Since the rural BPO will mainly cater to the incremental business from the urban areas, it may not have much of an impact on the continuing sustainabi

dashboard that monitors and congratulates better performers and motivates the slower ones," he says.
As much as 46% of the employees hold BA degrees, 35% BCom, 15% BSc and ]% each MA, MCom, MSc and MBA. "However, since most of them belong to the lowest strata of society, they had very harrowing experiences in taking up education and even in living a normal life. They had no background of English and would never have got jobs elsewhere," adds Durga Prasad.
WHY TIRUPATI?
Why was Tirupati chosen as a location? Explains Rajan: "The concept of a rural BPO necessarily requires the location to be a small town with close proximity to the rural areas. The town should be small enough to attract the rural youth, but have sufficient infrastructure to provide broadband connectivity and continuous power supply. One of the main reasons for locating it at Tirupati was the excellent support that we received from EGMM in identifying and preparing educated unemployed rural youths for our selection process. They also verify the background and integrity of the candidates which accelerates our recruitment process."
Rajan is very happy to replicate this model in any other states in India. "However, dedicated support from the concerned state governments and an assurance of steady flow of processing business is critical for the viability of such ventures," he adds.
Rajan is also very emphatic when he says that migrating work from urban BPOs to rural sites is not an issue since there are enough alternative employment opportunities for the trained BPO staffer in urban areas, which is demonstrated in the high staff turnover levels in such BPOs. Since the rural BPO will mainly cater to the incremental business from the urban areas, it may not have much of an impact on the continuing sustainability of the Metro based BPOs.
CHALLENGES IN SETTING UP A RURAL BPO
ADFC faced several chaJlenges in locating the BPO in a
remote town like Tirupati and making it functional. First of aJl, it was difficult to persuade software vendors and service staff to provide ongOing support in remote locations. Transportation and instaJiation of the hardware was also a tedious exercise. Secondly, connectivity was a major issue. While BSNL connectivity was readily available, it was important to have a second service proVider for business continuity. Lastly, it was essential that a steady and continuous supply of electric power was available to ensure that the work in the BPO is not interrupted by unscheduled power cuts.
To mitigate the above constraints, the bank's IT team
persuaded its
software and
hardware vendors
to go to Tirupati to set up the required infrastructure for the BPO. They also persuaded Bharati Airtel to start offering its services to help the BPO build its redundancy. While power supply had
been erratic, the BPO managed with gensets, though it is more expensive.
Explaining how sustainable and economically viable this business model has been, Rajan says the work that is getting migrated to the rural areas wiJl be delivered at a cheaper cost over a period of time. Besides, the quality of work will be at least equal to, if not better than the output from urban areas. Besides, the reduced attrition level is a major attraction to shift BPOs to semi urban towns.
Rajan feels that the rural BPO model is simple enough for other banks to set up similar ventures in rural and semi urban towns. "This is an idea which I wiJl be happy to share with others who have a similar vision."
CORPORATE SOCIAL RESPONSIBLITY
He says a rural BPO is not only a sustainable business model, but it is one of the best alternatives to develop the rural economy. "It proVides steady alternative income growth for the rural population, which is otherwise largely dependent on the vagaries of nature."
He is very optimistic that this initiative, to a great extent, could trigger a revolution to restrict the migration of rural people into urban areas and pre-empt a demographic disaster. Besides proViding jobs to the educated unemployed in the rural areas, such ventures can also prevent large scale migration of rural populace to the urban areas. [n addition, this will facilitate setting up of infrastructure in rural and semi-urban areas like roads, power supply, broadband connectivity, etc.
"I am happy to share with you that I have enquiries from at least two state governments on starting similar projects and ready to replicate this venture. The very fact that this initiative has stimulated similar thought process in high places itself is a very rewarding feeling."

