ICICI Bank Ltd., India's second largest, and DLF Ltd., the biggest developer, led banks and real estate firms lower in Mumbai trading after the central bank raised borrowing costs, threatening to slow loan growth.
ICICI fell 2.4 percent to 686 rupees, its lowest in almost two years, at 9:58 a.m. DLF declined 3.8 percent to the lowest since it began trading in July. The Bombay Stock Exchange's Bankex Index lost 3.3 percent, and the real estate index shed 4 percent.
The Reserve Bank of India unexpectedly lifted interest rates yesterday for the second time in two weeks and told lenders to keep more cash in reserve after the surge in crude-oil prices pushed inflation to a 13-year high. The central bank also signaled it will keep raising borrowing costs.
``Banks could raise lending and deposit rates by 75 to 100 basis points in response to the policy announcement,'' Sampath Kumar, an analyst at Goldman Sachs Group Inc., wrote in a note to clients today. ``Increase in lending rates would likely adversely affect market expectations on loan growth, net interest margins and asset quality.''
The Reserve Bank increased the repurchase rate by 0.5 percentage point to 8.5 percent, the biggest move since 2000, and adjusted the cash-reserve ratio by a similar margin to 8.75 percent.
Before yesterday's move, the central bank had raised the repurchase rate eight times in the past 2 1/2 years and increased the cash reserve ratio seven times since December 2006 to slow money supply and cool inflation.
The central bank's monetary tightening had already led to a 43 percent slump in the Bombay Stock Exchange's bank index this year, and a 60 percent plunge in the real estate index, outpacing the 30 percent drop in the nation's equity benchmark Sensitive Index.
Monday, June 30, 2008
Tuesday, June 24, 2008
ICICI Bank sees sharp drop
The continuous bear onslaught pushed the Dow Jones Industrial Average below the psychological 12,000-mark and the BSE Sensex below 15-K mark.
With the sentiment turning so bearish in both the markets, except MTNL, the other ADRs witnessed steep fall. MTNL announced last week that it has received International Long Distance (ILD) licence from the Department of Telecommunications. The ADR finished 3.79 per cent higher at $ 4.65 against the previous week’s close of $ 4.48.
However, the telecom major, Tata Communications, tumbled sharply by 7.81 per cent. The company posted a drop in net profit at Rs 10 crore (according to Indian GAAP) for the year ended March 31, 2008 against last year’s net profit Rs 15 crore. The company cited appreciation in the Indian rupee against the US dollar as the major reason for the drop in net profit.
The worst performer among the ADRs is ICICI Bank, whose ADR tumbled by 8.53 per cent. HDFC Bank also finished lower by 5.75 per cent. The sharp surge in inflation figure to 11.05 per cent, 13-year high in India — seemed to have weakened the sentiment for the bank counters on fears that the central bank might increase interest rate.
Even IT majors witnessed a sharp fall in their ADR values. While Infosys finished 6.36 per cent lower, Wipro tumbled 7.7 per cent, Satyam Computer 7.69 per cent and Patni Computers by 5.28 per cent.
The ADR of Tata Motors also crashed by 7.8 per cent on fears of hike in interest rate. It may be recalled that the Government last week raised taxes on big cars, multi-utility vehicle and sports utility vehicle by as much as Rs 20,000 per unit, which could affect the sales of companies such as Tata Motors and Hyundai Motors.
Sterlite Industries finished relatively better at $ 17.74 ($18.38), a drop of 3.48 per cent.
With the sentiment turning so bearish in both the markets, except MTNL, the other ADRs witnessed steep fall. MTNL announced last week that it has received International Long Distance (ILD) licence from the Department of Telecommunications. The ADR finished 3.79 per cent higher at $ 4.65 against the previous week’s close of $ 4.48.
However, the telecom major, Tata Communications, tumbled sharply by 7.81 per cent. The company posted a drop in net profit at Rs 10 crore (according to Indian GAAP) for the year ended March 31, 2008 against last year’s net profit Rs 15 crore. The company cited appreciation in the Indian rupee against the US dollar as the major reason for the drop in net profit.
The worst performer among the ADRs is ICICI Bank, whose ADR tumbled by 8.53 per cent. HDFC Bank also finished lower by 5.75 per cent. The sharp surge in inflation figure to 11.05 per cent, 13-year high in India — seemed to have weakened the sentiment for the bank counters on fears that the central bank might increase interest rate.
Even IT majors witnessed a sharp fall in their ADR values. While Infosys finished 6.36 per cent lower, Wipro tumbled 7.7 per cent, Satyam Computer 7.69 per cent and Patni Computers by 5.28 per cent.
The ADR of Tata Motors also crashed by 7.8 per cent on fears of hike in interest rate. It may be recalled that the Government last week raised taxes on big cars, multi-utility vehicle and sports utility vehicle by as much as Rs 20,000 per unit, which could affect the sales of companies such as Tata Motors and Hyundai Motors.
Sterlite Industries finished relatively better at $ 17.74 ($18.38), a drop of 3.48 per cent.
