RBI announces standard rating symbols for banks

The change in rating symbols and definitions, however, does not effect, in any manner, the rating methodology followed by the credit rating agencies (CRAs) for rating such instruments and will have no bearing on the existing ratings assigned by the CRAs under the Basel-II framework, the RBI said in a statement

Mumbai: The Reserve Bank of India (RBI) on Thursday announced uniform and standard rating symbols to be used for indicating financial health of a bank, reports PTI.

The change in rating symbols and definitions, however, does not effect, in any manner, the rating methodology followed by the credit rating agencies (CRAs) for rating such instruments and will have no bearing on the existing ratings assigned by the CRAs under the Basel-II framework, the RBI said in a statement.

Under the revised standardised system, there is no change in the long term rating symbols except that they will henceforth display the rating agency’s name as a prefix, it said.

“In case of short term ratings, a rating scale denoted by ‘A’ on a scale of ‘1’ to ‘4’ (i.e. A1, A2, A3 and A4) and ‘D’ has been prescribed,” it said.

Four domestic CRAs namely CARE, CRISIL, FITCH India and ICRA have been accredited for the purpose of risk weighting the banks’ claims for capital adequacy purposes.

The long term and short term ratings issued by the chosen domestic credit rating agencies have been mapped to the appropriate risk weights applicable as per the standardised approach under the Basel II framework.

In June this year, capital market regulator Securities and Exchange Board of India (SEBI) had asked CRAs to adopt standard symbols and definitions to help investors to understand better the financial health of firms.

The four accredited CRAs, which are registered with SEBI, have therefore revised their rating symbols of long term and short term debt instruments.

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Ulip holders to get interest if they discontinue policies

The IRDA also asked the life insurers that the policyholders Ulips should be allowed to revive their cover within two years of stoppage of premium payment, but not later than the expiry of lock-in period

New Delhi: Holders of unit-linked insurance policies (Ulips) who discontinue their policies mid-way shall get a minimum guaranteed interest at par with State Bank of India (SBI) savings bank account rates, reports PTI quoting the Insurance Regulatory and Development Authority (IRDA).

Changing the rules, the IRDA also asked the life insurers that the policyholders Ulips should be allowed to revive their cover within two years of stoppage of premium payment, but not later than the expiry of lock-in period.

“The policyholder shall have the right to revive such policy within two years from the date of discontinuance and not later than the expiry of lock in period,” IRDA said in a circular to all life insurance companies.

Elaborating on the interest rates to be paid on the discontinued policies, the IRDA circular said that proceeds of such policies means “... subject to a minimum guarantee of interest as applicable to savings bank account of the SBI”.

Further, the policyholders would be duly compensated for the discontinuation charges in case the policies are revived.

The compensation would be on the basis of the Net Asset Value (NAV) of the units of a common fund which is created out of the discontinuation charges and premium paid.

The regulator has also asked the insurance companies that the segregated fund relating the discontinued policies shall be invested in a pattern to be approved by IRDA.

When a policy is stopped mid-way, the insurers will be able to levy only discontinuance and fund management charges.

“No other charges, by whatsoever name, shall be levied,” the IRDA said.

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Share prices range-bound for now: Thursday Closing Report

Nifty is ranged between 5,060 and 5,130

In yesterday’s closing report we had mentioned that for the upmove to be sustained, the Nifty will have to keep itself above 5,060 and should try to close above 5,130. Today the benchmark opened above the level of 5,130, made a higher high, higher low, but closed in the red above the support of 5,060. The market closed nearly half a percent lower amid choppy trade in the absence of any domestic triggers. A marginal dip in the weekly food inflation numbers for the week ended 1st October also did not offer any help. The Nifty saw a huge volume of 62.13 crore shares. This suggests that further advance would be difficult for now.

The market opened higher on global positive cues as hopes of easing of the debt crisis in Europe helped the US markets close in the green overnight and also boosted investor sentiments across Asia today. The Nifty opened at 5,131, up 32 points and the Sensex gained 90 points to resume trade at 17,048. Banking, realty and IT sectors supported the initial gains.

