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| Meanwhile, for the year 2003-04 non SLR investments have showed some decline primarily on account of fall in holdings of bonds and debentures of the private corporate sector.
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| According to the report on Trend and Progress of Banking in India, 2002-03, released by the Reserve Bank of India, besides conventional credit, banks have been investing significantly in non-SLR investments in the form of commercial paper, shares , bonds and debentures issued by private corporate sector and public sector undertakings.
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| It has further stated that the sharp increase in such investments reflects partly the impact of merger effects.
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| While the share of investments in share have gone up from Rs 5,914 crore to Rs 9,019 crore and share of bonds and debentures from Rs 66,589 crore to Rs 79,828 crore, investments in commercial papers have drastically fallen from Rs 8,497 crore to Rs 4,007 crore.
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| The fall in investments in commercial papers have been attributed to decline in issuances during the later part of the year as the manufacturing companies could access sub-PLR lending, said the report.
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| In the non-SLR investments, bonds and debentures top the category by contributing almost 86 per cent for the year 2003-03 leaving shares and CPs way behind at 9.7 per cent and 4.3 per cent, respectively.
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| In bonds and debentures, those issued by public sector undertakings are higher than those invested in instruments issued by private corporates.
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| However, in case of shares, it is just the reverse whether investments are primarily in shares issued by private corporate.
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| In commercial papers, principal investors have been State Bank of India, HDFC Bank, Union Bank of India , Punjab National Bank and Central Bank of India.
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| Among the top issuers have been Exim Bank, IDBI, IPCL, erstwhile ICICI Ltd and HDFC. The discount rate on CPs invested by banks has gone down from 7.4-10.3 per cent in 2002 to 6-7.8 in March 2003 and further to 4.7-6.5 per cent by September 2003. |
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