3.60 Per Cent Cut-Off For Repos Auction

The central government has announced the auction of 14-day treasury bills. Tenders should be submitted in the prescribed from on Friday, August 8, before 2.30 pm and the results will be announced in the same evening. Successful bidders should make payments on Saturday, August 9.

The RBI has announced the revised price list of government securities which will be effective from today. According to the list, the bank will sell the 11 per cent gilt maturing in 2002 for Rs 100.80, the 6.50 per cent paper maturing in 2003 for Rs 80.42 and the 9 per cent security maturing in 2013 for Rs 81.11. The purchase price of gold bonds is Rs 3,723.18.

Bank of Baroda has constituted an internal task force to clear foreign currency loans. BoB chief K Kannan, said this was in order to tackle the burgeoning forex deposits with the Indian corporates going for ECBs and even mid-sized firms preferring loans against these forex deposits. The task force will have to search for borrowers and also sanction loans to them, he said.

Public sector banks have surging foreign currency non-resident deposits (banks) in recent years and the RBI has recently allowed them to advance foreign currency loans.

According to Kanan the banks FCNR (B) deposits stand at Rs 2,800 crore and another Rs 100 crore from FCNR (A) would be added to it once the scheme is withdrawn from August 15.

The State Bank of India (SBI) has disbursed a massive us $0.5 billion from its FCNR (B) deposits and plans to cross dollars one billion by the year end. said Kanan

SBI had been getting good business for foreign currency loans, the deputy managing director of the bank, B M Bhide said.

Till recently The corporates were hesitant to come forward for such loans as the exchange risk was with them. Since the rupee has been fairly stable for a long period, the demand for foreign currency has increased in the past two months.

Ever since the RBI reduced the minimum maturity period and freed the deposits rates by placing upper caps, the FCNR (B) scheme has received a lot of response from non-residents.

The banks have now fixed their lending and deposit rates to the London Inter-Bank offered rate (Libor). The growth in deposits for the banks is, however, far higher than the advances.

Heavy foreign currency inflows are taking a toll on the economy and to maintain a stable real effective exchange rate, the Reserve Bank has been mopping up dollars in the forex market and thereby injecting heavy doses of liquidity in the money markets.

To discourage more inflows from non-residents, former RBI deputy governor, S S Tarapore, said the highest reserve requirements should be placed on the non-resident deposits.

He also said the minimum maturity of FCNR (B) should be increased from the present six months to over one year.