

Mumbai/New Delhi, June 21
Reliance Capital abruptly halted gold sales and investments in its gold-backed funds on Friday, the latest squeeze on rampant demand that has prompted India to try to curb imports.

India is the world's biggest gold buyer and soaring imports have sent its current account to a record deficit. New Delhi has hiked import duty twice since January 1, doubling it to 8 percent, but central bank moves to tackle supply have had more impact.

Reliance, controlled by billionaire Anil Ambani, said in a statement on Friday it was "committed to support all policy objectives of the government and the RBI."

Imports could fall sharply in June and July, industry players say, because customers must now pay up front for gold, making it hard for the millions of small family shops who account for most of India's jewellery business to buy.

"Sales in June, July, August will be a super-flop. Imports will be down 50-60 percent from the normal average of 70 tonnes," said Kumar Jain, vice-president of the Mumbai Jewellers Association, which represents over 10,000 jewellers.

Gold imports, second only to oil for India, hit a record 162 tonnes in May as global prices fell, prompting a surge in retail buying everywhere. India's big bullion banks and traders stocked up in anticipation the authorities would move to slow buying.

"Everybody made money during the demand surge in May," said a Delhi-based importer who requested anonymity. — Reuters

Top

 

Home prices highly inflated; aggressive lending dangerous: HDFC chief

New Delhi, June 21
Terming current home prices as highly inflated in the country, including in smaller cities, industry leader Deepak Parekh on Friday asked builders to focus on affordable housing, rather than luxury homes, and said it is a dangerous thing to lend aggressively to developers.

Parekh, chairman of the country's largest housing finance company HDFC, also asked the home buyers to be cautious of 'too-good-to-be-true' offers from the property developers and warned them against schemes where builders claim of paying interest on the borrowers' loans.

He also asked financing firms to stay away from innovative and aggressive loans, including teaser rates where the interest rates rise gradually and lending money to developers at the same rate as being offered on individual home loans.

Parekh in his annual letter to shareholders of HDFC said: "As a basic tenet, construction finance entails higher risks and, therefore, such risks have to be built into the pricing.

"Construction finance should not, through any innovative structuring be available to developers at the rate of interest being offered on individual home loans. Further, complete upfronting of construction finance to developers, even before the ground is broken is dangerous," he said.

Parekh also said the country continues to face an acute housing shortage, but prices continue to remain high.

Talking about the interest rates where banks offer a low rate at the beginning and later increase them for the home loan borrowers, Parekh said such products were risky and should be avoided. — PTI

Top

 





HOME PAGE | Punjab | Haryana | Jammu & Kashmir | Himachal Pradesh | Regional Briefs | Nation | Opinions |
| Business | Sports | World | Letters | Chandigarh | Ludhiana | Delhi |
| Calendar | Weather | Archive | Subscribe | E-mail |