Gold price falls 0.36% in futures trade on global cues

Gold prices fell 0.36 per cent to Rs 29,678 per 10 gram in futures trade on Tuesday as speculators engaged in trimming positions.

Market analysts said the fall was mostly attributed to a weak trend overseas after a Federal Reserve official said policy makers may start reducing US fiscal stimulus as early as next month.

At the Multi Commodity Exchange, gold prices for delivery in December fell by Rs 108, or 0.36 per cent, to Rs 29,678 per 10 gram in business turnover of 253 lots.

Similarly, metal prices for delivery in October declined by Rs 99, or 0.33 per cent, to Rs 29,775 per ten gram in 2,235 lots.

Meanwhile, gold prices fell 0.4 per cent to settle at USD 1,327 an ounce in New York yesterday

Moody's concerns overblown, misplaced: SBI

Country's largest bank State Bank of India (SBI) on Tuesday dismissed the concerns raised by Moody's while downgrading its debt rating, saying that the issues cited by the global credit ratings agency are "overblown and misplaced".

"We had explained our views to Moody's, allaying their concerns on debts, deposits as well as recapitalisation, but still they went ahead with downgrade. We believe Moody's is overly concerned, and that is completely misplaced," SBI MD and CFO Arundhati Bhattacharya said.

At a press conference on Monday evening attended by all the four Managing Directors of the bank, she said: "What Moody's feels is their view and we don't subscribe to that. SBI is and will remain the banking champion of the nation. We have no difficulty in raising deposits with our nationwide presence nor do we have any means in raising funds.

"We still have the highest rating amongst the public sector banks when it comes to bank?s financial stability rating (BFSR) from Moody's."

The agency on Monday downgraded the senior unsecured debt and local currency deposit rating of SBI by a notch to 'Baa3' from 'Baa2', citing asset quality and recapitalisation concerns.

It said: "A combination of increasing pressure on credit fundamentals and ongoing reliance on fiscally constrained government to maintain capital at levels desired by regulators argue for appropriateness of supported debt and deposit ratings at a level no higher than the sovereign," it said.

Discounting the agency's fears on the bank's ability to recapitalised, Bhattacharya said: "We don't believe that Moody's concern on recapitalisation is right. They have their views, but that is not our views. We do believe that they are not completely right in its rating action. We have many ways to raise capital including bringing the government stake down from 62.3 per cent now to raise capital."

Even 4.5-5 per cent GDP growth in FY14 good for India: KPMG

Even 4.5-5% GDP growth good for India: KPMG

Consulting firm KPMG has said achieving gross domestic product (GDP) growth of even 4.5 -5 per cent in 2013-14 "should be good" for India as there has been a gradual slowdown in the country's economic activity.

"Initially, the government was talking of much higher growth. We have gradually come down to now below 5 per cent. My own estimate is that if we are able to even sustain 4.5-5 per cent, between there, it should be good," said Akhil Bansal, Chief Operating Officer, KPMG India.

India's economic growth had slumped to decade low of 5 per cent in 2012-13, and during the first quarter of 2013-14 slowed down further to 4.4 per cent.

Bansal added that the government needs to improve the country's infrastructure to promote growth.

Earlier, speaking on 'Practice of Strategic Consulting in India: Opportunities and Challenges', he said strategic consulting industry in the country is expected to grow at over 20 per cent in the current financial year.

"Consulting is still in nascent stage in India... Strategic consulting is required. I do not see any reason why it should not grow by another 20 per cent plus this year as well," he said.

He said about 70-80 good consulting firms are operating in India, but it (industry) is still pretty small.

"The estimated market size in India is about $300 million, which is very small. But the good thing is the way it is growing. Last year the growth was at about 22 per cent in strategic consulting and it came in an year when the economy was slowing."

Kingfisher Airlines in talks with an investor: Vijay Mallya

Bangalore: Criris-hit Kingfisher Airlines is in talks with a foreign investor for potential stake sale, its Chairman Vijay Mallya said Tuesday.

He, however, refused to divulge the investor's name.

"I expect this to take some form or shape in about 90 days. That is in my own estimate. It could be longer or it could be even earlier," Mallya told reporters after the annual shareholders meeting of the company.

