India is going for a Loan $3 Billion to recapitalise PSU Banks
And they say the Indian Banks are well capitalised .....what a joke.
India seeks $3.2 bn from World Bank to recapitalise PSU banks New Delhi (PTI): The government has sought a $3.2 billion loan from the World Bank to infuse capital into public sector banks, the Lok Sabha was informed on Friday.
Minister of State for Finance Namo Narain Meena on Friday responded in the affirmative, in a written reply to the Lok Sabha to a query on whether loans from the multilateral lending agency contain a proposed $3.2 billion for recapitalising state-run banks.
"To enable the PSBs to meet credit requirements of the economy while maintaining a healthy and comfortable level of regulatory capital to risk-weighted assets ratio, a proposal has been sent to the World Bank," he said.
However, on whether the government proposes to borrow funds from the World Bank to prop up the banking system, he said, "The assessment of the Indian financial system during 2007-08 done by the Reserve Bank of India shows that the banking sector in India continues to be healthy, sound and resilient."
Mr. Meena further said that India is taking loans from the International Bank for Reconstruction and Development (IBRD) and credit (soft loan) from the International Development Association (IDA).
"The cumulative commitment of the World Bank (IBRD and IDA) loans to India till June 2009 is $73.93 billion (IBRD $37.68 billion and IDA $36.25 billion)," he said.
Indian Bonds Decline as Auction Failure Signals Demand Weakened Share | Email | Print | A A A
By Anil Varma
Aug. 10 (Bloomberg) -- India’s 10-year bonds fell, snapping a two-day gain, after the government failed to sell 120 billion rupees ($2.5 billion) of debt at an auction on Aug. 7, the first such instance since March.
Yields on notes due 2019 rose to the highest level since the benchmark was issued on July 13 as the Reserve Bank of India, which conducts the sales, shunned bids. It didn’t provide a reason for the decision. India plans to borrow a record 4.51 trillion rupees in the fiscal year that started April 1 to finance the biggest budget deficit in 16 years.
“The rejection of bids has sent confusing signals and has only worsened the bearish mood in the bond market,” said Srinivasa Raghavan, head of treasury at IDBI Gilts Ltd. in Mumbai. “Yields may rise further as demand may be affected.”
The yield on the 6.9 percent note maturing in July 2019 climbed six basis points, or 0.06 percentage point, to 7.10 percent at the 5:30 p.m. close in Mumbai, according to the central bank’s trading system. The price declined 0.44, or 44 paise per 100-rupee face amount, to 98.61.
Ten-year yields may increase to 7.3 percent in coming weeks, Raghavan said.
Indian debt also declined on speculation an economic recovery will cause wholesale prices to rise, which “doesn’t augur well for the bond market in the longer term,” according to Raghavan.
The central bank on July 28 raised its inflation forecast for the year to around 5 percent from an April estimate of 4 percent, and said it may soon need to “reverse” the loose monetary policy of the past 10 months.
The benchmark wholesale-price index declined for an eighth week, falling 1.58 percent in the period to July 25 from a year earlier, after dropping 1.54 percent previously, a government report showed on Aug. 6.
Finance Minister Pranab Mukherjee last month unveiled plans to raise spending and widen the budget deficit to 6.8 percent of gross domestic product, the most since 1994. The central bank revised its economic-growth outlook to 6 percent with an “upward bias,” from 6 percent earlier.
The cost of five-year swaps, or derivative contracts used to guard against rate fluctuations, increased the most in three weeks. The rate, a fixed payment made to receive floating rates, rose to 6.53 percent from 6.40 percent at the end of last week.