BoB, Union Bank await policy review cues to decide on rate cut

“We will take a call after the RBI’s policy review. At the moment, liquidity is tight and perhaps one will like to assess the overall situation before taking a decision (on slashing rates),” chairman and managing director of Bank of Baroda, MD Mallya told reporters

Mumbai: Public sector lenders Bank of Baroda and Union Bank of India on Wednesday said they would take a call on slashing interest rates in specific segments once the Reserve Bank of India (RBI) has announced its mid-term policy review, reports PTI.

“We will take a call after the RBI’s policy review. At the moment, liquidity is tight and perhaps one will like to assess the overall situation before taking a decision (on slashing rates),” chairman and managing director of Bank of Baroda, MD Mallya told reporters here.

He was speaking on the sidelines of the fourth Annual Credit Information Conference organised by Credit Information Bureau of India (Cibil).

Mr Mallya also said that unless the cost of raising resources came down, it would be difficult to pass on the benefits to end-users.

The chairman of Union Bank echoed similar sentiment.

“We will have a look at our Net Interest Margin (NIM). If it improves substantially, we will look at (rate cut) in some of the products. Based on that, we will take a call,” chairman and managing director of Union Bank of India, MV Nair said.

Union Bank of India was the first bank to slash its base rate by 10 basis points to 10.65% after the policy review by the apex bank on 16 December 2011.

Referring to tight liquidity situation and expectation from upcoming mid-term review, Mr Mallya said he was expecting some relaxation.

“Liquidity is by and large tight in the last few weeks. May be with the advance tax payout, liquidity will remain tight for some time. Market expects a CRR (cash reserve ratio) cut... Let’s see,” Mr Mallya said.

He, however, declined to speculate on the quantum of CRR cut likely to happen in the next policy review.

Presently, banks are borrowing around Rs1.5 lakh crore a day from the repo window, which is much above the comfort level of the central bank of around Rs60,000 crore.

User

Kingfisher suspended by IATA for non-payment of dues

This is the second time since February two that the cash-strapped carrier has been suspended from ICH for not paying its dues. Earlier, its status was restored ten days later. It has now been suspended once again. Airlines and airline-associated companies join the IATA Clearing House to settle accounts for services provided by them to other airlines or firms

New Delhi: Beleaguered Kingfisher Airlines was today suspended for non-payment of dues for the second time in just over a month by the IATA from participating in a system which enables the airlines to settle their interline billings globally, reports PTI.

“IATA has suspended Kingfisher Airlines’ participation in the IATA Clearing House (ICH). This is because the airline did not settle its ICH account within the stipulated deadline,” IATA’s assistant director (corporate communications) Albert Tjoeng said in a statement from Singapore.

He said, “Kingfisher's participation in the ICH will be reinstated after the airline fulfils the ICH requirements.”

This is the second time since February two that the cash-strapped carrier has been suspended from ICH for not paying its dues. Earlier, its status was restored ten days later. It has now been suspended once again, IATA sources said.

Airlines and airline-associated companies join the IATA Clearing House to settle accounts for services provided by them to other airlines or firms.

The bank accounts of the airline, which is struggling to stay afloat, have been frozen by the income tax, service tax and excise and customs departments for failing to pay dues.

Crisis-ridden Kingfisher Airlines had last month also delayed joining the global airlines’ grouping ‘OneWorld’ due to its precarious financial position. It was slated to formally join the airline alliance on 10th February.

The airline, which never made a profit since its inception in May 2005, reported a net loss of Rs444.26 crore in the December quarter. It suffered a loss of Rs1,027 crore in 2010-11 and has a debt of Rs7,057.08 crore apart from over Rs4,000 crore of accumulated losses and a restructured long- term loan of around Rs7,000 crore.

With oil companies blocking fuel supplies and disrupting its flight schedules in the past few weeks, troubles have mounted for Kingfisher as its lenders have insisted they would not pump in money unless the promoters infused fresh equity.

The air carrier is understood to have been told by the bankers that it should get at least 25% of the Rs3,000 crore loan it is looking for in the form of fresh equity.

With the Airports Authority of India also putting Kingfisher on a ‘cash-and-carry’ mode for aeronautical services, its promoter and UB Group chief Vijay Mallya is likely to meet AAI top brass to clear its position on the huge dues to the state-run airports body.

As the airline has been operating a curtailed flight schedule, it also faces the prospect of losing a large number of its prime flying slots.

Though the government has made it clear that it does not want any airline to close down, it does not rule out suspension of its flying licence if safety is neglected.

User

RIL seeks $13/mmBtu price for coal-based methane

RIL said that the CBM price represented a “true arms length market price that meets all the requirements of price discovery and brings maximum benefits” to the government

New Delhi: Reliance Industries (RIL) has sought the government’s nod for selling gas that it will produce from coal seams in Madhya Pradesh, at a price close to $13 per million metric British thermal units (mmBtu), reports PTI.

RIL two weeks back wrote to the ministry of petroleum and natural gas saying its pricing formula of 12.67% of JCC, or Japan Customs-Cleared Crude, plus $0.26 per mmBtu had generated a demand six times the gas it plans to produce from the Sohagpur coal-bed methane (CBM) block by end-2014, official sources said.

At $100 per barrel oil price, CBM from RIL's Sohagpur CBM blocks in Madhya Pradesh will cost $12.93 per mmBtu.

The pricing formula RIL has proposed for CBM is different from the one natural gas from the company’s eastern offshore KG-D6 block is priced at. KG-D6 gas at cap crude oil price of $60 per barrel, translates into a sale price of $4.205 per mmBtu. Sohagpur CBM at $60 per barrel oil price would be $7.862 per mmBtu.

Sources said RIL told the ministry that it got 59 valid bids seeking about 70 mmscmd of gas in open bids that were invited as per the provisions of the Production Sharing Contract (PSC) to discovery market price of CBM.

The company on 3rd February put out an advertisement proposing to price CBM from SP(West)-CBM-2001/1 and SP(East)-CBM-2001/1 blocks at 12.67% of JCC plus $0.26, plus 'V', where 'V' was the biddable number that users were asked to quote. 'V' could have been either positive or negative.

Sources said RIL in the letter to oil and gas ministry stated that it got a demand of 20.63 mmscmd (about six times the gas offered for sale under the process of price discovery) if the biddable parameter 'v' is kept at zero.

RIL will charge $0.15 per mmBtu as marketing margin over and above the CBM price and the customers would also have to pay for taxes/duties and transportation tariff.

The CBM price, it said, represented a “true arms length market price that meets all the requirements of price discovery and brings maximum benefits” to the government.

Sources said RIL warned against non-acceptance or modification of the proposed formula saying government's share of profit from the CBM production, royalty and taxes would be impacted by any such move.

The formula proposed by RIL is the same at which Petronet LNG, the nation’s largest liquefied natural gas importer, buys 7.5 million tonne per annum of LNG from RasGas of Qatar.

RasGas charges 12.67% of JCC and Petronet pays a further $0.26 per mmBtu for shipping the gas in its liquid form (LNG) from Qatar.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)