Companies & Sectors
Banks can end derivative deals if client cut exposure says RBI

RBI in its 'prudential norms for off-balance Sheet Exposures of Banks' notification said, banks may partially or fully terminate the contract before maturity, at their discretion, thereby reducing the notional exposure of the contract

 

Mumbai: The Reserve Bank of India (RBI) said banks will have the discretion to terminate a derivative contract in case a client decides to reduce its exposure in such instrument pre-maturely, reports PTI.

However, such transaction would not be treated as restructuring of the derivative contract provided all other parameters of the original contract remain unchanged, RBI said in a notification.

So far, any change in any of the parameters of a derivative contract was treated as restructuring and the mark-to-market (MTM) value of the contract on the date of restructuring was settled in cash.

"There may be situations where the clients of banks may like to reduce the notional exposure of the hedging derivative contract.

"In such cases, banks may partially or fully terminate the contract before maturity, at their discretion, thereby reducing the notional exposure of the contract," RBI said in 'prudential norms for off-balance Sheet Exposures of Banks' notification.

Off-balance sheet deals include currency and interest rate derivatives, securitised loans and guarantees.

The notification further said, there may be cases, where the derivative contract has been terminated, either partially or fully, MTM has been permitted to be repaid in instalments but the client subsequently decides to hedge the same underlying exposure again by entering into new contract with same or other bank.

In such cases, banks may offer derivative contracts to the client provided the client has fully re-paid the entire outstanding instalments corresponding to the derivative contract that was used to hedge the underlying exposure previously, it added.
 

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Wipro Q1 net profit up 18.4% to Rs 1,580 crore

Wipro's IT services revenue, which accounted for 78% of the total revenues, grew 30% year-on-year in rupee terms to Rs8,314 crore during the first quarter

Mumbai: Wipro Ltd, India's third-largest software company on Tuesday reported 18.4% increase in consolidated net profit at Rs1,580.2 crore for the first quarter ended June 2012, reports PTI.

 
The company had posted a net profit of Rs1,334.9 crore in the April-June quarter of last fiscal, Wipro said in a filing to the BSE.
 
The total income from operation during the quarter rose by 24.4% to Rs10,619.6 crore from Rs8,538.4 crore in the year-ago period.
 
"In today's complex business environment, global corporations are increasingly investing in transformational technology initiatives to improve competitiveness. We see this shift as an opportunity for us to lead this change and help customers differentiate in this fast evolving market," Wipro Chairman Azim Premji said in a statement.
 
Wipro's IT services revenue, which accounted for 78% of the total revenues, grew 30% year-on-year in rupee terms to Rs8,314 crore.
 
"IT Services revenue in dollar terms was impacted by $25 million of cross currency impact and was $1,515 million, a year-on-year increase of 8%," it said.
 
The company had forecasted IT services revenues to be in the range of $1,520 million to $1,550 million for the April-June 2012 quarter.
 
For the quarter ending September 2012, the company has maintained its revenue outlook to be in the same range, assuming that exchange rates of dollar will be at Rs54.76.
 
"We have seen high levels of volatility in currencies globally. We have improved profitability, while continuing to invest for growth," Wipro Executive Director and Chief Financial Officer Suresh Senapaty said.

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