The candidates are generally those who have completed theirgraduation but not been able to land a job due to their inability to compete with their cit

is now more than six months since the BPO has started functioning in full steam and it has around 650 employees working in two shifts handling tasks like data capturing, retail loan processing, credit card application processing, etc. The current BPO strength is fUlly engaged in meeting the needs of HDFC Bank but Rajan is confident the operations can be easily scaled up to meet requirements if needed. "We can easily scale up the operations to accommodate more than 1,800 people over three shifts if there are assured business flows," says Rajan, adding "Mutual funds, i nsu rance com pan ies, telecom and other service providers have identical activities, which can be easily migrated to this BPO."
Rajan spearheaded the initiative after a chance encounter with a small BPO at Puttaparthi in rural Andhra Pradesh, run by a band of dedicated entrepreneurs employing a few rural youths from nearby villages. However, he found that this experimental venture was languishing for want of adequate business flows and he arranged to divert some of the processes from the bank to the BPO. "The dedication and commitment of these rural youths inspired a thought in me as to how some of the routine processes of the bank in the metro cities can be diverted to support rural employment in a much larger scale, says Rajan. "It was further strengthened when I met with a dynamic lady called Meera Shenoy at Hyderabad who was working with a team of dedicated Gas in the interiors of Andhra Pradesh with an identical vision. She heads the Employment Generation and Marketing Mission (EGMM) at the department of rural development of the Andhra Pradesh government, mainly identifying and training deserving poor youth from rural areas to take up appropriate employment. We decided to set up the rural BPO at Tirupati where daughters and sons of farmers, laborers, carpenters, weavers, etc, from nearby Villages could be employed. The candidates are generally those who have completed their graduation but
not been able to land a job due to their inability to compete with their city brethren who get better exposures."
Rajan says
convincing and
getting the approval of the bank's CEO and the members of the board on
experimenting with this initiative was not at all difficult, since they immediately appreciated the tremendous value addition that this initiative can have in uplifting rural economy.
The nature of the work of the employees of the BPO largely involves ca ptu ri ng customer data from scanned images of application forms and sending the data back to the central servers in Mumbai. "Since scanned images could be sent over broadband lines and brought back to the central server
as encrypted data files, we could mange the entire activity without any time loss of turnaround time for the customers and without compromising data security," adds Rajan.
INITIAL EXPERIENCES
Durga Prasad, a senior banker, who heads the operations of the BPO at Tirupati, adds: "The boys and girls who joined this BPO are seeing an office environment for the first time in their life. In fact, during the initial days, I was puzzled to see many of them wearing warm woolen clothes despite the humid weather at Tirupati, before I realized that most of them were not accustomed to spending eight hours in an air-conditioned enclosure!" He adds the BPO job has brought in dignity and respect for them and many of them have been able to get rid of their family debts, start educating their siblings and prOVide an enhanced lifestyle to their families. The status of being a BPO employee has also helped some of the girls to get married into respectable families.
As much as 54% of the staff employed in the rural BPO is girls.
Many of them are destitutes, orphans and widows and the BPO has given them an impetus to lead a life of dignity. They work in two shifts, but Durga Prasad manages the shift allocations in such a way that the girls are able to leave office before dusk.
Meera Shenoy, who heads EGMM, says the organization was associated with HDFC Bank even before setting up the BPO and the experience was such that it had no hesitation whatsoever to the idea of a rural BPO. "We readily undertook the initial training aspects, tailormaking it to the needs of the BPO," she adds.
She says three factors influenced her thinking while being associated with HDFC Bank: (i) the impeccable credentials of the bank, (ii) the project is to help rural youth and (iii) it creates job opportunities in the local area instead of the youths having to migrate to cities.
Shenoy says: "This is one of the best examples of public­private partnership and it is a worthwhile model since it aims to create job opportunities for the rural and tribal youths in their area of residence. We have received enquiries from other state governments on this pattern."
She adds: "On our part, we have been trying to impart tailormade training to the youths, as per the requirement of the employers. As an organization EGMM is one of the largest job creators for rural youth globally, having secured jobs to as many as 225,000 youths so far."
TRAINING REQUIREMENTS
Besides the initial grooming support from EGMM, the BPO gives extensive training to the youngsters in handling computers, using software applications and in understanding basic banking products before they are put on the actual job. Durga Prasad says it takes about six months for them to become reasonably skilled and productive. "Each of the employee works with realistic targets in terms of productivity and quality of output. There is a

Mascot of a Generation

Dhanamma is an amazing example of women getting empowered. She has been a girl with fierce determination and will power to make it big. In spite of stiff resistance from her mother, this second daughter of a shepherd father and farm laborer mother from one of the villages bordering Tirupati managed to graduate. Dhanamma is now an agent at the rural BPO.

