RBI to launch Rs 1,000 notes with Re symbol, more security

Mumbai, August 28: RBI today said it will soon launch Rs 1,000 denomination banknotes with rupee symbol, and improved security features. "The Reserve Bank of India will shortly issue Rs 1,000 denomination banknotes incorporating rupee symbol, with inset letter 'L', in both the numbering panels, in the Mahatma Gandhi Series-2005 with improved security features," RBI said in a notification.

 

These banknotes will bear the signature of RBI governor D Subbarao and the year of printing 2012 will be on the reverse of the banknote, it added. The design of these notes to be issued will be similar in all respects to the Rs 1,000 banknotes in Mahatma Gandhi Series-2005.

 

All the banknotes in the denomination of Rs 1,000 issued by the Bank (RBI) in the past will continue to be legal tender," RBI said.

SBI Chief Pratip Chaudhuri says repo rate cut won’t be sufficient

Mumbai, July 27:  A cut in the cash reserve ratio (CRR) could serve as a mood elevator for the markets, according to the State Bank of India Chairman, Mr Pratip Chaudhuri. CRR, currently at 4.75 per cent, is the slice of deposits that banks have to maintain with the Reserve Bank of India (RBI). “Perhaps there should be a 50 basis points CRR cut (to 4.25 per cent). I don’t know what kind of liquidity signals are being looked at.
“I do not agree with this that the total borrowing under the LAF (liquidity adjustment facility) is a ‘measure of the street’. The ‘measure of the street’ is at what price banks are issuing certificates of deposits (CDs),” said Mr Chaudhuri at a press meet to announce the conclusion of the bank’s $1.25-billion five-year overseas bond offering. LAF is a facility extended by the RBI to banks to avail themselves of liquidity in case they face deficit or park funds with the RBI in case they have surplus funds on an overnight basis against the collateral of government securities.
Mr Chaudhuri said that if banks are continuing to issue CDs at 9 per cent and 9.2 per cent, it obviously indicates that the liquidity situation is not comfortable.

‘Strong case for rate cut’
“Last time they (the RBI) skipped CRR cut. So, there is a strong case for it now. Globally, the monetary authorities have taken upon themselves the task of rejuvenating the economy. One thing that they can contribute is by moderating the interest rates,” reasoned the SBI chief.
The interest rate differential between Indian and overseas markets opens up carry trade. “Rupee is a good currency for deposits but not-so-good currency for bonds. We think there is case for bringing down the CRR and that will have a cooling effect on interest rates, especially for customers,” said Mr Chaudhuri.
In case of a repo rate cut, the benefits (for banks) are little. If there is no benefit, then banks cannot pass on any interest rate cut, he explained.

Disadvantage India
“Interest rate acts as a signal. It is a necessary but not a sufficient condition (for growth). It is a mood elevator. If interest rate comes down, it will trigger enthusiasm (among various participants in the economy). To some extent, most markets are a function of sentiments. Market sentiment will turn positive if there is a reduction in interest rates,” said Mr Chaudhuri.
Pointing out that Indian companies were at a disadvantage vis-à-vis their foreign competitors, the SBI chief said if the promoter of a power plant buys capital equipment from an Indian manufacturer, then he has to take rupee loan, which will come at 10-11 per cent. If the promoter were to go for foreign gear, say, Chinese equipment, which is very common, the interest cost is 4 per cent.

Low-cost Deposits up
According to Mr Chaudhuri, SBI’s retail deposit growth has been quiet good in the first four months of the current financial year. Low-cost deposits in current accounts and savings bank accounts increased by about Rs 30,000 crore in those first four months. However, loan growth has been muted.

SBI's $1 billion international bond issue opens

Mumbai, July 25: State Bank of India on Wednesday launched an international five-year bond sale programme to raise at least USD one billion. When contacted, SBI Managing Director and Group Executive for International Banking Hemant Contractor said that the bank on Wednesday launched its benchmark bond sale through book-building route.
"The issue is open and the details like pricing and the quantum of funds being mobilised will be known only by late night," Contractor said. A benchmark bond issue typically aims to raise more than USD 500 million. According to sources, the bond issue is of over USD 1 billion size with a five-year tenure.
The issue's investment bankers include Bank of America Merrill Lynch, Barclays Capital, Citigroup, Deutsche Bank, JP Morgan and UBS. SBI launched a marketing campaign for its benchmark bond issue on July 16 in Hong Kong, Singapore, London, New York, Los Angeles, Boston, Frankfurt and Zurich.
The bank has a board mandate to raise USD 10 billion from overseas markets over the next few years, and it has a headroom to raise nearly USD 7 billion more since it has raised USD 4 billion. The senior notes offering, which has been rated as 'BBB-' by Standard & Poor's, is a dollar-denominated issue. Giving the 'BBB-' rating on the SBI bond sale, S&P had earlier said this reflects the long-term counterparty credit rating on the bank. "The proposed notes will constitute direct, unconditional, unsecured, and un-subordinated obligations of SBI," S&P said.
SBI's move to raise overseas funds comes in the wake of the recent RBI steps to stem the falling rupee value and measures to encourage foreign debt inflows. Earlier, ICICI Bank and India Overseas Bank had initiated their respective dollar bond plans and had also hired investment bankers, but the offerings were delayed amid tough market conditions.
While Indian Overseas Bank was aiming to raise about USD 500 million, ICICI Bank was eyeing USD one billion through a bond sale. A slew of sovereign downgrades in the past few months have made it difficult for domestic companies to raise overseas debt. So far this year, a sum of USD 4 billion has been raised by two corporates -- USD 3.5 billion by Reliance Industries in two instalments in February and May, and USD 500 million by Axis Bank.
The fourth issue which is underway now, is again from RIL, to raise another USD 1.5 billion, for which market making meetings are beginning tomorrow in Singapore. However, domestic companies had raised over USD 8 billion through dollar bonds in 2011.