Big-size banks necessary to meet economy demand: Lenders

Mumbai: Two of the country's biggest lenders today called for larger banks with scale and capital to meet the growing needs of the country, which is growing at a faster pace and is poised to attain double-digit economic expansion, reports PTI.

Stating that the balance sheet size of this (SBI) bank is at par only with the tenth largest lender in China, State Bank of India chairman OP Bhatt said that in the next five years, there would be an addition of up to 500 million people to the middle class, which would demand huge support from banking and financial sector.

Public sector banks will have to play a pivotal role in helping the large middle class populace meet its aspirations, he said, expressing reservations if the state-owned institutions had wherewithal to meet the demand.

"I suspect if the PSBs will be able to cope with the demand though I hope I am proved wrong," he said, addressing a banking summit organized by the Indian Merchants Chamber here.

Mr Bhatt also expressed concerns if there was enough liquidity to fund the growth, saying the situation was not at "comfort" level.

ICICI Bank's chief executive and managing director Chanda Kochhar said Indian banking sector would have to grow at 25% every year or 2.5 times over the next five years if our country were to sustain the 8%-10% per annum growth rate.

Agreeing with Mr Bhatt, she said, the country needed to deepen the bond, debt and take-out financing markets so that banks could meet the funding requirements necessary for infrastructure development.

The government has set a $1 trillion investment in the infrastructure sector in the Twelfth Five-Year Plan period and is on the way to set up a Rs50,000 crore dedicated infrastructure fund.

Both MR Bhatt and Ms Kochhar said achieving the financial inclusion objective would not be enough to fuel growth and help the vast majority of the poor jump out of poverty. They said financial conclusion would have to be complimented by holistic approach with attention in areas like education, health and vocational training.

Mr Bhatt said in the next 5-7 years the banking and financial services industry would face a severe capacity crunch in terms of talent to serve the growing needs of the middle class.
 

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IOC beats Reliance to become the nation’s top refiner

New Delhi: State-owned Indian Oil Corporation (IOC) has surpassed Reliance Industries (RIL) to regain its position as nation's biggest refiner after it completed expansion of its Panipat unit, report PTI.

"We have this week completed expansion of our Panipat refinery (in Haryana) to 15 million tonnes (from 12 million tonnes)," IOC director (refineries) B N Bankapur said today.

Before the expansion, IOC's eight refineries had a total crude oil refining capacity of 51.2 million tonnes a year and together with its subsidiary Chennai Petroleum Corporation Ltd (CPCL), it had a combined refining capacity of 61.7 million tonnes.

After the Panipat expansion, IOC group's refining capacity has increased to 64.7 million tonnes, ahead of 62 million tonnes of refining capacity that RIL has at Jamnagar in Gujarat.

IOC was the largest oil refiner in the country before Reliance started its 29 million tonnes a year only-for-exports unit adjacent to its 33 million tonnes a year plant at Jamnagar.

"This year we have raised Haldia refinery capacity by 1.5 million tonnes to 7.5 million tonnes," Bankapur said.

IOC is mulling raising the capacity of its Koyali refinery in Gujarat to 16 or 18 million tonnes a year from current 13.7 million tonnes a year.

"We will conduct feasibility of raising Koyali refinery capacity to either 16 or 18 million tonnes in next 3-4 months," he said.

Also IOC has sought approval from the Supreme Court to raise capacity of its 8 million tonnes Mathura plant to 11 million tonnes.

IOC's refining capacity would rise to 80 million tonnes by 2012 after it commissions a 15 million tonnes a year unit at Paradip refinery in Orissa.
 

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Thursday Closing Report: Bear and tear

Consolidation in the domestic market continued for the second day on selling by institutional investors resulting in a cut of over 1.25% at the end of the trading session.

The market witnessed a green opening this morning but selling pressure soon took the indices into the negative terrain on the back of global uncertainty. Even the easing of the weekly food inflation numbers brought no respite to the market, which was in a consolidation mood for the second day in a row. The indices slipped further on outflows by institutional investors, dragging the indices deeper into the red.

The Sensex closed at 20,589, down 286.62 points (1.37%). The bellwether index touched a high-low of 20,937 and 20,544, respectively. The Nifty was down 81.45 points (1.30%) at 6,194. The index touched an intraday high of 6,296 and a low of 6,179 today.

The market breadth was negative today. The Sensex had 25 losers while five stocks closed in the green. The 50-share Nifty list had 30 declining stocks, 10 gainers and one stock was unchanged. Among the broader indices, the BSE Mid-cap index tanked 1.12% while the BSE Small-cap index declined 0.47%.

The main performers on the Sensex were Hindalco Industries (up 2.65%), Tata Power (up 1.47%) and Reliance Infrastructure (up 1.16%). The top losers were DLF (down 4.41%), Jaiprakash Associates (down 3.28%), Bharti Airtel (down 3.26%), Cipla (down 3.22%) and BHEL (down 2.66%).

Consolidation in the domestic market continued for the second day on selling by institutional investors resulting in a cut of over 1.25% at the end of the trading session.

