Today's Hot Stories - March 04, 2013
10 Headlines for Today
(1) Deputy SP's murder: UP minister Raja Bhaiya resigns
(2) ‘Power-full’ Gujarat gives 24-hour electricity
(3) Bangladesh: Khaleda Zia calls off meeting with Pranab
(4) Jet Airways seeks aviation ministry nod to buy 6 Kingfisher slots
(5) IT dept's intel unit to track evaders
(6) Cut in US spend may trip FII flows
(7) India 400/3 at lunch, lead by 163 runs
(8) Unmukt helps Delhi lift Hazare Trophy
(9) Football: Bale helps Spurs beat Arsenal 2-1
(10) In medical first, scientists say baby born with HIV apparently cured
5 Stories for Today
(1) Shivraj Singh Chouhan holds up MP too as model
(2) Kerry’s terms puts Morsy in a tough spot
(3) Budget 2013 Impact: Reserve Bank of India may cut rates, banks unlikely to follow
(4) Swiss overwhelmingly vote for golden parachute ban: Projection
(5) A quiet focus on financial sector
(1) Shivraj Singh Chouhan holds up MP too as model
Even as Narendra Modi stole the show at the BJP national council meeting on Sunday, Madhya Pradesh chief minister Shivraj Singh Chouhan provided the contrast, countering Modi's flamboyance with his bottom-up approach to development and his earthy lines to reach out to people in the state which will go for assembly polls later this year.
If Chouhan wins the Madhya Pradesh polls for which he and his party look confident, it would be his third consecutive term in office and put him in the same league as Modi.
If Modi's theme was growth and governance, Chouhan's mantra was 'Antyoday', or reaching out to the last man in the social pyramid - the poor, the farmer, women, daily wage labourers and senior citizens.
Chouhan rattled off the successful schemes that he had started and which were adopted at the national level and by other states including Congress-ruled states like the 'Ladli Laxmi Yojna'. He kept comparing the success stories of his state with that of Gujarat and said, "The examples of good governance that BJP is providing is certainly there in Gujarat, but they are also there in other BJP ruled states."
Chouhan referred to himself as the father, brother, uncle, son to different sections of the electorate, relating to them as one of their family. In contrast, Modi is a distant leader whose enigma adds to his charisma. Both Chouhan and Modi will be inducted into the BJP's parliamentary board soon.
The mild-mannered Chouhan reached out to the people including his electorate by saying, "We are in politics to create better polity and serve the people, mostly the downtrodden who cannot help themselves. The aim is not to get to the chair but to serve the last man standing."
He stood out in his humility as opposed to the high-profile, flamboyant and aggressive Modi who scored by hitting out at rival Congress and went without naming any BJP leader sharing the stage with him. Chouhan, on the contrary, addressed each of the leaders respectfully by name and did not forget to mention Deen Dayal Upadhyay and Atal Bihari Vajpayee.
As he gave out the growth figures of Madhya Pradesh and details of how the state had been pulled out of BIMARU status, Chouhan said, "Madhya Pradesh is my temple, its people are my god and I am the pujari (priest) at the temple.
Source: The Times of India
(2) Kerry’s terms puts Morsy in a tough spot
The U.S. has offered support for embattled President Mohamed Morsy, provided Egypt falls in line and follows the tough economic prescriptions of the International Monetary Fund (IMF).
Visiting U.S. Secretary of State John Kerry made it plain during his visit to Cairo that Egypt would have to agree to painful IMF conditions if it is to avail itself a life-saving $4.8 billion loan.
“It is paramount, essential, urgent that the Egyptian economy get stronger, that it gets back on its feet,” said Mr. Kerry during a meeting with Egyptian and U.S. business executives. “It’s clear to us that the IMF arrangement needs to be reached.”
With little room for manoeuvre, Mr. Morsy has found himself in a tight corner. In case he accepts the harsh loan conditions — slashing of energy subsidies and a steep hike in taxes — the President risks deepening social unrest among his people, who are looking for economic relief, two years after a turbulent revolution. Conversely, if he doesn’t accept the debt, he risks collapse of the economy. Analysts point out that once the IMF loan is through, Egypt could raise bilateral loans from U.S. and Europe, but this could, conversely, lure Egypt into a debt trap.
By way of political incentive, Mr. Kerry backed Mr. Morsy’s controversial call for fresh parliamentary elections, slated to begin on April 22.
Retrial of Mubarak
A decision taken on Sunday by an Egyptian appeals court for the retrial for former President Hosni Mubarak on April 13 — nine days ahead of the polls — is likely to impact the elections. Mr. Mubarak faces charges of corruption and conspiracy to kill protesters during the 2011 uprising that led to his fall.
The retrial has been ordered after a court had earlier accepted Mr. Mubarak’s appeal against the life sentence that he is serving following his conviction last June.