Kingfisher Airlines has remained grounded for almost a year now under the burden of huge debts totalling over Rs 7,000 crore and accumulated losses of more than Rs 16,000 crore.

Asked about the investor's profile, Mallya said he is unable to reveal anything at this moment as it is something that would breach the confidentiality of agreement. "The investor is very sensitive to identity being revealed. Let us really give it a good try to get KFA started," he added.

To a query, Mallya said the United Breweries Holdings Limited (UBHL) Board has considered the request of KFA Board for continued funding in the light of the prospective investor and agreed to provide some funding for KFA.

"UBHL itself cannot use its own funds and its assets that it currently has because of the restraining order from the Karnataka High Court. We have in fact applied to the court's permission to use part of this fund, and now it is in the hands of the honourable court," he said.

On the response of the Directorate General of Civil Aviation (DGCA) to the airlines' submission of revival plan in a bid to restart limited operations, Mallya said the company had not heard from the aviation regulator, but gathered informally that they would like to see recapitalisation plan.

Asked whether the UBHL has agreed to pay employees' salaries, Mallya said: "Yes, that is the principle request before the honourable court."

Queried if there is any contingency plan in case the court does not take it up, he said: "I have no contingency plan to violate or deviate from the orders of honourable court."

To a question, Mallya said issues with its creditors are bilateral in nature and would talk to them from time to time.

"Some of them have preferred bilateral negotiations in good faithful spirit and some have gone to court. We have to deal with all these issues as they come along," he added.

On Malaysian low-cost carrier Air Asia impacting the aviation sector in India after its foray into the country, Mallya said KFA was never a low-cost carrier and always challenged the very use of the word. "If at all, it will have an impact on the full service space, but good luck to all those who are starting," he said.

Asked how he saw the aviation sector panning out in next year or so, Mallya said: "If you take all three components - current crude oil prices, the value of rupee versus the dollar etc - as they exist, obviously it is very challenging. And I don't know whether there can be full recovery."

CCEA approves methodology for coal blocks auction

New Delhi: The Cabinet Tuesday approved the methodology for auctioning coal blocks, providing for upfront and production-linked payments and benchmarking of coal sale prices.

Coal blocks will be put for auction after the environment ministry reviews them and bidders have to agree to a minimum work programme, according to an official statement.

"CCEA has approved the methodology for auction by competitive bidding of the coal blocks. The methodology provides for auctioning the fully explored coal blocks and also provides for fast tracking the auction by exploration of regionally explored blocks," the statement said.

The policy will ensure greater transparency and will pave the way for the government to auction explored blocks.

"The process of bidding of coal blocks will be started very soon. The government has fulfilled its commitment to bring transparency in the allocation of coal blocks," Coal Minister Sriprakash Jaiswal said.

A source said six explored blocks will be auctioned first, with estimated reserves of over 2,000 million tonnes.

The policy provides for production-linked payment on a rupee per tonne basis, plus a basic upfront payment of 10 percent of the intrinsic value of the coal block.

The intrinsic value will be calculated on the basis of net present value (NPV) of the block arrived at through the discounted cash flow (DCF) method, the statement said.

"To benchmark the selling price of coal, the international FoB (freight-on-board) price from the public indices like Argus/Platts will be used by adjusting it by 15 percent to provide for inland transport cost which would give the mine mouth price," it said.

To avoid short-term volatility, the average sale price will be calculated by taking prices of the past five years.

For the regulated power sector, a 90 percent discount will be provided on the intrinsic value. This will help to rationalise power tariffs, the government said.

To ensure firm commitment, there will be an agreement between the ministry and the bidder to perform minimum work programmes at all stages.

There would be development stage obligations in terms of milestones to be achieved such as getting mining leases and obtaining environment/forest clearances, while the bidder will have to give performance guarantees.

The policy also provides for relinquishment of a block without penalty if the bidder has carried out the minimum work programme stipulated in the agreement.

According to the statement, the Ministry of Environment and Forests will review details of coal blocks and communicate its findings before the areas are put to auction. Final clearances will be subject to statutory approvals.

The government said exploration activities in identified blocks are at an advanced stage and are likely to be completed soon. They will be auctioned under the Competitive Bidding of the Coal Mines Rules, 2012, according to the statement.