When two management students from Vignana ]yothi Institute of Management, Hyderabad, Aparna Krishnan and Sirisha, met her as part of a case study on the rural BPO project, Dhanamma recollected her days when she walked miles together to graze goats, helpless at not being able to go to college. Her mother thought it was worthless attending college instead of helping her with her field work and household chores. She went to college to only write her examinations. She took a BA in political science and when she listened to a presentation by EGMM at a meeting of a SHG, she was convinced that her dreams can be fulfilled by taking up the training at EGMM. She persuaded her father and joined the 45--day training. She was later absorbed by ADFC at the BPO.

"The 45 days at EGMM changed me completely from a shepherdess to a woman ready to be employed in a swank, air conditioned corporate office," she tells the management students proudly displaying her ID card. She feels that the training has been the best part of her life as she has acqUired English speaking skills and can manage the work like any other urban girl.

Dhanamma stays in a hostel at Tirupati as her home is in Patagunta, which is 40 kms away from Tirupati. She sends Rs 2,700 every month to her parents. She complains that many people in her village waste their time doing nothing productive and getting into bad habits like gambling.

Aparna and Sirisha write in their case study: "Dhanamma is a mascot of whole generation of women fighting their way to getting educated and going beyond their borders. She is the first girl to get graduated from her village and the first girl to go out of her village to earn a living. This determination is now spreading in the whole village. On her way to her home lots of kids come up to her to greet her. She says that all of them wish to work like her in the City."
recruited from villages around the temple town, from the lowest rungs of the economic strata. These youngsters (many of them walking down or cycling to the office covering anywhere between 5 and 15 kms daily), are quite a contrast to the motor cycle riding call center executives of the cities.
"We started the Rural BPO more as a corporate social responsibility with the intention of proViding employment opportunities to the rural youth rather than as
a cost-cutting initiative," says A. Rajan, group head - Operations of HDFC Bank and a director on the board of ADFC. "The cost aspect was considered to the extent that the bank should not be spending more than what it was incurring for similar activities in the metros. This is important, since it is pointless to start an initiative unless it is economically viable and self-sustaining in the long run. Since the BPO is intended to proVide job opportunities closer to the rural employees' residences, the bank had to necessarily locate it in a remote town away from the metros, thus incurring a higher cost on leasing appropriate bandwidth. However, this cost is expected to be offset by the fact that infrastructure costs like rentals and wage bills are lower at remote towns, compared with those in a metro," he adds.
There is also another significant advantage.
In rural areas, there is very little attrition as the youngsters, while working in the BPO, can continue to support their family business as well. So, there is a double benefit for them and they are less likely be tempted by the better salary prospects in the metros.
Rajan agrees: "There is negligible attrition.
This saves the BPO significant re-training expenses, which is otherwise incurred by the metro based BPOs facing a sizeable turnover. The few resignations that were seen in the Tirupati BPO were due to the fact that some of the female staff who got married had to re-locate. There were also a few cases where the ladies had to resign for compelling family responsibilities. This was anticipated since the BPO predominantly employs a larger

MARATHON FUTUREX ..

