"We are waiting for regulatory approval from the Insurance Regulatory and Development Authority (IRDA) for the deal and unless that comes through, we will not disclose the details and strategy," PNB chairman and managing director K R Kamath said.
Awaiting regulatory approval for its proposed acquisition of a 30% stake in insurance company Metlife, Punjab National Bank (PNB) has said it will not disclose the rationale behind the move or the financial details until IRDA gives its nod.
"We are waiting for regulatory approval from the Insurance Regulatory and Development Authority (IRDA) for the deal and unless that comes through, we will not disclose the details and strategy," PNB chairman and managing director K R Kamath said on the sidelines of the 100-year celebrations of the bank's operations in the eastern region.
Kamath said PNB does not foresee any hurdles in the way of the deal, which was announced five months ago, and would unveil the transaction details after approvals were in place.
If the proposed deal goes through, PNB would become the largest shareholder in the insurance company.
Speaking about overseas expansion, Kamath said the bank is awaiting approval from the Canadian authorities for setting up a subsidiary in that country, besides the regulator's nod in Oslo, Norway.
"We have applied with Reserve Bank of India for Maldives and after receiving positive feedback from a survey, we will soon move to our regulator to foray into Bangladesh," he said. Singapore, Brazil and South Africa are also on PNB's radar, he added.
To a question, Kamath said there was stress on the bank's asset quality, but declined to provide further details. The bank is targeting total business worth Rs6,66,000 crore during 2011-12. As of December, the bank has achieved business worth Rs6,21,000 crore.
As per court rules, it will accept only cash as court fee. However the company has argued that since the amount involved is large, it cannot pay cash due to accounting problems. Hence, the court has advised Mahindra Satyam to wait for the judgment in a similar case in the higher court
Hyderabad: The damages claim, filed by Mahindra Satyam against its former board of directors, certain employees and audit firm PricewaterhouseCoopers may not be taken up by a local court immediately as it has demanded the court fee in cash, whereas the company prefers to pay it in draft or cheque, reports PTI.
Sources close to the development said that as of now, the court has advised the company to wait for the judgment of a similar case that is pending before the Andhra Pradesh High Court.
“As per court rules it will accept only cash as court fee. However the company argues that since the amount involved is large, it cannot pay cash due to accounting problems. Now the court has advised Mahindra Satyam to wait for the judgment in a similar case in the higher court,” sources told PTI.
The company has to pay 1% of the total damages claimed in the petition as court fee.
Sources said Mahindra Satyam, which has claimed around Rs250 crore as damages, would have to pay Rs25,00,000 as non-refundable court fee.
Though the final claim of the damages will run into thousands of crores, Mahindra Satyam chose to claim lesser amount in the petition as it is yet to make payments in some of the issues that the company agreed to settle.
“The court asked the Mahindra Satyam not to ask for dispensation of the case as it is advisable to wait for the AP High Court judgment on a similar issue,” sources said.
The company has named around 123 people as defendants, including Satyam founder chairman B Ramalinga Raju, Rama Raju, V Srinivas, and former directors including Ram Mynampati and Krishna Palepu, sources added.
In January 2009, Ramalinga Raju admitted to an accounting fraud of Rs14,000 crore at the IT firm. The government soon stepped in and set up a new board, following which Tech Mahindra bought a 46% stake in Satyam through a formal public auction process. The company was later rechristened as Mahindra Satyam in July.
Last year, Mahindra Satyam agreed to pay $125 million (over Rs587 crore) in an out-of-court settlement to end a bunch of class action suits filed in the US. It had also agreed to pay $70 million in a legal settlement with British firm Upaid Systems.
The Indian tax authorities have also slapped an income tax claim of about Rs2,500 crore on the company.
According to a member of Institute of Chartered Accountants of India, no company or individual should deal with more than Rs20,000 in cash. However, in special cases such as compensation to farmers, ex-gratia to victims, the government may pay cash.
