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Monday 10 November, 2008

Securities and Exchange Board of India to tighten norms for FMPs

In a significant development, market regulator Sebi, or Securities and Exchange Board of India, has decided to tighten norms for FMPs, or fixed maturity plans, and has put all fresh offer documents that allow an exit option on hold.

Sebi has decided to put all fresh FMP offer documents that allow an exit option on hold and will relook at FMP norms. It will also look at disclosures and need for sectoral limits. The regulator will look at exit clauses on FMPs and wants tougher exit clauses. Sebi also said it will discuss the issue with the industry once the immediate liquidity concerns subside.

Meanwhile, the AMFI, or Association of Mutual Funds in India, Chairman said the industry recognises the concerns and that it will work with the regulator to avoid any future crises and Liquidity pressure on mutual funds was easing.

Tuesday 4 November, 2008

India Infoline receives inprinciple to start MF Company

Leading financial services firm India Infoline has received inprinciple nod from SEBI to start its mutual fund company. “An entry into the mutual funds space is an opportunity for us to continue to expand our offerings under the financial services domain in line with our long-term strategy,” India Infoline executive director R Venkataraman said in a statement on Tuesday. The company has presence in 886 business locations spread over 350 cities across the country.

In the recent past, all the Assets under management have declined significantly on account of the fall in the stock prices and also some amount withdrawal by investors and no new money flowing into the new purchases of Mutual funds.

Loan Rates Likely To Drop 25-75 bps

Given the recent cut in CRR, Repo Rate, SLR one could see that the cost of funds drop by up to 75 basis points, as leading state-run banks lower lending rates under pressure from the government keen to rev up the economy.

Many of the public sector banks — State Bank of India, Bank of Baroda, Indian Bank and Central Bank of India — confirmed on Tuesday that they were considering rate cuts following last week’s move by the Reserve Bank of India (RBI) to slash reserve ratios and cut short term rates and the government’s assurance of favourable policy measures.

Union finance minister P Chidambaram met with public sector banks’ chiefs on Tuesday to take stock of the financial position of banks at a quarterly review meeting. “We have had an extensive discussion and the Indian Banks Association, on behalf of the banks, has assured me that they will go through the matter and come up with some decisions on the price at which credit will be delivered to the different sectors,” Mr Chidambaram told reporters.

But in another development many of the private setcor banks like ICICI, Kotak and HDFC bank have indicated that they will not cut the Auto Loan rates just yet and they will adopt a wait and watch policy.