The biggest challenge in Mumbai, the country's financial capital today is the availability of well-defined and well maintained and safe business parks. Construction of state-of-the-art secure structures, built with keeping in mind the seamless functioning of the financial institutions are a must for Mumbai to continue its status as the financial hub of the nation. With growing number of Banking, Financial Services and Insurance (BFSI) companies in the country's financial capital, the need for buildings with modern infrastructure, catering specifically to these sectors is a must.
The Marathon Group, through its upcoming project Marathon Futurex at Lower Parel, the emerging financial hub ofMumbai, has made an endeavor to fulfill requirements of several such BFSI aspirants to set up their new office in Mumbai.
It was the Marathon Group, which with its several unique commercial and residential projects like Marathon NextGen Innova, Marathon Omega, Marathon NextGen Era etc have already converted Lower Parel from decaying chawls and dead mills to the one of the financial hub of the country's financial
capital with its prestigious projects,
catering to the need of this growing city.
Addressing the need for spacious business parks with a positive ambience, Marathon Futurex, at Lower Parel is one such project in the area being developed by the Marathon Group as one of the most favored tomorrow's busi ness destination for the BFSI companies.
Marathon Futurex is "A" class IT Park overlooking Arabian sea and Mahalaxmi racecourse and offers floor plates from 30,000 sq. ft. to 70,000 sq. ft. and is designed to accommodate more than 900 cars. Impressive and grand centrally air conditioned entrance lobby, lush green sky gardens, advanced building management system, Electric sub-station, DG back up for common areas, broadband connectivity, advanced security with CCTV make this future Green building an ideal business destination.
Centrally located at the junction of Lower Parel and Curry road, Marathon Futurex is easily accessible by all modes of transport­connected to major bus routes, flyovers and Bandra-Worli sea link. Futu rex is the only business destination at a one minute walking distance from Lower Parel and Currey Road railway stations. Proposed skywalk between these two railway station will further ease the connectivity. Air-conditioned monorail services between Jacob circle in South Bombay and Chemburon harbour line will also add up to the reach as the proposed on-route sration is close ro the site along N .M.Joshi Marg. Junction free VT-Sion expressway will facilitate the faster connectivity between central and harbour suburbs
with the central business destination. Upcoming Mumbai Trans Harbour sea linkwill not only bring New Mumbai and adjoinlTlg suburbs closer to Lower Parel but also connect Pune. Concentration of high gear service sector organizations like Peninsula Corpora < Park, Phoenix Mills, Kamala Mills, five star hotels like ITC ar J Fo \' Season's and entertainment outlets at High Street Phoenix In th vicinity itself had become the location advantage ot thL M r rho Futurex. Upcoming hi-end Shangri-La hotel at Phocn ix will FL , , hospitality to new level.
Another reason for Lowet Parel being the preferred destinauor s by the business leaders as compared to the upmarket Bandra Kurla Complex (BKC) is, that the latter lacks social infrastructure and ItS neither close to Bandra nor to Kurla railway stations.
The project, being developed in the Mafatlal Mill land compound will host more than 15 landscaped gardens by international architect from Singapore and will feature Drop offlevel adorned with water feature signage, water bodies, water spout sculpture, timber deck,
fountain feature, bamboo garden, garden plaza, cascad ing garden ete.
Marathon is the only developer offering this kind of project in the middle of the Lower Parel business district, offering commercial space through leave and license and outright sales to the customers, that too as per their requirements.
As the demand for commercial space is growing in Mumbai, the commercial capital of the country has seen growing in all the directions. In the current scenarIO, centrally located places such as Lower Parel turned out an extended central business district.
Group's one such landmark project called NextGen lnnova offering independent business spaces starting from 2000 sq. ft. with scalability option upto one lac sq. ft. is located opposite Peninsula Corporate Park in Lower Parel Destination for brands like Anchor,
Sundaram BNP Paribas, HDFC, Dawnay Day AV, STCl Securities, Evergreen Logistics, Armstrong WI! Pvt. Ltd. to name a few, NextGen I nnova is dotted with most conducive features like grand entrance lobby, capsule elevators, hi-tech security, tree lined walkways, independent car park building for more than 500 cars, tennis court and modern clubhouse comprising of gymnasium, swimming pool, squash court, aerobic studio etc on 5" level. This project was awarded as the "Best Commercial Project of the Year" -2006 by Accommodation Times.
The Group is actively involved in High-rise residences, Corporate & IT parks, Retail, Townships and SEZs.