Tuesday, June 17, 2008
ICICI Bank to pay Rs 10,000 to credit card holder
A consumer forum has asked the ICICI Bank Ltd to compensate a customer for withdrawing money from his credit card account and issuing a medical policy without his consent.
"The bank argued that policy was issued to complainant on telephonic instructions. But it could not file any such record where daily telephonic messages are stored. The forum holds that it had issued medical policy without consent, authorisation and knowledge of complainant," forum President A K Jain said.
The forum asked the bank to pay Rs 10,000 as compensation to complainant and city resident Sunil Kumar Sinha, besides Rs 3,000 as cost of litigation.
The panel, comprising S C Jain and M Siddiqui as members, also directed the bank to credit a sum of Rs 5,204 in Sinha's account, noting that the amount was withdrawn without any authorisation from him.
In a complaint before the forum, Sinha, who possessed a credit card of ICICI Bank Ltd, said that ICICI Lombard General Insurance Ltd had issued medical policy in his and family members' names without any consent or authorisation.
He submitted that when he protested the withdrawal of Rs 9,000 from his account, the company refunded him just Rs 7,000 but held back Rs 2,000 as service charge.
Sinha, who also held a salary account with ICICI Bank, further alleged that the company had withdrawn Rs 5,204 from his account without any notice, causing him "great mental and physical harassment."
The insurance company, however, pleaded that it had issued the medical policy following a telephonic request from Sinha and denied any deficiency in service, saying that the money was withdrawn in accordance with the terms.
"The bank argued that policy was issued to complainant on telephonic instructions. But it could not file any such record where daily telephonic messages are stored. The forum holds that it had issued medical policy without consent, authorisation and knowledge of complainant," forum President A K Jain said.
The forum asked the bank to pay Rs 10,000 as compensation to complainant and city resident Sunil Kumar Sinha, besides Rs 3,000 as cost of litigation.
The panel, comprising S C Jain and M Siddiqui as members, also directed the bank to credit a sum of Rs 5,204 in Sinha's account, noting that the amount was withdrawn without any authorisation from him.
In a complaint before the forum, Sinha, who possessed a credit card of ICICI Bank Ltd, said that ICICI Lombard General Insurance Ltd had issued medical policy in his and family members' names without any consent or authorisation.
He submitted that when he protested the withdrawal of Rs 9,000 from his account, the company refunded him just Rs 7,000 but held back Rs 2,000 as service charge.
Sinha, who also held a salary account with ICICI Bank, further alleged that the company had withdrawn Rs 5,204 from his account without any notice, causing him "great mental and physical harassment."
The insurance company, however, pleaded that it had issued the medical policy following a telephonic request from Sinha and denied any deficiency in service, saying that the money was withdrawn in accordance with the terms.
Wednesday, June 4, 2008
ICICI Bank raises credit card rates
The monthly credit card statement that comes laden with lots of offers, gift coupons and summer deals at this time of the year would normally not have got more than a casual glance from Mr K. Nath. But something caught his attention this time.
There was an unobtrusive line at the bottom of the statement that conveyed that his card company (ICICI Bank which has one third share of the market) had increased its interest rates. The statement said that the rate of interest on “extended credit and cash advances” was being increased from the current 3.15 per cent per month (45.09 pc per annum) to 3.40 per cent per month (49.36 per cent annualised) effective from June 1, 2008. That’s a symptom that something is just not right with the credit card industry.
Hiking rates in an industry already known for high rates is a sure sign of troubled times. Most card companies charge around 2.7 per cent to 2.9 per cent per month or about 36 per cent per annum. Even this has been criticised as being a touch usurious.
For years now, there has been a continuous clamour for lower interest rates on credit card spending. That’s something that card companies have resisted, citing high default rates thanks to a combination of poor laws, the lack of any security and the general climate of bad borrower behaviour.
Default rates across the card industry that were in the 5-7 per cent range are now double that, says Shameek Bhargava, Managing Director, Head of Cards, Asia Pacific, Deutsche Bank, India.
There was an unobtrusive line at the bottom of the statement that conveyed that his card company (ICICI Bank which has one third share of the market) had increased its interest rates. The statement said that the rate of interest on “extended credit and cash advances” was being increased from the current 3.15 per cent per month (45.09 pc per annum) to 3.40 per cent per month (49.36 per cent annualised) effective from June 1, 2008. That’s a symptom that something is just not right with the credit card industry.
Hiking rates in an industry already known for high rates is a sure sign of troubled times. Most card companies charge around 2.7 per cent to 2.9 per cent per month or about 36 per cent per annum. Even this has been criticised as being a touch usurious.
For years now, there has been a continuous clamour for lower interest rates on credit card spending. That’s something that card companies have resisted, citing high default rates thanks to a combination of poor laws, the lack of any security and the general climate of bad borrower behaviour.
Default rates across the card industry that were in the 5-7 per cent range are now double that, says Shameek Bhargava, Managing Director, Head of Cards, Asia Pacific, Deutsche Bank, India.
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