Interest Rate on PPF, Other Savings Schemes Set To Fall Further: Report

The repo rate cut announced by the Reserve Bank on Tuesday is likely to bring much-needed relief to borrowers, but the move wouldn't impress millions of investors who depend on small savings instruments such as public provident fund (PPF) and Sukanya Samriddhi to earn tax free income.

According to research agency India Ratings, the 25-basis-point rate cut, coupled with measures to ease liquidity, could bring down small savings rate by 20 to 25 basis points during the July-September quarter. One basis point is equal to one-hundredth of a percentage point.

This means interest rate on PPF, for example, could fall to between 7.85 per cent and 7.9 per cent in the fiscal second quarter. 

According to the new small savings scheme rules which came into effect from April 1, interest rates will be revised every quarter, based on the previous 3-month yields on benchmark government securities or bonds with a small mark-up. Earlier, interest rates were set for the full year.

For the April quarter, the government cut the interest rate on small savings schemes sharply, following a slide in benchmark government securities rate.

As a result, interest rate on PPF was set sharply lower at 8.1 per cent for the period April 1 to June 30, down from 8.7 per cent. Senior citizen savings scheme of five years would earn 8.6 per cent interest compared to 9.3 per cent. Girl-child saving scheme, Sukanya Samriddhi Account will see interest rate of 8.6 per cent as against 9.2 per cent.

The RBI's liquidity injection measures are meant to pump enough cash into the banking system, allowing the sector to cut lending rates and pass on the lower borrowing costs to the broader economy.

Analysts say that the measures taken by the RBI on Tuesday will help to bring down yields of government bonds.  Small savings collections are generally invested in government securities and a small amount is invested as loans in India Infrastructure Finance Company, according to India Ratings.  (Watch)

The interest rate on small savings schemes for every quarter, under the new rules, would be decided on the 15th of the preceding month. Interest rate for July-September quarter will be announced on June 15.

In A First, This Domestic Bank Offers ATM Transactions Without PIN

In a first for any domestic lender, DCB Bank has started an Aadhaar-based ATM usage facility wherein a customer can transact using his/her biometric details instead of the PIN.

"We have started the first ATM in the country which operates using the Aadhaar data. One can do a transaction without the card as well," DCB Bank managing director and chief executive Murali Natrajan told PTI.

The user can key-in the 12-digit Aadhaar number or swipe the card at an automated teller machine (ATM) to start a transaction, but at the stage of confirming the identity, it requires biometric details rather than the PIN.

"All you have to do to authenticate is put your finger on the scanner. This is better than PIN, which can be forgotten because of multiple bank accounts," he said.

Seeding the bank account with the Aadhaar number will be essential before a customer can use the facility, he said, adding that initially, only DCB Bank customers will be able to make use of the service.

The solution has been developed in-house and involves connecting up with the Aadhaar server to authenticate the identity of the customer every time a transaction is initiated, he said.

Mr Natrajan said it is a comparatively inexpensive solution and the bank, which currently has 400 ATMs, is targeting to cover its entire network under the system within a year.

The first of the Aadhaar-based ATMs has been installed at its corporate office in the megapolis's Lower Parel area and Mr Natrajan said it will be waiting for a month more for the technology to stabilise before a mass roll-out.

He added that it has great potential at the POS (point-of-sale) terminals at the merchants' end to make transactions easier and also for business correspondents.

Enrolments under Aadhaar are set to cross the 100 crore mark soon. The data is being used for a slew of purposes like opening bank accounts and the government's direct benefit transfer (DBT) scheme.

Mr Natrajan said he sees the banking industry coming out with similar technologies so that ATM transactions can be carried out without a card.

BSE to offer liquidity enhancement incentive to 163 securities

BSE has decided to offer 'Liquidity Enhancement Incentive Programmes Schemes (LEIPS)' to as many as 163 securities exclusively listed on the stock exchange.

Under LEIPS both market makers and general market participants get incentives

As per Sebi regulations, stock exchanges can introduce incentive schemes for brokers and intermediaries to enhance liquidity in illiquid securities in the equity cash and derivative segments.

The eligible securities belong to 'XC' group, which is a new sub-group implemented by BSE for companies listed exclusively on it.

The equities with a six monthly average (full) market cap of more than Rs 100 crore and having more than 1,000 public shareholders are classified under "XC" sub-segment.

Further, BSE said that registration for market makers for the set of companies under LEIPS scheme will be available in BSE Electronic Filing System (BEFS) from April 4, 2016.

Active trading members of equity segment of the exchange can follow a simple process to register themselves for this LEIPS scheme as a market maker by filling a registration form.

Members should also have net worth of Rs 1 crore and there should not be any disciplinary action against the member in last one year.

"...securities eligible for market making are subject to change from time to time depending on listing and surveillance actions," BSE said.

In a separate circular, BSE said that online bidding process for selection of market maker for BSE Exclusive securities (belonging to XD group) will begin from April 4.

The bidding process will be conducted in BSE's iBBS (Internet Based Book Building System)platform from April 4 to April 20 from 10:00 am to 6:00 pm daily.