Prepaid Technology from FIS

ecently, in the UK, two prepaid cards were launched - one, 'Cash Manager' for adults looking to budget in times of tightened spending, and the other, 'Load & Go', aimed at teens looking for a safer alternative to cash and who want to shop online but may do so only by borrowing their parents' cards.
Imagine a card for teenagers, age 13 and up.
With this card, parents can teach children to manage money. Children may only purchase goods that are 'allowed' e.g., the card can be programmed to bar a purchase at an adult internet site or at a liquor store. Plus, the card can be given to children who study and live far away where spending cannot be watched. The company that launched them, 02, is UK's leading mobile company.
A TELCO LAUNCHING PREPAID CARDS?
Analysts feel that a teko can bring a fresh approach to financial services. The card is in a way a step toward integrating the wallet and the mobile phone. Also, majority of prepaid programs have been developed by building a customer base. This telco comes with millions of existing customers with which it communicates regularly. Marketing the program to these customers will not be as costly as reaching out to new customers. While different business models may drive a tel co to launch Prepaid, reduction of customer churn also makes a reason for entering this business.
IN A RECESSIONARY GLOBAL MARKET?
u.s. data shows that spending on credit and debit cards have decreased in the last quarter of 2008. While the total appears to be up on a yearly basis, statistics point toward reduced spending in many countries in 2009. Thus, budget-consciousness and use of cash to control expenditures will reflect in consumer behavior, implying, increased preference in the usage of ATM and prepaid cards over credit cards.
PREPAID OPPORTUNITIES IN INDIA
The Indian psyche is well versed with concepts like small­value, pre-loaded and prepaid. Majority of Indian mobiles are on prepaid plans and small packets of Lays or sachets of L'Oreal are a rage in India. Though on a higher value note, the prepaid travel card has caught the Indian consumers' fancy and a growing number of Indians opt for a one-time or reloadable card instead of forex or TCs. Considering the huge increase in outbound travel (business and leisure), this is an area of growth. However, scope still remains for understanding the complete prepaid proposition. Education by technology providers to banks and end-users is the way forward. Technologically, India
is ready to accept many - if not all - of the following: in Consumer - Gift Card, Merchant Gift Card, Teen/Student Card, Personal Reloadable Card, Travel Cards, Money Transfer Cards; in Commercial - Payroll Card, Incentive Card, Corporate Gift Card, Promotion Card, Catastrophe Card, Insurance ClaimCard, Employee Benefits, Employee Reimbursement; and in Government - Court Ordered Payments, Benefit Disbursements, Unemployment Payetc.
As critical as the decision to go prepaid, is the bank's technology partner. An ideal provider should have a CV that reads:
a) Industry expert with a background in banking and financial services
b) Core Competency & depth of experience - a pioneer, present & committed to India; IT is never reinvented!
c) Size-big processor, large R&D spend, world-wide operations for bandwidth, reach and efficiency
d) Customer Support - local, global, telephone and internet
One company that fits the above description is Fidelity National Information Services or FIS. This USD 5.14 billion company invested U5$30 Million in its prepaid technology in 2008. A pioneer and leader, FlS was world's first prepaid-only processor, in business for more than 10 years. As world's largest, PIS is a full service provider with a multitude of offerings. Its total cards on file today are 192 million with a value load of 11 billion USD, equal to 25 percent market share globally. With over 40 years in banking technology, FIS has been global #1 in banking in the FinTech 100 rankings for four consecutive years and 95% of FIS revenues are derived from services to the BFSI segment.
Present since 1998, FIS has 4000+ employees in seven centers in India, serving the banking and financial services industry. Of that, 250+ constitute its Prepaid Team with expertise in implementation, operations, technology and live support to consumers. Shrihari Bhat, Country Manager, FIS India, says, "Prepaid is poised for tremendous growth and acceptance in India and banks and NBFCs must cash in on this opportunity."
Looking back, in recessionary year, a teko launches prepaid cards in the UK; in India, banks brace up for prepaid products; leading technology providers offer their knowhow in the market and the writing on the wall favours prepaid over credit cards. To conclude, if you are a product manager or marketer, you may want to finalize your own prepaid product and launch it soon. Raksha Bandhan has heralded onset of the festival season. Gifts, bonuses, incentive payouts, weddings, holidays etc., are all waiting for you to capitalize on. Prepaid may not just be a trend. It could actually help you max your 2009 performance targets!

lOB seeks to secure its internet gateway

ndian Overseas Bank is planing to secure ih internet gateway and has sought bids for supply of security systems including firewall, intrusion detection and prevention, content filtering, gateway antivirus and URL filter of CYBEROAM brand and SSL VI' appliance. The systems are to be installed at the bank's DR site in Hyderabad. The bank intends to have a solution that can support administration via secured communication over HTITS, SSH and from Console, capable of export and import of configuration backup including user objects, support Route (Layer 3)/transparent mode (Layer 2) and is capable of integration with Windows NTLM, Active Directory, LDAP, Radius or Local Database for user authentication. The proposed solution should also support
Dynamic DNSconfiguration, provie utilization graph on daily, weekly, yearly for total or individuallSP linl real time data transfer/bandwidtl done by individual user/ip/applic as the anti-virus solution sough intends to have an integrated soh has webcoast checkmark certi antivirus/anti spyware, work as , and support scanning for SMTP, FTp, HTTP, FTP over HTTP protoCi content filtering solution

