RBI collects information on banks' exposure in Satyam

The Reserve Bank of India has collected data on banks' exposure in scam-tainted IT firm Satyam Computer and an investigation in the matter
is on, a top RBI official said.

"We have collected data on direct and indirect exposure of banks to Satyam. The investigation in the matter is on," RBI Deputy Governor Shyamala Gopinath told reporters here on the sidelines a conference organised by the Indira Gandhi Institute of Development Research on Money and Finance.

The Reserve Bank of India (RBI) had asked banks to furnish information to the central bank on their fund and non-fund based exposures to Satyam and associate companies.

A communique to this effect had been sent to banks recently, Gopinath said.

Replying to a question on banks not cutting their interest rates on the ground that their cost of funds are still high, Gopinath said, "It is up to (the) banks to decide how to go about it. Banks are responding by cutting PLR and deposit rates."

The Indian financial markets are facing excessive pressure due to the substitution effect, subsequent to the drying up of alternative credit avenues during the current financial turmoil.

"The slowdown in the real sector is affecting the financial sector, which, in fact, has second order impact on the real sector," Gopinath said.

During a boom time, any asset is liquid and marketable, while when the market breaks down, the asset becomes illiquid, she said.

"There is a need to have government bonds in a portfolio of liquid assets," Gopinath said.

The Indian growth process is driven by domestic factors and the country has a comfortable foreign exchange reserve, Gopinath said.

The reversal of capital flows due to the de-leveraging of global markets has put pressure on India, she said, but expressed confidence in the Indian banking sector, saying ratios of Indian banks are better than their peers.

"Indian banks' average capital adequacy ratio is 13% as on March 31 as against the regulatory requirement of 9%," Gopinath said adding that their foreign units have suffered some mark-to-market losses due to the widening credit spread, the Deputy Governor Gopinath said.

Commenting on over the counter derivatives (OTC), Gopinath said, "there is a need for a central counter-party for OTC derivatives when volumes are high. The gap between prudential needs and accounting standards needed to be bridged and regulations in leveraging, transparency and liquidity must be ensured."

Financial sector entities need to be seen and regulated as risk repositories in the system-any notion of their risks being dissipated into or outside the system is inherently flawed.

There is, therefore, a need for limits, prudential safeguards and adequate capital to support the risks.

ONGC-Mittal signs deal to take 25% stake in Kazakh oilfield

Oil and Natural Gas Corp and its billionaire partner Lakshmi N Mittal on Saturday signed an agreement to take a 25% stake in
Kazakhstan's prospective Satpayev oil field in the Caspian Sea.

ONGC Mittal Energy Ltd, the joint venture of ONGC Videsh Ltd and Mittal Investment Sarl, signed the agreement with Kazakhstan's national oil firm KazMunaiGas (KMG) for the stake, official sources said.

OVL Managing Director R S Butola signed the agreements on behalf of OMEL and for KMG its President Kairgeldi Kabyldin inked the deal.

The agreement is clumination of nearly four years of negotiations during which Kazakhstan went back and forth on giving stake to the Indian company.

Kazakhstan had initially identified the Satpayev and Makhambet blocks in the Caspian Sea for giving a 50% stake in one of them to OVL, the overseas arm of state-owned ONGC. Later it reduced the stake on offer to 25% on condition that the Indian flagship teamed up with steel baron Lakshmi N Mittal for entry.

OVL relented and in June 2007 made an attractive commercial proposal to KazMunaiGas (KMG), but in subsequent negotiations, Kazakhstan's state-run firm did not agree on the percentage of stake OVL would get. It also did not agree on giving operatorship to OVL during the exploratory and appraisal stages.

Kazakhstan today finally decided to sign the agreement. KazMunaiGas will hold the remaining 75% stake in Satpayev.

Gold v/s Silver

Gold prices spurted to an all-time high of Rs 14,110 in early trade on the bullion market on Saturday on hectic stockists buying triggered
by sharp rise in global markets.

Silver also advanced further on persistent industrial demand on the back of higher international advices.

Standard gold (99.5 purity) rallied by Rs 345 per ten grams to open at an all-time peak of Rs 14,110 from yesterday's closing level of Rs 13,765. It earlier touched a high of Rs 14,105 on October ten, 2008.