It further said that 539 securities are eligible for market making.

Sensex, Nifty Likely to Open Higher; HCL Tech, Geometric in Focus

Sensex and Nifty are likely to open higher tracking positive trading of Nifty futures on the Singapore Stock Exchange.

The Nifty futures traded on the Singapore Stock Exchange also known as the SGX Nifty or Singapore Nifty was up 0.25 per cent or 19 points at 7,764.

Meanwhile, other Asian markets were mostly trading higher. China's Shanghai Composite was up 0.12 per cent and Japan's Nikkei advanced 0.11 per cent. While, Hong Kong's Hang Seng fell 1.34 per cent.

Stocks on Wall Street rose on Friday after better-than-expected US jobs and factory survey data, but a gloomy manufacturing report in Japan knocked other global equity markets lower and crude oil prices slumped.

Nonfarm payrolls increased 215,000 and the unemployment rate rose to 5.0 per cent from an eight-year low of 4.9 per cent, the US Labor Department said. The jobless rate rose as more people continued to seek work, a sign of confidence in the jobs market.

Back home, foreign institutional investors bought shares worth Rs 214 crore while domestic institutional investors sold shares worth Rs 519.91 crore on Friday.

HCL Technologies and Geometric will be in focus today after Geometric said it will sell its IT services business to HCL Technologies Ltd in an all-stock deal valued at Rs 1,237 crore, as HCL looks to strengthen its engineering and automotive services portfolio.

Jindal Steel will also be on investors radar on reports that lenders to Jindal Steel and Power Ltd (JSPL) have approved refinancing of loans worth Rs 2,500 crore.

Union Bank Of India Raises RS. 1,000 Crore Via Bonds

Public sector lender Union Bank of India on Tuesday said it has raised Rs. 1,000 crore by issuing bonds on private placement basis.

Oriental Bank of Commerce (OBC) said it will raise over Rs. 178 crore by selling stake to LIC.

"Union Bank of India has issued 10,000 basel III compliant Tier II bonds of face value of Rs. 10 lakh each aggregating to Rs. 1,000 crore on private placement basis," it said in a filing on BSE.

The bonds, issued for a 10-year tenure, bears 8.61 per cent per annum of coupon rate.

The bonds are rated IND AA by India Rating, the bank said.

OBC, in its Extraordinary General Meeting, held on Tuesday said it will issue and allot 2,15,48,758 equity shares at an issue price of Rs. 82.79 aggregating to Rs. 178.40 crore to LIC on preferential basis.

Tata Steel Says Puts Entire UK Business Up For Sale

Tata Steel, Britain's largest steelmaker, is considering the sale of its entire UK business to stem heavy losses, a move that would draw a line under its almost decade-long foray into Britain.

After a marathon board meeting in Mumbai, the steel giant said in a statement in the early hours of Wednesday that the financial performance of its UK arm had deteriorated substantially in recent months, after years of weak conditions.

Blaming high manufacturing costs, domestic market weakness and increased imports into Europe from countries like China, the company said it saw little change ahead for its UK plants.

Tata said its European arm would now "explore all options for portfolio restructuring, including the potential divestment of Tata Steel UK, in whole or in parts".

"Given the severity of the funding requirement in the foreseeable future, the Tata Steel Europe Board will be advised to evaluate and implement the most feasible option in a time-bound manner," it added.

Tata Steel bought Anglo-Dutch steelmaker Corus in 2007 and has since struggled to turn the giant around in the face of a deteriorating market, slashing costs and thousands of jobs.

The company said it remained in talks with the UK government and with investment firm Greybull Capital over the sale of its British long products unit, which makes steel for use in construction. Talks with Greybull were announced last year.

Sun Pharma Acquires 14 Brands From Novartis for Rs 1,940 Crore

Drug major Sun Pharma has forayed into the Japanese prescription market by acquiring 14 brands from Swiss drug firm Novartis for $293 million (over Rs 1,940 crore).

According to the agreements signed by the parties, a wholly-owned subsidiary of Sun Pharma will acquire the portfolio consisting of 14 established prescription brands from Novartis for a cash consideration of $293 million, Sun Pharma said in a statement.

"Japan is a market of strategic interest for us. This acquisition marks Sun Pharma's foray into the Japanese prescription market and provides us an opportunity to build a larger product portfolio in the future," Sun Pharma managing director Dilip Shanghvi said.

Under the terms of the agreements, Novartis will continue to distribute these brands, for a certain period, pending transfer of all marketing authorisations to Sun Pharma's subsidiary, it added.

The acquired brands will be marketed by a reliable and established local marketing partner under the Sun Pharma label. The local marketing partner will also be responsible for distribution of the brands, the company said.

The 14 brands have combined annualised revenues of around $160 million and address medical conditions across several therapeutic areas.

According to December-2015 IMS data, the size of the Japanese pharmaceutical market was estimated at $73 billion, accounting for over 7 per cent of the $1-trillion global pharmaceutical market.