Lakshmi Vilas Bank hikes interest rates on NRE term deposits

Private sector lender Lakshmi Vilas Bank has hiked interest rate on Non-Resident External (NRE) term deposits with immediate effect.

The hike in interest rates on NRE term deposits was based on the deregulation of interest rates by the Reserve Bank, LVB said in a statement.

According to the revised structure, the interest rates for deposits with a period of one year and above but less than two years has been revised to 10 per cent from the existing 3.82 per cent.

For term period of two years and above, but less than three years, it has been increased to 8 per cent from 3.51 per cent (existing).

For those deposits that are up to three years and above, the interest rates has been hiked to 7 per cent from 3.64 per cent, it added.

Lakshmi Vilas Bank currently serves 1.81 million customers. It has 274 branches and 381 ATM networks across the country, the statement added.

Read More

Bank not at fault if ATM card misused'

A person cannot claim damages from bank if he fails to immediately block his lost ATM card and money is unauthorisedly withdrawn by using the card, a district consumer forum has said.

It said the bank would have been liable if the transaction of withdrawal of money took place after blockage of the card.

A bench of Central Delhi District Consumer forum passed the order while dismissing a complaint filed by a Faridabad resident Deepa Singh alleging that bank is liable for the compensation as it allowed illegal withdrawal of money from her account after she lost her ATM.

"Singh was having the PIN number and without that PIN number, the ATM card could not have been used. First the money was withdrawn and only thereafter the bank was informed to block the card.

"The bank complied the instructions of the complainant. The bank would have been liable if transaction of withdrawal of the amount would have taken after the blockage of the card by it," the forum said.

The forum presided by its president B B Chaudhary also refused to pass any order against the bank for its failure to provide her video footage of the person who had used her ATM.

"The bank cannot be held liable merely because it could not provide the CCTV footage of the relevant time of the withdrawal of money. The CCTV is a machine and it may not function at a particular time," it said.

The forum further said that the PIN number of the ATM card was only with Singh and without it money could not have been withdrawn and the bank was told to block the card only after the amount was withdrawn.

Singh had submitted that at the time of issuance of card, the bank had assured her that if somebody would withdraw money from her account without her knowledge, it would provide her video clipping but in July 2010, the bank informed her that the camera was not working at the relevant time and video clippings could not be provided.

But the forum was not satisfied and dismissed her plea saying, "only card holder can be held responsible if the ATM card/Debit card is misused fraudulently."

Read More

CLSA cuts India's growth f'cast to 6.7%

Brokerage CLSA cut its forecast for Indian gross domestic product (GDP) growth to 6.7 percent for the current fiscal year ending March from its earlier projection of 7.3 percent, citing cyclical deceleration caused by high interest rates, policy inertia and the adverse impact of global headwinds.

On Thursday, the Reserve Bank of India governor said the economy is poised to miss the central bank's growth forecast of 7.6 percent for 2011/12 and the inflation outlook is uncertain.

The government said in a mid-year review this month that it expected the economy to grow by 7.25 to 7.75 percent in 2011/12, down sharply from an estimate of 9 percent issued in February.

Read More

US venture-funded firms: Indians on top

Nearly half of America's top 50 venture-funded companies were started by immigrants and the most common country of origin for these founders was India, reveals a study by US National Foundation for American Policy (USNFAP).

The research by USNFAP, a non-profit, public policy research organisation, finds that 48 per cent, or 24 out of 50, of the US' top venture-funded companies had at least one immigrant founder and the most common country of origin for these immigrant founders was India, followed by Israel, Canada, Iran and New Zealand.

Other founders and co-founders were born in Italy, South Africa, Greece, Norway, Germany, the UK, Singapore, Switzerland and France.

The report further notes foreign-born and native-born talent creates a win-win situation that creates jobs and important innovations in America.

As per the report, immigrant founders have created an average of 150 jobs per company in the United States.

The research also found that 38 of the top 50 companies, or 76 per cent, employed one or more immigrants in a key management or product development position, demonstrating the important role played by foreign-born personnel in these firms.

Among Indian founders whose names were mentioned in the report include Mayank Bawa of Aster Data Systems Inc, Aayush Phumbhra (Chegg), Samir Arora and Raj Narayan of Glam Media, Umesh Maheshwari and Varun Mehta (Nimble Storage Inc), Ajeet Rohatgi (Suniva Inc), Satish Palvai (Xactly Corp), R K Anand, Ashok Krishnamurthi and S K Vinod of Xsigo Systems Inc.