ca Bank has invited bids from prospective vendors to implent c'Jre banking solution in the five regional rural banks sponsored hy it on an ASP model. The five sponsored RRBs are Jaipur Thar Gramin Bank, Kalinga Gramya Bank, Bihar Kshetriya Gramin Bank, l'aschim Banga Gramin Bank and Mahakausal Kshetriya Gramin Bank, which together had around 800 branches in Rajasthan, Orissa, Bihar, West Bengal and Madhya Pradesh. The bank wants the proposed CBS to be deployed on an ASP model and it would award a total contract for the entire services, to be executed on a turnkey basis. The bank has also laid a schedule for implementation
- minimum 25% of each RRB to be covered by CBS t 2009, the next 500,1) branches to be covered by Septeml 100% of the branches to be covered by September 2 view to ensure uniformity in the technology platform business processes at all the five different RRBs, bE proofing against any regulatory consolidation requirem the immediate, the bank has preferred Finacle solutio Technologies. Besides, the bank itself is using Finac feels, would facilitate experience based technical, mal traini

yndicate Bank is planning to implement prepaid card management solution on an ASP model for cards issued by the bank in affiliation with VISA/MasterCard and for use at VISA/ MasterCard enabled ATMs and POS terminals and other shared networks of the bank. The bank would prefer a solution provider, which would have its own switch and application host in place for authorization, authentication and settlement with secure web access to the bank's card center at Bangalore, hank branches all over India and customers / pre-paid cardholders JCfOSS the world. The various cards issued by the bank include branded gift card, payroll card, prepaid purchasing card, travel card, campus card, virtual prepaid cards and lenslon cards. The bank will implement the project on a revenue haring model under which the net revenue generated from he busi!less shall be shared between the bank and the selected
vendor on a determined ratio, while the VISA/MasterC and other third party certification charges would be b, bank. It will be the sole responsibility of the selectee provide pre-paid card management and also offer services in pre-paid card solution including back-el of switch maintenance / authorization, network ill,
authorization, MIS,
services and dispute Besides, the vendor Sf hosted services with infrastructure for aut
authentication and
of transactions. The should include fun like, interchange accou necessary reporting tools management / risk management tools / Fraud Manag Anti Money Laundering (AML) Tools with web enabl Branches / Card Centre of the Bank. ng support to the RRBs from the sponsor bank.
is expected to be webcoas certified and should be capable of integrating with Ie instead of querying to database hosted somewhere on and be a standalone HTrp proxy.

New Frontiers at Banking Frontiers

Having covered the banking sector in this magazine for over 7 years, and having organized seminars, conferences and roundtables for 5 years, time was ripe for us to start some new activity. And that new activity is research surveys. From time to time, we will come to you with a set of questions and based on your responses, will present you the analysis.
On an experimental note, we started off on a mini survey on corporate banking, with only 7 respondents. The full analysis of the survey will be presented later, but here I will share with you some interesting responses from the participants. On the training front, it emerges that it is not product knowledge, nor technology knowhow, but simply soft skills that is the most critical training need for front office staff. On the back office side, it was a combination of core banking knowhow and credit appraisal skills that demanded maximum training. As regards internal database, the customer database turns outto be the most important database. For external source of information, the most critical are varied including websites of RBI, NABARD, Ministry of Finance, etc.
In terms of outsourcing various activities, the key drivers are cost reduction, improved productivity and volume variation.
Common drivers cited by corporate bankers for growing
the volume of business include improved processes,
improved technology and more business intelligence.
Common drivers for improving profits was primarily better products. For both volume and profit growth, adding more people was seen as the least appropriate solution.
All in all, the survey shows that corporate
banking continues to be a complex business where change comes in slowly. Seems that process, products and technology are the areas where maximum changes are in the pipeline.
We will share with you a proper analysis once we have inputs from a larger number of participants in this survey. Do let us know what survey topic are of interest to you.
CORRIGENDUM
There was a typographic error in the news on page 45 in the July issue. The name of ED of Syndicate Bank, R Ramachandran was mentioned as R Ramanathan. The error is regretted.
Manoj Agrawal Editor +91-9867366111 manoj@bf-mail.com
Project Pipeline Book Review
Banking on Rural Resources
Guiding Growth of Coop Banks in Rajasthan Energizing Multiple Schemes & Projects SBBJ Expanding on Multiple Fronts
BoB Driving Financial Inclusion in Rajasthan Loan Automation Technology
Collaborative Customer Engagement Corporate Banking Transformation Customer Engagement Strategies
Sugar - Problems & Profits Aplenty Maharashtra Sugar Cooperatives Bullish Challenge Is to Increase Flow of Credit News from Northeast News & News in Pics