Others who will face re-trial include former interior minister Habib al-Adly, who was sentenced for life for his role in the killing of dissidents. The former President’s sons, Alaa and Gamal, who were acquitted in June, will now be retried on corruption charges.
The U.S. support for the polls was a wrap on knuckles of the National Salvation Front — the opposition conglomerate that has decided to boycott the parliamentary poll. Mr. Kerry held separate talks with opposition leaders, which included a meeting with former presidential hopeful Amr Moussa, to reinforce his message of support for the polls.
He also had a telephonic conversation with Mohamed ElBaradei, another political heavyweight, who has become Mr. Morsy’s visceral critic. Hamdeen Sabbahi, who stood third in the presidential race, chose not to attend the group meeting with Mr. Kerry.
There were small but colourful street protests against Mr. Kerry, perceived by some of having a soft-corner for the Islamist president, and the Muslim Brotherhood, Mr. Morsy’s parent organisation. Mr. Kerry’s pictures were set alight by a group of anti-Morsy demonstrators who had assembled on Saturday outside the Foreign Ministry building, where the top American diplomat was to meet Kamel Amr, the Egyptian Foreign Minister.
Reuters reported that the demonstrators had earlier marched from Tahrir Square, holding up cartoons of Mr. Kerry sporting an Islamic beard. Placards bearing Mr. Morsy’s pictures showed him sporting a similar moustache to that of Adolf Hitler.
As Mr. Kerry held talks in Cairo, there was seething turmoil in some Egyptian cities. Protests broke out in the Nile Delta city of Mansoura, after an armoured police vehicle ran over and killed a demonstrator. There was violence in the Suez Canal city of Port Said, where protesters burned down a police station, state media reported.
Source: The Hindu
(3) Budget 2013 Impact: Reserve Bank of India may cut rates, banks unlikely to follow
The Reserve Bank of India governor, Duvvuri Subbarao, may oblige Finance Minister P Chidambaram with an interest rate cut on March 19 impressed by the tight fiscal ship that is being run, but the markets may defy lower rates for a longer period. Tight liquidity, slump in deposit growth, and banks' desperation to match their assets and liabilities may keep interest rates higher.
"Interest rates will continue to be high till March even if the RBI cuts rates; it may even climb," said BA Prabhakar, chairman and managing director, Andhra BankBSE -1.60 %.
"There is a chance that from April, rates may come down, but I doubt it would fall substantially." State Bank of IndiaBSE 0.17 %, Punjab National BankBSE -1.01 %, Karnataka BankBSE -2.64 % and others raised term deposit rates by as much as 1.25 per cent last week. This, amid finance minister's calls for lowering of interest rates, is making economists and traders sceptical about the market interest rates easing even if the RBI lowers repo rate, the rate at which it lends to banks.
Tight liquidity, slump in deposit growth, and banks’ desperation to match their assets and liabilities may keep interest rates higher.
Advance tax payments and the scramble by banks to raise funds to meet redemption of bulk deposits could add pressure on short-term interest rates. "Banks are de-risking themselves from bulk deposits and, for now, banks may have to keep retail deposit rates attractive," said Phani Shankar, head -treasury at ING Vysya Bank. PNB raised term deposit rates by 1.25 per cent to 8.75 per cent for deposits less than Rs 1 crore for maturities between six months and less than a year, while Karnataka Bank also raised deposit rates from 9 per cent to 9.25 per cent for the one and two-year deposit buckets.
"I am sure the RBI governor has taken note of all that I have said in the Budget speech, all that we have done in terms of budgeting, the fact that we have contained fiscal deficit to 5.2 per cent and the fact that I am pretty confident I will be able to contain fiscal deficit to below 4.8 per cent next year," Chidambaram told ET NOW in an interview.
"Reduction in interest rates will certainly help get us to 6.5 per cent growth, from the 5 per cent forecast for the current fiscal." By keeping fiscal deficit at 5.2 per cent of the gross domestic product this fiscal, Chidambaram beat his earlier estimates of 5.3 per cent. It is forecast to be 4.8 per cent next fiscal. Tight liquidity at a time when the government and the corporate world are seeking lower rates could throw a spanner in the works. Liquidity may not ease even if the RBI buys bonds from the market, since bank deposit growth rate has slumped to a near-decade low.
Banks, which have to redeem certificate of deposits of more than Rs 1 lakh crore, have borrowed an average of Rs 1.13 lakh crore from the central bank in the repo, signalling tight liquidity. Deposit growth is at 13.2 per cent, a near-decade low, and demand for loans is at 16.4 per cent. The incremental credit-to-deposit ratio is at 73.78 per cent against 68.4 per cent in January 2012, reflecting a tighter liquidity in the banking system.
Deposits have slowed due to a negative real interest rate due to high inflation. "Deposit rates will not soften before April or May," said Ashwani Kumar, CMD, Dena BankBSE -1.22 %. "Lower deposit mobilisation by banks is largely because existing interest rate is very low and investors have better channels for investments."