"Today's breakthrough companies are often founded by immigrants or at least employ a foreign-born scientist, engineer or CEO crucial to business growth and product development. Executives say access to talent from around the world is even more important to companies in their emerging growth phase," the report said.

The top 50 venture-funded companies, were selected and ranked in March 2011 by the research firm VentureSource and the rankings were based on factors such as company growth, successful track record of CEOs, founders and investors, and capital raised.

Read More

Ravi Ruia steps down as Chairman of Essar Energy

Essar Energy Chairman Ravi Ruia today announced his decision to step down from the post amid CBI claiming that Essar group suppressed facts related to its equity holding in Loop Telecom, an allegation denied by the conglomerate.

Essar Group is surprised and disappointed by the stand taken by the CBI, Essar Energy said in a statement.

Meanwhile, Ravi Ruia has voluntarily decided to temporarily step aside as Chairman but would continue as a director of Essar Energy. Prashant Ruia, presently the Vice Chairman, would take over as interim Chairman.

“This decision follows allegations by India's Central Bureau of Investigation (CBI) that Ruia, certain other executives of the Essar Group and Essar Teleholdings Ltd – an Indian company belonging to the Essar Group, had suppressed facts relating to the extent of equity holding of Essar Group in Loop Telecom Ltd (Loop)," the statement said.

Essar Energy noted that "there are no charges of bribery or corruption or collusion with public servants (as compared to the other prosecutions being pursued in the 2G spectrum scam)".

Ravi Ruia said he believed that as a good corporate governance measure, he should step aside at this time.

“Essar Group has always been open, transparent and law abiding, and I am confident that these charges will be dismissed by the courts in India. I expect that I would resume the office of Chairman at an appropriate time," he noted.

According to Essar Energy, Ravi Ruia and Essar Group deny all charges and intend to take legal recourse to defend their position.

Read More

RBI raises alarm over corporate loans AGENCIES

The Reserve Bank of India (RBI) today said Indian companies may find it difficult to repay loans as rising input cost is putting pressure on their profit margins.

"The outlook of the firms shows signs of weakness which can be attributed to rise in input prices, interest rates, slackening demand and some infrastructural constraints.

Servicing of loans by them, therefore, may come under stress," said the RBI's Financial Stability Report (FSR).

It said the profit margin of the corporate sector has dipped, which indicates its reduced pricing power in the wake of rising raw material and input costs.

"The rising share of interest cost in sales as well as gross profits so far, implies that the impact of monetary tightening on the margins of corporates are now becoming visible," the RBI said.

The RBI has hiked rates 13 times since March, 2010, and industry believes the rising borrowing cost is putting pressure on margins as production is getting impacted.

It said restructured and impaired assets increased in telecom and power sectors. "The fact that incremental credit to these sectors was also high-- higher than the aggregate growth in banking sector credit-- called for careful monitoring of asset quality in these segments," RBI said.

The report further said that the bank's asset quality has come under pressure due to the adverse impact of inflation on growth and various other factors.

It said that higher interest expenses and higher provisioning requirements put some pressure on bank's profitability even as efficiency ratios continued to improve.

"Going forward, earnings may be further stressed due to the impact of high deposit rates, potential slowdown in credit growth and deterioration in asset quality," it said.

Further, India's external sector faces risks due to decreasing growth in world trade volumes and weakening global demand.

"Going forward, exports may moderate further if the slowdown in advanced economies persists," RBI said.

Read More

NHAI to launch tax-free bonds

Unfazed by uncertainty in the capital markets, the National Highways Authority of India (NHAI) will launch its first ever tax-free bonds issue of Rs 10,000 crore on December 28.

The issue will close on December 30, a senior Road Transport Ministry official said.

The official further said the interest (coupon) rate of the bonds issue will be between 8 to 8.5 per cent, while refusing to disclose the exact number.

"A formal announcement will be made tomorrow by Road Transport Minister C P Joshi and you should wait for that," the official said, adding that the money raised from it will be used to partly finance various National Highways projects under different government schemes.

Some money will also be used for viability gap funding for BOT (build-operate-transfer) road contracts, the official added.

As per the prospectus filed by NHAI with the market regulator SEBI, the bonds will have two maturity periods of 10 and 15 years, and would get listed on the BSE and the National Stock Exchange.

