RBI cuts CRR by 50 bps to 8.5%, effective October 11 Monday

The RBI on Monday slashed by 0.50 per cent the rate of mandatory deposits that banks need to keep with it to ease the tight liquidity position, a move that may induce banks to lower commercial lending rates. The new Cash Reserve Ratio (CRR) of 8.5 per cent will be effective from October 11 and would unlock about Rs 20,000 crore into the banking system, RBI said. This is the first time in almost three years that the bank has relaxed its tight monetary policy stance that it had adopted to contain inflation. The move, which comes in the backdrop of inflation easing below 12 per cent and outflow of foreign capital, is aimed at infusing more funds in the financial system

European Crisis Deepens; Officials Vow to Save Banks

The global credit crunch deepened in Europe as government leaders pledged to bail out troubled banks and protect depositors.BNP Paribas SA will take control of Fortis's units in Belgium and Luxembourg after government efforts to ensure the company's stability failed, while Germany's government and financial institutions agreed on a 50 billion euro ($68 billion) rescue package for Hypo Real Estate Holding AG. U.K. Chancellor of the Exchequer Alistair Darling said Britain is ``ready to do whatever it takes'' to help its banks.

Global bailout package size nears $2 trillion

With financial institutions falling prey one after another to the global credit crisis, the bailout packages announced by various governments across the globe are inching towards two trillion-dollar mark -- an amount nearly double the size of Indian economy. With the US Congress giving nod to $ 700-billion aid for troubled financial institutions in the country, the US government alone has announced a total package worth about $990 billion. Besides, a handful of European countries have already announced packages worth a similar amount in efforts to save their troubled financial entities. There are expectations for more such instances of helping hands coming from the governments in Europe as the crisis is said to be fast spreading in the region after a full-blown blast in the US. However, nothing of this sort is expected in India as the country and its financial institutions have remained mostly insulated from any direct impact of the crisis. Still, the collective bailout packages in the US and Europe, currently at about $1.8 trillion, could soon be double the size of one trillion-dollar Indian economy. India's GDP is estimated at Rs 46,93,602 crore for the latest fiscal 2007-08, which stands at just over $one trillion based on the current exchange rate of about Rs 46.8 to a dollar. From America to Europe, the deepening financial turmoil has seen the fall of big names, especially in the banking industry, such as the bankruptcy of Lehman Brothers, firesale of Merrill Lynch to Bank of America and the extension of $ 85 billion lifeline to AIG.

Nuclear deal may be signed on 13 October

Indo-US civilian nuclear deal may be signed on 13 October in Washington, after missing the 4 October schedule, when US Secretary of State Condoleezza Rice visited New Delhi on her farewell tour.Although, there will be a new venue and schedule, the two signatories will remain same: External Affairs Minister Pranab Mukherjee will travel to Washington and sign the agreement there with Rice. According to top sources, the government didn't see any problem in the delay. Rather it suited the UPA government as it wants to see the final shape of legislation after President George W Bush signs it into the law.According to sources, as the senate has added supplementary legislations and the Hyde Act still remains relevant for the US administration India wants to see which are the areas Bush highlights in his notification. South Block expects the occasion will clear certain misgivings. At her joint press conference with Mukherjee on Saturday, Rice maintained: "The Hyde Act is completely consistent with 123 Agreement....123 Agreement is consistent with the Hyde Act. The US will keep its commitments to both." Rice said on Saturday that Bush's signing of the legislation into law had got delayed due to "administrative" reasons and there were "no open issues" involved. The US Congress had approved the agreement last week. After the talks between Rice and Mukherjee, the two sides had expressed hope that the 123 agreement would be signed soon. South Block had earlier earmarked two dates—October 4 and 13—for Condoleezza Rice's visit to India and signing the Agreement with her. As she had already visited India last week, Mukherjee now has to travel to Washington as per diplomatic protocol. "The President will sign the legislation very soon. He wants to do it very soon. There are administrative details," Rice said at the joint press conference with Mukherjee. "Let me be clear, the 123 agreement is done. It is a matter of signing and so I don't want anyone to think that we have open issues." said Rice, who also met Prime Minister Manmohan Singh and Opposition Leader L K Advani.

ONGC find uranium traces in Gujarat, Rajasthan, AP

The Oil and Natural Gas Company (ONGC) has spotted traces of uranium in its existing wells in Gujarat, Rajasthan and Andhra Pradesh. Chairman and managing director of ONGC RS Sharma said this on the sidelines of golden jubilee celebration event of the company’s first oil well at Lunej in Gujarat.The board has given a go-ahead to the company’s proposed joint venture with Uranium Corporation of India for uranium exploration and we will soon sign an agreement,” Sharma said. The 50:50 joint venture company will utilise data from ONGC’s existing log of hydrocarbons which bears traces of uranium. Talking about the its upcoming ONGC Petro Additions Ltd (OPaL) project at Dahej, the chairman said that two consortiums have been zeroed in for the dual-feed cracker unit estimated to cost over Rs 6,000 crore with a capacity of about 11 lakh tones per annum (TPA).“The dual feed cracker unit will be ONGC’s largest construction contract till date,” said A K Balyan, director (HR) of ONGC. The rising input cost could see the cracker unit cost going well over Rs 7-8,000 crore, sources in the company said. Companies like GAIL and Petronet LNG have already picked 10 per cent and 5 per cent stake respectively in the project, sources said.

Reliance Globalcom to rejig business

Reliance Globalcom, the international telecom operations subsidiary of the Reliance Anil Dhirubhai Ambani Group (R-ADAG), is restructuring its business under four verticals in an attempt to further penetrate the $285-billion global communications market. The company will structure its services under four business segments — Data, voice, WiMax and National Long Distance (NLD) services — that would help it increase focus on customer segments and improve revenue generation. "This will augment capabilities to offer highly customer-focused solutions to end-consumers and businesses, including enterprises, systems integrators and carriers, around the globe. This is an important step towards making Reliance Globalcom one of the top five global communications enterprises," sources close to the development said. The group will realign operations of Reliance Globalcom (formerly Flag Telecom), Reliance Globalcom Services (earlier acquired Yipes Enterprises) and Reliance Vanco Group (formerly Vanco Group) under the four proposed verticals. Further details of the restructuring were not immediately available. An R-ADAG spokesperson declined to comment. After the restructuring, the company's data business will compete with global majors such as AT&T, British Telecom Global Services, Orange Business Services and Verizon Business among others. Reliance Globalcom intends to service medium to large MNCs, either directly or through channel partners. It expects the new structure to accelerate growth into the rapidly growing communications market by offering comprehensive voice, video and data network services.

Inflation down at 11.99%

Inflation for the week ended September 20 down at 11.99% Vs12.14% a week ago. RBI is unlikely to change short-term lending and borrowing rates-- repo and reverse repo-- in the upcoming policy review. There would be a pause on the rate tightening cycle, they said. "By the end of October or early November, the first tranche of Rs 25,000 crore to banks for their outgo on farm debt waiver would be released which is more than about one per cent CRR cut," the sources said.