Source: The Economic Times
(4) Swiss overwhelmingly vote for golden parachute ban: Projection
A large majority of Swiss voted on Sunday to rein in executive pay and force business leaders to give up golden parachutes, according to early results and projections.
Official first results of the popular vote showed that in Geneva, where polling ended at noon (1100 GMT), 67.7 per cent voted in favour of the initiative, with similar numbers in the canton of Vaud and Fribourg.
And projections from Switzerland's financial capital Zurich, where voting will continue until 6:30 pm, showed 71 per cent of voters want the so-called Minder Initiative, after its sponsor businessman and senator Thomas Minder, passed into law.
"The people have decided to send a strong signal to boards, the Federal Council (Swiss government) and the parliament," Minder himself told public broadcaster RTS, adding he was not surprised by the projected results.
The draft law set down by his initiative - one of several initiatives being voted on at both national and local levels today - only covers Swiss companies listed on Swiss or foreign stock exchanges.
It would limit the mandate of board members to one year, and would ban certain kinds of compensation, including the so-called golden handshakes or golden parachutes given to executives when they leave a company.
In addition, it would ban the bonuses received for takeovers, or when a company sells off part of its business.
While Switzerland has avoided the level of economic crisis seen in the European Union, which surrounds the Alpine nation, public anger has risen there as elsewhere over what is deemed abusive levels of pay and bonuses for top bosses.
Source: The Times of India
(5) A quiet focus on financial sector
Describing the financial sector as “the heart of the economy”, the Finance Minister, P. Chidambaram, in his budget speech, announced 17 measures across banking, insurance and capital market. Almost all of them do not involve any financial outlays.
Among the few exceptions are the capital infusion to 13 public sector banks (PSBs) aggregating Rs.12,517 crore before March 31 this year, and an additional Rs.40,000 crore next year. Such a large capital infusion is needed to enable the banks to meet the enhanced capital adequacy requirements, as they migrate to the Basel-III norms from April 1.
Capital infusion by the government to buttress the PSBs’ capital is not new and arises from the fact that the government does not, on principle, want to let go the majority equity stake in them, and lose control. The irony is that all PSBs are listed, and their shares, in varying degrees, are faring well. Some of the stronger ones like State Bank of India can easily fund their capital requirements by accessing the capital market but are not allowed to do so. Perhaps, in the not distant future, it should be possible for the government to permit a dilution of its stake to below 51 per cent without letting the banks divest their public sector character. This is a reform measure for long talked about with very little follow-up action.
Regulatory aspects
Regulatory aspects of the financial sector get a look in. The report of the Financial Sector Legislative Reforms Commission due shortly will be acted upon. Also in the regulatory category is the proposal to constitute a Standing Council of Experts in the Ministry of Finance to analyse the international competitiveness of the Indian financial sector, periodically examine the transaction costs of doing business in India, and provide inputs to the government. These two measures are very relevant. In the present Indian context, supervision of financial conglomerates is a big issue. The latest guidelines issued by the Reserve Bank of India (RBI) for licensing new banks have drawn attention to it in a big way. Since India is fast integrating with the rest of the world, it is necessary to keep an informed watch on the competitiveness of Indian financial sector.
Keeping in view the policy goal of financial inclusion, the budget claims that all scheduled commercial banks and all RRBs (regional rural banks) are on core banking solution.
This and the related assurance that all PSBs will have an ATM at all their branches by March 31, 2014, sounds too good to be true but then we have the Finance Minister’s word for it.
Furthering financial inclusion is the buzzword in insurance also. Insurance companies will be allowed to open branches in smaller cities and towns without the permission of the regulator, Insurance Regulatory and Development Authority (IRDA). All towns, with a population of 10,000 or more, will have an office of LIC and an office of one public sector insurance company. The stress on the public sector is important. Only they can be directed. But what such forcible branch expansion does to their profitability is a different issue. Besides, can’t technology be used to increase market coverage as is being done by banks?
In a welcome move, it has been decided that the KYC of banks will be sufficient to acquire insurance policies. It must be ensured that this decision is implemented on the ground without any hassles. Also, getting a KYC from a bank itself is not the easiest of tasks.
Concerns
Permitting banks to act as insurance brokers is an attractive idea, but for various reasons banking and insurance do not mix well. Among the concerns have been lack of familiarity of insurance products and possible conflict of interest arising out of the fact that at the most basic level both chase a potential customer’s money.
Speeding up third-party motor settlement claims, which are now clogging courts through adalats, is a good idea but where is the infrastructure or for that matter expertise without which alternative dispute settlements such as adalats will not succeed.
Finally, selling micro-insurance products through banking correspondents is a good idea.
It will, however, have a greater chance of success if the products on offer are standardised and made simple and both the correspondent and the potential customers are sufficiently educated.
Source: The Hindu
Disclaimer: All news stories and content sourced from freely available material on the internet. All sources are acknowledged.
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