The Comptroller and Auditor General said in a report that allocation of coal blocks between 2004 and 2009 without auction resulted in "undue benefits" worth Rs 1.8 lakh crore to private entities.

This led to a furore in Parliament, with opposition parties seeking a probe into the matter. The CBI is investigating the issue.

The government allocated 14 coal mines to central and state public sector units, including four to NTPC, in July.

It had planned to auction 54 coal blocks with total estimated reserves of about 18 billion tonnes.

Rupee up 142 paise against dollar in late morning deals

The rupee had settled just a paise lower at 63.38 against the dollar in Wednesday’s trade. File photo: V.V. Krishnan

The rupee rose by 142 paise to 61.96 in late morning trade on Thursday on fresh selling of the U.S. currency by banks and exporters triggered by sharp fall in dollar in overseas amid smart rise in the equity market.

In New York market, the U.S. dollar fell sharply against major rivals yesterday, especially against emerging-market currencies, after the Federal Reserve made no change to its monthly asset-purchase programme.

The rupee resumed higher at 61.70 per dollar as against the last closing level of 63.38 at the Interbank Foreign Exchange (Forex) Market and firmed up further to 61.64 before quoting at 61.96 per dollar (1050 hours).

It showed a sharp gain of 142 paise or 2.24 per cent from its last close.

It moved in a range of 61.64 and 62.08 per dollar during the morning deals.

Meanwhile, the benchmark BSE-30 share Sensex rose by 489 points or 2.45 per cent to 20,451.56 at 1050 hours.

Keywords: inter-bank foreign exchange, rupee-dollar trade, forex market, opening trade

SBI increases base rate to 9.80 pc, makes loans costlier

A a day ahead of the RBI's policy review, State Bank of India (SBI) on Thursday increased its base rate, or the minimum rate of lending, to 9.80 per cent, making loans costlier.

"State Bank of India has revised the base rate by 0.10 per cent from 9.70 per cent per annum to 9.80 per cent," it said in a statement. Retail term deposit rates have been revised upward, it said.

SBI is the first major state-run bank to hike lending rates after short-term rates rose as a result of the Reserve Bank of India's liquidity tightening moves announced in July.

The decision comes on the eve of the mid-quarter review of the monetary policy.

According to watchers, new RBI Governor Raghuram Rajan has been given some room to take an accommodative stance after the US Federal Reserve delayed the tapering of liquidity infusion.

SBI also increased the spreads on auto and home loans by as much as 0.20 per cent, which will affect new borrowers.

Home and auto loan borrowers typically pay a margin, or a spread, above the base rate, which is arrived at as per the risk and quantum of borrowing.

The bank has hiked rates for loans under the benchmark prime lending rate, an older system of computing interest rates, to 14.55 per cent from 14.45 per cent. The lending rate hikes are effective from today, it added.

A senior bank official said the decision to increase rates was taken by the asset liability committee, which met late last evening.

"There has been an increase in our cost of funds and the pressure will only increase further as we enter the festive season, which increases the requirement for liquidity," the official said.

New housing loans under Rs 30 lakh will come at 10.10 per cent as against 9.95 per cent earlier, while interest rates on auto loans will go up to 10.75 per cent, the official said.

ECONOMY

19 Sep, 2013 11:50 IST

RBI To Likely Hold Rates Steady: Poll

Of the 52 economists polled, 50 expect the policy repo rate to remain at 7.25%, and 47 of 48 respondents see the CRR unchanged at 4.00%

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Picture by Reuters

The Reserve Bank of India's new Governor Raghuram Rajan is expected to leave key policy rates unchanged in his first monetary policy review on Friday, and continue emergency cash tightening measures initiated in-mid July to stabilise the rupee, and check racing inflation.

Of the 52 economists polled, 50 expect the policy repo rate to remain at 7.25 per cent, and 47 of 48 respondents see the cash reserve ratio, or the portion of deposits banks have to maintain with the central bank, unchanged at 4.00 per cent.

Of 37 economists polled, 30 expect no change in the Marginal Standing Facility (MSF) rate or the rate at which banks access funds for emergency needs. The MSF rate was raised by 200 basis points in July as part of slew of cash tightening steps aimed at rescuing the rupee.