The market witnessed a green opening this morning but selling pressure soon took the indices into the negative terrain on the back of global uncertainty. Even the easing of the weekly food inflation numbers brought no respite to the market, which was in a consolidation mood for the second day in a row. The indices slipped further on outflows by institutional investors, dragging the indices deeper into the red.

The Sensex closed at 20,589, down 286.62 points (1.37%). The bellwether index touched a high-low of 20,937 and 20,544, respectively. The Nifty was down 81.45 points (1.30%) at 6,194. The index touched an intraday high of 6,296 and a low of 6,179 today.

The market breadth was negative today. The Sensex had 25 losers while five stocks closed in the green. The 50-share Nifty list had 30 declining stocks, 10 gainers and one stock was unchanged. Among the broader indices, the BSE Mid-cap index tanked 1.12% while the BSE Small-cap index declined 0.47%.

The main performers on the Sensex were Hindalco Industries (up 2.65%), Tata Power (up 1.47%) and Reliance Infrastructure (up 1.16%). The top losers were DLF (down 4.41%), Jaiprakash Associates (down 3.28%), Bharti Airtel (down 3.26%), Cipla (down 3.22%) and BHEL (down 2.66%).

The sectoral space was a sea of red today as all sectors ended lower. BSE Realty was down 3.15%, BSE Oil & Gas was down 1.84%, BSE TECk was down 1.58%, BSE PSU was down 1.43% and BSE IT was down 1.34%.

Food inflation declined to 12.30% for the week ended 30th October from 12.85% in the previous week, on improved supply of items, showing a downward movement for the fourth straight week.

While most food items like wheat, pulses and potatoes turned cheaper, onions became costlier as their prices rose about 10% within a week.

Considering that food inflation stood at a high of 12.59% during the corresponding week of last year, even 12.30% inflation is quite elevated.

Asian markets closed mixed today. The Chinese market was up as Moody's Investor Service upgraded the country's debt rating. Speculations that the government will hike fuel prices boosted domestic oil companies. The Japanese market was supported by speculations that proposed banking regulations by the Group of Twenty (G20) will not impact the country's banks. Other markets were lower awaiting the outcome of the two-day G20 meet.

The Shanghai Composite surged 1.04%, Hang Seng gained 0.82%, Nikkei 225 was up 0.31% and the Straits Times rose 0.13%. On the flip side, the Jakarta Composite declined 0.33%, KLSE Composite fell 0.94%, Seoul Composite tumbled 2.70% and Taiwan Weighted shed 0.16%.

The 2008 global financial crisis had little impact on funds flow to south Asia's power sector and had only marginal adverse impact on India's power sector. In India, the impact of the global financial crisis on its power sector was marginally adverse in the short term, said the report "The Impact of the Global Financial Crisis on Investments in the Electric Power Sector: the Experience of India, Pakistan, and Bangladesh", released by the World Bank's Energy Sector Management Assistance Program (ESMAP).

Wall Street settled higher on Wednesday on positive economic data and as the dollar took a breather after four sessions of gains. The Federal Reserve said it will conduct 18 open-market operations from 12th November through 9th December. The central bank is buying an additional $600 billion of Treasuries through June and expects to reinvest $250 billion to $300 billion of proceeds from mortgage-backed debt and agency securities into Treasuries. Besides, the number of workers filing for initial jobless claims fell by a greater-than-expected 24,000 to 435,000, the lowest level in four months.

The Dow added 10.29 points (0.09%) to close at 11,357. The S&P 500 rose 5.31 points (0.44%) to 1,218. The Nasdaq gained 15.80 points (0.62%) to close at 2,578.

Foreign institutional investors were net sellers of Rs32 crore in the equities segment on Wednesday. Domestic institutional investors were net sellers of Rs143 crore worth stocks on the same day.

Elecon Engineering Company Ltd (down 0.16%) has informed the Bombay Stock Exchange that the company has been awarded an order worth Rs36 crores from Essar Projects (India) Ltd. for design, engineering, manufacturing, testing, inspection and supply, of equipment with all the auxiliaries / accessories for complete installation and commissioning of Material Handling Equipments for Paradeep Coal Berth Terminal Project.

The government today said it will take a call within a fortnight on whether State Bank of India (SBI) (down 1.20%) should be allowed to go for the rights issue, which is expected to be in the range of Rs18,000-Rs21,000 crore, less than the original estimate.

"We are number crunching that (SBI proposal of Rs20,000 crore rights issue) at this point of time. I think some decision would be taken perhaps in next 15 days," financial services secretary R Gopalan said on the sidelines of an event by consultant Skoch in New Delhi.

Shipping Corporation of India (SCI) (2.09%) is planning to add 1.7 deadweight tonnage (DWT) to its existing fleets by acquiring 29 vessels by March 2012. For this acquisition the company will be investing around Rs 6,000 crore. Of the new order, 26 vessels will be delivered to SCI during the next two years while it has received the possession of three vessels. The vessels ordered include product tanker, crude oil carrier, bulk carrier, supply carrier, anchor handling vessels.

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