Pure gold (99.9 purity) also shot up by Rs 350 per ten grams to Rs 14,170 from Rs 13,820 yesterday.

Silver ready (.999 fineness) rose by Rs 425 per kilo to Rs 19,480 from Rs 19,055.

Gold prices rose to a three-month high, climbing past USD 900 an ounce in both New York and London for the first time since October, as global equity markets tumbled, boosting demand for a safe harbor.

Gold futures for February delivery climbed USD 37, or 4.3 per cent, to USD 895.80 an ounce on the Comex Division of the New York Mercantile Exchange, the biggest gain since December 10. Earlier, the price reached USD 903.80, the highest for a most-active contract since October 10.

Silver futures for March delivery rose 57.5 cents to USD 11.94 an ounce.

Intel cuts processor prices by 48%

Intel, the world's largest chip maker, has cut the price of some processors by as much as 48 per cent as it confronts slumping demand and new lower-cost chips from Advanced Micro Devices Inc, Bloomberg reported.

The price of Celeron 570 processors, designed for laptops, dropped 48 per cent to $70 whereas one of the company's quad-core desktop-computer models, which have four processors on one piece of silicon, dropped 40 per cent to $316, the news agency said.

Intel kept the price of its three most expensive desktop chips unchanged, the report said on Tuesday. Intel was not immediately available for comment.

The US company had said it expects margins to bounce back to "healthy" levels by the second half of 2009, but held back on giving detailed quarterly forecasts when it issued earnings on January 15, citing economic uncertainty.

Invest C$400,000 for 5 years & be a permanent Canadian resident

Canada's immigrant investor programme, under which applicants investing Canadian $400,000 for five years with the Canadian government NRI Taxation
Remittances made easy
Liberalised norms for NRI investors
are eligible for permanent residence, is being expanded as a source of foreign investment to tackle the economic downturn.

Canada's minister of citizenship, immigration and multiculturalism Jason Kenney told ET that the programme will be made more attractive for high net worth individuals so that it can draw more capital to Canada in these recessionary times. The immigrant investor programme was created by the Canadian government, originally, to woo successful foreign business immigrants to bring new investment to Canada.

The Canadian government will soon announce changes in the immigrant investor programme so that we can leverage it better as a source of capital inflows into the country in these recessionary times.

Gold imports in India for 2008 dipped by almost 47% to 402 tonnes

"High prices have been the culprit this year as gold imports in India for 2008 dipped by almost 47% to 402 tonnes. The December 2008 gold imports stood at only 3 tonnes versus the 16 tonnes in December 2007," National Commodities Exchange of India's (NCDEX) Economist, Manasee S Gokhale, said in a report.

The economic turmoil has also hit the demand for luxury goods and hence the demand for jewellery has fallen considerably.

'Buying remained dull and prices remained high on global cues', Gokhale said.

Although the gold market fundamentals look excellent, investors have been struggling for survival and in this attempt have sold even their gold and silver positions. As a result, gold prices have dropped continuously till they hit the $680/troy ounce levels. As compared to equities or other commodities, the percentage fall in gold prices has been lesser, Gokhale said.

Commenting on the performance of gold price in 2009, Gokhale said that if the downward scenario continues and there is deflation, gold would do well as asset value drops because of fear and distrust in the system.

"What appeared to be excellent market conditions in 2008 have all vanished into thin air and staring us in the face is the growing uncertainty created by the financial crisis," Gokhale said.

Former Satyam brass asked to furnish bank, asset details

The Company Law Board on Wednesday passed a restraint order against erstwhile tainted management of Satyam ordering them to provide
details of their bank accounts and movable and immovable properties both in India and abroad before it.

“Satyam's founder Ramalinga Raju, his brother B Rama Raju, former CFO Vadlamani Srinivas, executive Ram Mynampati, and company secretary G J Jayaraman have been asked to furnish details of assets including movable and immovable assets both in India and abroad," says P C Gupta, minister of company affairs.

"This was being done to ensure that the former officials do not profit or otherwise gain from any diversion of siphoning of fund from Satyam," Gupta said.

"The orders have been issued by the board and details have to be given in a sealed cover by Feb 20," Gupta said.