In this year's Budget, the government had allowed NHAI to raise Rs 10,000 crore from the tax-free bonds, an instrument never used by it earlier. Till now, it used to raise funds through issue of 54EC bonds, under which subscribers can claim exemption of capital gains tax.

Citing the provisions of Income Tax rules, the NHAI prospectus has, however, clarified that only the interest earned on the new bonds will be tax-free, not the actual investments.

Moreover, investors will be liable to pay capital gains tax as applicable, it further said.

According to the NHAI prospectus, the bonds issue will worsen its debt to capital ratio from 0.11 to 0.29 if it raises Rs 10,000 crore from the markets. The debt to capital ratio reflects the financing strengths of a firm, higher the ratio, the more debt company has compared to its equity.

As on June 30, 2011, the NHAI's total debt (including secured loans) stood at Rs 6,636.21 crore.

The bond issue has got AAA (stable) rating from the three agencies -- Crisil, CARE and Fitch.

SBI Caps, ICICI Securities, Kotal Mahindra Capital and AK Capital Services have been appointed as the lead managers by the NHAI for the bonds issue.

Read More

SBI, DDA, PNB babus fined for corruption

Over 200 government officials have been penalised for their alleged involvement in corruption by the Central Vigilance Commission (CVC) during September this year.

Out of the total of 201 government employees, the highest number of 46 were from Central Board of Excise and Customs, 29 from Syndicate Bank, 20 from State Bank of India (SBI) and 13 each from Delhi Development Authority and Ministry of Railways among others, a CVC report said.

Besides them, 11 officials each from Bharat Sanchar Nigam Limited, Allahabad Bank and Punjab National Bank, five each from United India Insurance Company Limited and Ministry of Urban Development have also been penalised.

According to the Commission's monthly performance report for September, a total of 1,797 complaints were received against various government officials for their alleged involvement in corrupt practices.

The Chief Technical Examination wing of the CVC also effected a recovery of about Rs 3.36 crore from various departments after inspecting procurement-related works, it said.

A recovery of a total of about Rs 73 crore has been made by the Commission between January and September this year after inspection of different department-related works.

"The Commission is deeply concerned over continuing delay in filling up the post of Chief Vigilance Officer (CVO)in Delhi Transport Corporation," the report said.

Read More

Govt OK's PFRDA Bill change, allows FDI

The government today approved amendments to the PFRDA Bill 2011 (Pension Fund Regulatory and Development Authority) while agreeing to the proposed 26 per cent foreign direct investment (FDI) in the pension sector but refrained from providing assured returns to subscribers in the proposed law.

The government had decided not to mention FDI cap in the legislation itself for retaining the flexibility of changing it through an executive order. The 26 per cent FDI cap is to be mentioned in the regulations to the legislation.

The changes to the PFRDA Bill were approved by the Union Cabinet at its meeting here.

The Bill, which has already been scrutinised by the Parliamentary Standing Committee on Finance, is likely to be taken up for consideration and passage in the Winter Session beginning November 22.

"The government is of the view that FDI cap in the pension should be at 26 per cent at par with the insurance sector. However, it would like to retain the flexibility of changing the cap of FDI as and when required and that is why it has not been kept as part of the bill", an official spokesperson said.

The proposed legislation, the official said, will not provide assured returns to the subscribers of pension schemes.

The Committee, which is headed by senior BJP leader and former Finance Minister Yashwant Sinha, wanted the government to specify the FDI cap in the legislation itself and provide minimum guaranteed return to subscribers.

The government also turned down the Committee's recommendation for allowing greater flexibility to subscribers of pension schemes for pre-mature withdrawal of funds from their accounts.

"The flexibility of withdrawals from funds under the pension scheme, however, would be tightened. It would be allowed only in case of genuine needs...It would be considered when the need is critical. It will not be allowed for frivolous reasons," the official explained.

The government, however, upheld the panel's suggestion to provide greater participation of the employees and stakeholders in the Pension Advisory Committee, the official said.

The Bill, which was introduced in the Lok Sabha on March 2011, was referred to the Standing Committee for consideration.

The government, it may be mentioned, has not been able to raise FDI in insurance from 26 per cent to 49 per cent because the changes require amendments in law. The Insurance (Amendment) Bill has been pending since 2008.

Once the FDI caps are mentioned in the regulations, it would be easier for the government to modify the ceilings, as and when needed, through an executive order.

Read More