The country's largest lender, State Bank of India, has refrained from cutting its base rate but has cut lending rates in select products
Mumbai: State-run lenders Canara Bank and Bank of India cut their base rate or minimum rate of lending by 0.25% to 10.50% following the Reserve Bank of India's move to cut rates, reports PTI.
Both the banks also cut rates on loans under the older benchmark prime lending rate by a similar 0.25% to 14.75%, they said in separate filings to the exchanges.
The revisions are applicable from 1 May 2012, they said.
Their peer Oriental Bank of Commerce (OBC) also cut lending rates by 0.25% to 14.75% only under the BPLR, leaving the base rate untouched.
The announcements by banks come exactly a fortnight after the RBI cut its short term lending rate, the repo rate, by 0.50% to 8% prompted by lower inflation and intended at giving a boost to the sagging growth.
All the bankers had opined that the RBI move would lead to reduction in lending rates. Among those who have announced rate reductions till now are ICICI Bank, Corporation Bank and Central Bank of India.
The country's largest lender, State Bank of India, has till now refrained from cutting its base rate but it has cut lending rates in select products.
Export growth has crashed (probably last year their were a lot fake exports) and capital inflows are weak leading to a vicious cycle
Indian exports in March declined to $28.68 billion from $30.41 billion in March 2011. This is the first time since 2009 that exports have fallen. It has led to a spurt in trade deficit to an all time high of $185 billion in the last fiscal. Exports had touched $303.7 billion for the previous fiscal, registering 21% expansion. Imports for the month aggregated $42.6 billion leaving a trade gap of $13.9 billion, according to the data released by the commerce ministry. Import bill in 2011-12 touched $488.6 billion on account of rise in imports of crude oil and gold. Both items alone accounted for over 44% of total import bill. Commerce secretary Rahul Khullar had said the trade deficit situation can worsen in the current fiscal.
Is the market underestimating the seriousness of India’s exports having declined by 5.71% in March? After all, there is no sign that things are going to improve anytime soon. “If balance of trade (BoT) is to stay exactly where it was, my exports need to grow by 28% and that is impossible, we cannot do that...where are we going to drum up 25%-30% growth?” Mr Khullar asked. The highest ever BoT remains an area of concern for the Reserve Bank of India (RBI) and the exporters’ community. “The financing of the current account deficit will continue to pose a major challenge,” RBI has said in its credit policy.
Financial services firm Nomura, while analysing India’s current account deficit in its recent report, said that the deficit deteriorated because imports remained relatively robust while export growth slowed during the global slowdown. Import demand was fuelled by four factors: strong consumption demand was boosted by consumption-biased fiscal policies; high inflation led to demand for gold imports; inelastic oil demand due to subsidized fuel prices ; and higher coal imports caused by delays in domestic production from slow environmental clearances. The national income identity suggests that a wider current account deficit reflects gross domestic saving falling much more than investment.
Crude oil imports went up by 46.9% to $155.6 billion in 2011-12. The other reason was higher imports of gold and silver which grew by 44.4% year-on-year to $61.5 billion. Oil and non-oil imports during the month have increased by 32.45% and 19.91% to $15.83 billion and $26.75 billion respectively.
Federation of Indian Export Organisations (FIEO) president M Rafeeque Ahmed said the growing trade deficit, which is highest in the history of India’s trade, is a cause for concern. He too sounded pessimistic about the future. “Looking at the profile of imports, very little manoeuvring is possible since increasing trade deficit is on account of large imports of petroleum, gold, silver, and coal,” he said.
Mr Khullar has cautioned that 2012-13 would again be a difficult year and early policy decisions on coal, fertiliser and edible oil are needed in the wake of rising import bill on these heads.
During 2011-12, coal, fertiliser and edible oil imports grew by 80.3%, 59% and 47.5% to $17.6 billion, $11 billion and $9.7 billion respectively.
“Coal imports expanded significantly. Now it requires a decision on the domestic policy front in terms of coal production. Similarly, edible oil and fertiliser imports have expanded significantly and these require domestic policy decisions,” Mr Khullar said.
From a peak of 82% in July, export growth slipped to 44.25% in August, 36.36% in September, 10.8% in October and 3.8% in November 2011. However, exports grew 6.7% in December, over 10% in January and 4.3% in February.
What are the implications of the trade and current account deficit? The current account deficit in India can be controlled by FDI (foreign direct investment) and FII (foreign institutional investors) fund inflows in the equity market. FDI inflows are in a current low because of uncertainty in the Indian government policy. After the Vodafone court case and the government retrospective tax amendment, multinationals are adopting a wait and watch attitude. FIIs have been cautious in the Indian stock market and there has been a net outflow of funds in April after a robust inflow in the first quarter. The combined effect of these factors could lead to a weakening of the rupee against the dollar, which can further worsen the trade deficit in a vicious cycle.
According to the BluFin chief executive it does not need permission from market regulator SEBI so long as the indices are not traded on the bourses
Mumbai: Financial information and content company BluFin will launch a set of stock indices by end of this month, a top official said.
“Our objective is to offer a comprehensive set of stock market indices of at least 1,500 stocks, so that it can better reflect the overall picture of the capital market,” Blufin chief executive Rashid Bilimoria, told PTI.
“The proposed indices will be divided into 15 buckets, with sub-indices like M-cap, Macro, Mega, Micro, and Value among others. The index will be benchmarked from the 1990s,” he said.
When asked whether he has secured permission from the markets watchdog SEBI, he said, it is not needed so long as the indices are not traded on the bourses and would be contemplating to get the indices traded only a few years down the line.
Elaborating on the rationale for introducing new stock indices, he said, the country follows the US of the 1960/70s in forming the stock market indices methodology.
That apart, the 30-share Sensex and the larger 50-stock Nifty don't reflect the actual mood of the markets or the investing community, Mr Bilimoria added.
The company last month launched the country's first monthly consumer confidence index.
BluFin is owned by Mr Bilimoria and private equity fund Zodius Advisors chief executive Neeraj Bhargava, who also is the chairman of BluFin.
The BluFin consumer confidence index for March, which is the country's first monthly index of consumer confidence, showed a very pessimistic score of just 39.9 indicating consumers are pessimistic about the economy and their lives going forward.
The index was arrived at after interviewing as many as 4,000 urban consumers in person spanning 18 cities and has data from October last.
“Our index is unique in the sense that it is the first monthly one, apart from being fully customised for the country and is done physically unlike other consumer indices which are done globally,” Mr Bilimoria said.
It is also planning to launch seven more indices on a similar ser of sectors going forward, he said.
He said a third index called Leading Biz Indicators Index, which will be launched in June. However, he did not offer details on the other indices.
The consumer confidence index broadly covers four segments -- general economic sentiment, inflation sentiment, employment outlook and spending outlook, Bilimoria said.
The index is designed to measure how consumers are feeling about the economy and their ability and desire to spend.
The BluFin consumer index is a key aggregate indicator that assesses the sentiment of the urban consumers with regard to the economy and spending behaviour. The aggregate CCI consists of two key components-the present situation index and the future expectations index.
Mr Bilimoria said, the city-based company will launch the April CCI on 9th May.
Market research firm TNS India is gathering feedback from 4,000 urban consumers from Delhi, Mumbai, Chennai, Kolkata, Hyderabad, and Bangalore amongst others every month.