The central bank has also revised its growth estimate for the current fiscal at 7% from the earlier figure of 7.6%. It has projected inflation at 7% by the end of March, but added that fiscal slippages are a “significant threat” to the economy
The Reserve Bank of India (RBI) in its quarterly review of the monetary policy, cut the cash reserve ratio (CRR)—the amount of deposits banks keep with the central bank—by 50 basis points (bps) to 5.50% from 6%. The central bank kept other rates like repo and reverse repo rates unchanged due to high core inflation in December.
The cut in CRR will ease liquidity problems faced by banks and is expected to spur growth, the RBI said. The move will lead to an infusion of Rs32,000 crore into the system. With additional liquidity by CRR cut, there is a possibility that banks may reduce the interest rate to attract borrowers.
According to Goldman Sachs, there were strong reasons for enacting the CRR cut. “First, system liquidity is extremely tight. The average daily borrowing at the repo window was Rs1.5 trillion (about $30 billion) in the week of 16th January. This is significantly above the historic borrowing, and the RBI’s preferred system deficit of (+/-) 1% of net demand and time liabilities of banks, which is roughly Rs600 billion (about $12 billion). As a result, the overnight call money rate has shot up significantly above the repo rate and is complicating monetary transmission. Indeed, the liquidity tightness is acting as an increase in the repo rate beyond the 8.50% level the RBI has raised it to. Second, the open market operations done so far have not prevented an inversion of the yield curve, and other liquidity tools are necessary. Third, with the long lags in the system, there is a need to start the easing process early to help investor and corporate confidence to kick-start the recovery in second half of 2012, in our view,” said Tushar Poddar, chief economist, India, Goldman Sachs.
The RBI retained the repo or the short-term lending rate at 8.5% while making it clear that any cut in it will only happen after moderation in inflation. Projecting a lower growth of 7% for 2011-12, the central bank said the policy actions are meant to “mitigate downside risks to growth” and anchor inflationary expectations.
“Based on the current inflation trajectory, including consideration of suppressed inflation, it is premature to begin reducing the policy rate,” RBI governor D Subbarao said while unveiling the third quarterly monetary policy review.
He said, “Even as inflation remains elevated, despite moderation, downside risks to growth have increased. The growth-inflation balance of the monetary policy stance has now shifted to growth”.
He further said slippage on fiscal deficit, crude prices and rupee depreciation are key challenges for inflation, which after remaining near double digit for almost two-years, came down to 7.5% in December 2011.
The chairman of Prime Minister’s Economic Advisory Panel, C Rangarajan, said RBI has taken a “wise decision” and it would lead to softening of interest rate.
“The improvement in liquidity condition will automatically have effect on interest rate. Improvement in liquidity condition will lead to softening of interest rate,” he said.
According to Barclays Capital, the monetary policy is gearing more towards supporting growth despite continued upside inflation risks. "We continue to see risks of a repo rate cut of 25bps in the March mid quarter policy review, while maintaining our base case of start of the rate cut cycle from the April credit policy review. Even with the cut in the CRR, the RBI has flagged that non-food manufacturing inflation remains elevated, and has not seen sufficient softening to justify policy rate reductions as of now," it said in a report.
The RBI has commenced easing cycle with the 50bps cut in CRR. However the monetary policy has put the onus of easing on fiscal and structural policy. Rohini Malkani, economist, Citi India, said, "Given that the growth-inflation balance has shifted to growth, we maintain our view of a minimum 100bps cut in the repo rate in 2012. However, it is worth noting that the RBI has said the timing and quantum would be contingent on policy measures to induce investments and steps towards fiscal consolidation".
The BSE benchmark Sensex rallied by over 186 points in late morning trade soon after RBI announced a cut in cash reserve ratio (CRR) in its monetary policy review.
After rising over 83 points in early trade, the 30-share index rallied further to trade 285 points, or over 1.7% higher, at 17,037.11 at 1323 hrs.
The broad-based National Stock Exchange index Nifty regained 5,100-point level by rising 90 points, or 1.8%, to 5,136.75.