Of 32 economists polled, 17 said they expect the RBI to retain the cash tightening steps, while another 28 out of 38 said they do not expect more measures to strengthen the rupee.

The majority of economists polled expect RBI's focus to remain on rupee stability with price stability coming a close second. Eighteen of 35 economists polled expect Rajan to retain his predecessor's stance, while 12 expect a more growth-oriented approach.

The rupee slumped to a record low of 68.85 to the dollar on August 28 but has since clawed back some ground and last traded at 63.22 on Wednesday.

India's headline inflation rate based on the wholesale price index soared to a six-month high of 6.1 per cent in August.

(Reuters)

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- See more at: http://www.businessworld.in/news/economy/india/rbi-to-likely-hold-rates-steady-poll/1082159/page-1.html#sthash.wS4Ji7Y2.dpuf

he Reserve Bank of India's new Governor Raghuram Rajan is expected to leave key policy rates unchanged in his first monetary policy review on Friday, and continue emergency cash tightening measures initiated in-mid July to stabilise the rupee, and check racing inflation.

Of the 52 economists polled, 50 expect the policy repo rate to remain at 7.25 per cent, and 47 of 48 respondents see the cash reserve ratio, or the portion of deposits banks have to maintain with the central bank, unchanged at 4.00 per cent.

Of 37 economists polled, 30 expect no change in the Marginal Standing Facility (MSF) rate or the rate at which banks access funds for emergency needs. The MSF rate was raised by 200 basis points in July as part of slew of cash tightening steps aimed at rescuing the rupee.

Of 32 economists polled, 17 said they expect the RBI to retain the cash tightening steps, while another 28 out of 38 said they do not expect more measures to strengthen the rupee.

The majority of economists polled expect RBI's focus to remain on rupee stability with price stability coming a close second. Eighteen of 35 economists polled expect Rajan to retain his predecessor's stance, while 12 expect a more growth-oriented approach.

The rupee slumped to a record low of 68.85 to the dollar on August 28 but has since clawed back some ground and last traded at 63.22 on Wednesday.

India's headline inflation rate based on the wholesale price index soared to a six-month high of 6.1 per cent in August. - See more at: http://www.businessworld.in/news/economy/india/rbi-to-likely-hold-rates-steady-poll/1082159/page-1.html#sthash.wS4Ji7Y2.dpuf

he Reserve Bank of India's new Governor Raghuram Rajan is expected to leave key policy rates unchanged in his first monetary policy review on Friday, and continue emergency cash tightening measures initiated in-mid July to stabilise the rupee, and check racing inflation.

Of the 52 economists polled, 50 expect the policy repo rate to remain at 7.25 per cent, and 47 of 48 respondents see the cash reserve ratio, or the portion of deposits banks have to maintain with the central bank, unchanged at 4.00 per cent.

Of 37 economists polled, 30 expect no change in the Marginal Standing Facility (MSF) rate or the rate at which banks access funds for emergency needs. The MSF rate was raised by 200 basis points in July as part of slew of cash tightening steps aimed at rescuing the rupee.

Of 32 economists polled, 17 said they expect the RBI to retain the cash tightening steps, while another 28 out of 38 said they do not expect more measures to strengthen the rupee.

The majority of economists polled expect RBI's focus to remain on rupee stability with price stability coming a close second. Eighteen of 35 economists polled expect Rajan to retain his predecessor's stance, while 12 expect a more growth-oriented approach.

The rupee slumped to a record low of 68.85 to the dollar on August 28 but has since clawed back some ground and last traded at 63.22 on Wednesday.

India's headline inflation rate based on the wholesale price index soared to a six-month high of 6.1 per cent in August.
- See more at: http://www.businessworld.in/news/economy/india/rbi-to-likely-hold-rates-steady-poll/1082159/page-1.html#sthash.wS4Ji7Y2.dpuf

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ECONOMY

19 Sep, 2013 11:50 IST

RBI To Likely Hold Rates Steady: Poll

Of the 52 economists polled, 50 expect the policy repo rate to remain at 7.25%, and 47 of 48 respondents see the CRR unchanged at 4.00%

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