IIFCL to sign $700 mn loan agreement with ADB

India Infrastructure Finance Company Ltd (IIFCL) is said to sign a loan agreement of $ 700 million with the Asian Development Bank next month while the agreement of $ 1.2 billion with World Bank has already been signed. Moreover, it is said that another 184 million Euros was also on its way from another multilateral agency. Further, foreign loan, IIFCL will raise another Rs 3,000 crore from bonds or loans from Indian banks in the domestic market during the year.

Additionally, the 2009-10 targets was Rs 10,500-11,000 crore and they have already raised Rs 1,000 crore so far in the year and hopes another Rs 10,000 crore raised from bonds would be utilized as refinance to banks. However, until now Rs 6,300 crore had been disbursed in the present financial year while IIFCL has so far sanctioned 111 infrastructure projects of which financial closure of 103 projects had been achieved whereas the total exposure of IIFCL is Rs 19,000 crore.

Interest rates to rise in Q4 of 2009-10: IDBI Gilts Date

IDBI Gilts stated that as bond yields may go up and RBI may tighten money supply to rein in inflation, interest rates are likely to rise in the last quarter of this fiscal by up to 50 basis points, which is likely to be fuelled as food prices could move upwards. Additionally, it said that there has not been fundamental change in the economy and in spite of that, the yields on the government papers have hardened due to the government''s high borrowing target in the current fiscal in the range of 30-55 bps in the last one-and-half months and if this is the trend, then interest rate will rise by 25-50 bps from December to March.

However, it said that the government''s borrowing target stands at Rs 4.51 lakh crore for 2009-10, with 66% of the borrowing in the first six months and added that in case of failure of agriculture due to drought-like situation in the country food prices would rise, which could lead to inflationary pressures in the coming months.

Moreover, the RBI might tighten its monetary policy and thus the banks will have to respond by raising interest rates and this would be reversal of RBI''s soft money supply policy since global financial crisis deepened in the middle of September 2008.

Fortis MF Announces Change in Flexi Debt Fund - Regular Plan A

Fortis Mutual Fund has announced that no fresh subscriptions/switch-in shall be permitted under Fortis Flexi Debt Fund - Regular Plan A effective from August 24, 2009.

Three more US banks fail, tally hits 81 for ''09

In the second-largest US bank failure this year, US regulators shut down Guaranty Bank, a lender felled by losses on loans to homebuilders and borrowers. However, it is said that Guaranty''s failure, along with those of three banks in Georgia and Alabama bringing to 81 the number of US bank failures in 2009.

Additionally, the Federal Deposit Insurance Corp. detained Guaranty Bank, with about $13 billion in assets and $12 billion in deposits while it sold all of its deposits and $12 billion of the assets to BBVA Compass, the US division of Banco Bilbao Vizcaya Argentaria SA. In addition, the FDIC agreed to share losses with BBVA on about $11 billion of Guaranty Bank''s assets.

Moreover, the crumple of Guaranty Bank, whose parent company was Guaranty Financial Group Inc., was the 10th-largest bank failure in US history and is expected to cost the deposit insurance fund an estimated $3 billion while the bank with 162 branches in Texas and California, also suffered losses on mortgage-linked securities it bought from other banks.

Reliance MF Announces Change in Medium Term Fund

Reliance Mutual Fund has decided to make changes in the asset allocation/investment pattern of Reliance Medium Term Fund effective from September 19, 2009.

Accordingly the scheme will invest 0% to 80% of asset in money market instruments / short term debt instruments / floating rate notes with maturity / interest rate reset period not exceeding 3 months, with a risk profile of low risk.

Moreover, it would invest 20% to 100% of asset in money market instruments and any other instrument with duration of more than 3 months but not exceeding 3 years. Securitized debt would include investment up-to 80% of the corpus. It would have a risk profile of low to medium.

However, any unit holder who does not wish to comply with the changes can redeem their units at the applicable NAV without any exit load for a period from August 20-September 18, 2009

ICICI Bank looks to focus on home, car loans

ICICI Bank plans to focus more on increasing its home and car loan portfolios in the coming months and stated that its rates are competitive in the industry. However, the impact of drought in some parts of the country is yet to be evaluated which might have an impact on the banking industry as well if consumer demand is affected. Additionally, the regulators have to be in line with the innovations in the market and also be ahead of the curve to face the challenges in the system while the organizations have to take into account future risks while shaping the risk management tools than simply assessing past risks.

Canara Bank to mop up Rs 600 cr via bonds

With an issue of non-convertible subordinated perpetual bonds - tier I (series II), Canara Bank is looking at mobilizing Rs 600 crore, including a greenshoe option of Rs 200 crore which would be used to build up the bank''s capital adequacy and also improve its long-term resources. In addition, the bonds will have a call option that may be exercised after the instrument has run for at least 10 years and with approval from the RBI. Moreover, the bonds coupon rate would be 9.10% per annum for the first 10 years, followed by a step-up option to boost the coupon rate to 9.6%, if the call option has not been exercised by the bank at the end of the tenth year from the deemed date of allotment.


FM assures fresh capital for RRBs

Finance Minister Pranab Mukherjee stated that in order to increase credit flow to the farm sector, the government will introduce fresh capital into the regional rural banking (RRB) system to make it profitable by 2010 and this in turn would help RRBs achieve their agriculture targets in 2009-10. Additionally, he said that it will set up a committee to look into the demands of the rural banks, including fresh capital infusion. However, he said that there will be no fresh proposal for farm loan waver and that the economy will grow at over 6% in the current fiscal.