Amid volatile trade, the indices hit their intraday highs in the first hour itself with the Nifty going up to 5,137 and the Sensex climbing to 17,084. However, higher levels lured investors to indulge in profit-booking, resulting in the indices dipping into the negative at around 10.50am.

The market continued to hover on both sides of the neutral line in subsequent trade. The benchmark got a small boost in the noon session following a positive opening of the European markets, but the push was not strong enough as the market edged lower a short while later after the European bourses drifted southwards.

Seesaw trade continued with the Nifty touching its intraday low of 5,069 shortly after 2pm. The Sensex fell to the day’s low towards the end of the session with the index going back to 16,854. Closing near the intraday low, the Nifty fell 22 points to 5,078 and the Sensex was 74 points down at 16,884.

The advance-decline ratio on the NSE was almost equal at 829:818.

While the Sensex closed lower, the broader indices ended flat with a positive bias. The BSE Mid-cap index and the BSE Small-cap index added 0.03% and 0.06%, respectively.

BSE Bankex (up 1.04%), BSE IT (up 0.65%), BSE Realty (up 0.41%), BSE TECk (up 0.27%) were the gainers in the sectoral space. BSE Auto (down 1.48%), BSE Capital Goods (down 1.20%), BSE Healthcare (down 0.95%), BSE Oil & Gas (down 0.83%) and BSE Metal (down 0.75%) were the top losers.

ICICI Bank (up 2.22%), Tata Steel (up 1.63%), TCS (up 1.06%), DLF (up 0.89%) and State Bank of India (up 0.79%) were the top performers in the Sensex list. The laggards were led by Jindal Steel (down 3.45%), Tata Motors (down 3.09%), Hindalco Industries (down 3.01%), Maruti Suzuki (down 2.71%) and Tata Power (down 2.47%).

The major gainers on the Nifty were ICICI Bank (up 2.24%), HCL Technologies (up 2.10%), Tata Steel (up 1.81%), Cipla (up 1.36%) and TCS (up 0.96%). The key losers were Jindal Steel (down 4.77%), Hindalco Ind (down 3.35%), Tata Motors (down 3.18%), Ranbaxy (down 3.06%) and IDFC (down 3.04%).

Markets in Asia closed mostly higher on assurance from European policymakers that steps to recapitalise banks in the continent are taking shape. This apart, minutes of the US Federal Reserve’s 20th-21st September meeting released on Wednesday stated that the central bank is open to additional asset purchases to support the economy. These developments rekindled investors’ risk appetite.

The Shanghai Composite gained 0.78%; the Hang Seng surged 2.34%; the Jakarta Composite climbed 1.09%; the KLSE Composite advanced 1.15%; the Nikkei 225 rose 0.97%; the Seoul Composite was up 0.75% and the Taiwan Weighted settled 0.62% higher. On the other hand, the Straits Times lost 0.14% in trade today.

Back home, foreign institutional investors were net buyers of stocks worth Rs595.01 crore on Wednesday, whereas domestic institutional investors were net sellers of shares worth Rs106.55 crore.

Tiles-maker Somany Ceramics has signed a memorandum of understanding (MoU) to acquire a 26% stake in Vintage Tiles. The strategic stake purchase shall allow the company to market the entire quantity of polished vitrified tiles to be manufactured by VTPL. The stock jumped 4.47% to Rs47.95 on the NSE.

Wind power major Suzlon Energy has completed the sale of its entire shareholding in Hansen Transmissions to ZF Friedrichshafen AG for Rs890 crore. Suzlon held a 26.06% stake in Hansen Transmission through its Netherlands-based subsidiary, AE-Rotor Holding BV. The stock fell 0.79% to Rs37.75 on the NSE.

Bajaj Corp, the maker of Bajaj Almond Drops and Kailash Parbat brands of hair oils is in talks with several potential targets and has several consultants advising it on its plans to expand its presence. The company said that it is looking at acquisitions in the personal care segment, which would complement its core categories. The stock added 0.05% to Rs101.50 on the NSE.

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