Challenge Is to Increase Flow Df Credit: SuBank of India Governor Dr D. Subbarao released the document 'Macroeconomic and Monetary Developmentsbbaraa

R
BI Governor D Subbaro has said that there is a scope for banks to lower lending rates further. "Banks say that the demand for credit is picking up on the back of investment in projects. The bankers informed me that the demand for credit in certain segments like home and retail is picking up, which was a welcome sign. There is a scope for reducing lending rates within the policy rate adjustments already done by RBI. Interest rates for short-term credit should be about 9.5% but these are about 1O.5'YtJ. So, there is scope. As deposits contracted at higher rates mature and get re-priced, the cost of money to banks will come down and they can look to reduce lending rates," Subbarao said after presenting the first quarter review of the monetary policy on 28 July 2009.
The RBI prodded banks to lower lending rates, saying the full pass-through of the monetary policy rate changes had not taken place. Besides, it said banks could pass on the benefits of the lower cost of funds due to the reduction in deposit rates initiated over the past several months.
On being asked about the steep yield curve that may result in a liquidity trap, Subbarao said: "We do have tried to influence the yield curve. After a review, we changed the maturity profile of the government borrowing in order to manage the yields towards small loans and others."
To a question as to whether the worst is over, he said: "I wish I could definitively say that. Our financial sector only had hiccups and didn't have deep structural problems. But the challenge going forward is to increase flow of credit. We talked to bankers and they said the demand for credit had come down. We talk to the corporate sector and they say the supply has dried up, so there is a mismatch there."
INDUSTRIAL & INFRASTRUCTURE CREDIT
On the issue of measures to direct credit to the core sector and whether RBI making concessional long-term loans available to capital goods sector, he said: "We will do whatever is within the ambit of the monetary policy to ensure that there is adequate credit. The RBI's objective is to ensure credit flow to all productive sectors of the economy. The latest industrial index of production
numbers show that capital goods and consumer non­durables have still not picked up. We will also have to make sure that the credit flow is well-regulated and prudent. We cannot allow credit policy to deteriorate in order to increase flow of credit. There is no proposal to direct credit to infrastructure beyond what's already there. There have been requests to raise the single borrower limit for banks lending to corporates. But we have decided not to increase the limit. We can't ensure directed flow of credit to particular sectors, except in crisis situations. We want long-term credit flows to improve."
MANAGING GROWTH
To a question as to assessment of how much capital is required by the banks, he said: "We have an assessment of the capital required. We are not in a position to share that figure right now." According to RBI's revised estimate, deposit growth for commercial banks would be 19% for the current financial year. It is an upward revision from 18% set in April 2009 as part of a plan to maintain ample liquidity in the system. The money supply growth is also revised to 18%, up from 17°/<) projected in the annual policy statement issued in April this year.
It was important that the increased government borrowings did not crowd out credit flow to the private sector. The y-o-y growth in deposits till July 3 2009, was 21.9%. The outstanding deposit of banks stood at Rs 40,28,707 cr, according to RBI data. On deposit growth across bank groups, the pace of deposit growth for public sector banks has accelerated, while that for private and foreign banks has slowed down. For 12 months ended July 3, 2009, deposits with public sector banks increased 26.4%, up from 23.1 % witnessed in the preceding 12 months.
Private sector banks witnessed a slowdown in the deposit growth. The y-o-y growth in deposits nosedived to 6.7% as on July 3, 2009, from 17.4% year ago. As far as foreign banks are concerned, moderation in deposit growth was 16.4% as on July 3, 2009, from 20.9% a year ago. This was due to lower deposit base of these banks.
Bankers felt that the status quo on policy rates would anchor interest rate expectations that could spur investment demand. They indicated that they are seeing signs of revival in the domestic

New Frontiers at Banking Frontiers

Having covered the banking sector in this magazine for over 7 years, and having organized seminars, conferences and roundtables for 5 years, time was ripe for us to start some new activity. And that new activity is research surveys. From time to time, we will come to you with a set of questions and based on your responses, will present you the analysis.
On an experimental note, we started off on a mini survey on corporate banking, with only 7 respondents. The full analysis of the survey will be presented later, but here I will share with you some interesting responses from the participants. On the training front, it emerges that it is not product knowledge, nor technology knowhow, but simply soft skills that is the most critical training need for front office staff. On the back office side, it was a combination of core banking knowhow and credit appraisal skills that demanded maximum training. As regards internal database, the customer database turns out to be the most important database. For external source of information, the most critical are varied including websites of RBI, NABARD, Ministry of Finance, etc.
In terms of outsourcing various activities, the key drivers are cost reduction, improved productivity and volume variation.
Common drivers cited by corporate bankers for growing
the volume of business include improved processes,
improved technology and more business intelligence.
Common drivers for improving profits was primarily better products. For both volume and profit growth, adding more people was seen as the least appropriate solution.
All in all, the survey shows that corporate
banking continues to be a complex business where change comes in slowly. Seems that process, products and technology are the areas where maximum changes are in the pipeline.
We will share with you a proper analysis once we have inputs from a larger number of participants in this survey. Do let us know what survey topic are of interest to you.

MEASURES AGAINST DECREASING PRPROBLEMS OF THE INDUSTRY ODBAN ON FUTURES TRADING UCTION

With India's domestic sugar production in the 2008-09 season hitting a record decline, FMC banning futures trading in sugar, delayed monsoon and continued price rise, Mehul Dani speaks to the various stake holders of the sugar industry including the organizations who extend loans to sugar mills and cooperative factories and presents, on the eve of series of festivals, a picture which is certainly not rosy but gloomy and sour in taste.
~e Indian sugar industry has been on a roller-coaster ride 1 ~f highly fluctuating production during the past few years. The rising and faper the statement of Sharad Pawar, Minister of Agriculture, on 3] July, 2009 in Parliament, the production of sugar in the current 2008-09 sugar season is provisionally estimated in the range of 150-155 lakh tons as compared to about 263 lakh tons in 2007-08. The government has now decided to extend the terminal date for import of duty free raw sugar under Open General Licence (OGL) by sugar factories from] August 2009 to 31 March 2010. The import of raw sugar has also been opened up to the private trade up to 31 March 201 0 for being processed by domestic factories on job basis. Further, accelerated
release of processed sugar made from raw sugar would be allowed. The government had, in April 09, also decided to allow duty free import of white/refined sugar under OGL up to 10 lakh tons by
designated agencies, namely, STC, MMTC, PEC and NAFED till 1 August 09. This has now been extended up to 30 ovember 09.
Samir Somaiya, President, Indian Sugar Mills Association, New Delhi said: "Sugar production for the season 2008-09 may exceed ]47 lakh tones (against 264 lakh tons in the previous season). With the opening stock of sugar at 80 lakh tons, the total availability would work out to 227 lakh tons. Taking into account the present situation, additionally about 13 lakh tons of raw sugar has also been contracted, of which about 9 lakh tons has already arrived. Further contracts for purchase of raw sugar is also in the offing for later months to coincide with the crushing season for the incoming sugar season 2009-10. Therefore, the sugar supply situation would remain adequate to meet demand and prices are likely to remain steady as at present."
There are around 600 sugar manufacturing mills in India out of which 500 mills are in proper working conditions. ISMA has a strength of mCommodity market regulator Forward Markets Commission (FMC) banned futures trading in sugar in May until 3] December 2009 to arrest a possible speculation driven rise in prices. Sugar
Somaiya said: "Although India liberalized, the sugar industry remained heavily controlled and is still subject to the monthly release
mechanism for sugar sales that is determined and declared by the government of India. Millers must be free to determine the timing and quantity of their sugar sales, as is done by most other economic entities. This is the only
price, which was at Rs l8 to 23 on last October when the 2008-09 sugar season began, is ruling currently at Rs 28+ a kg in major citiesore than 200 member factories countrywide. Meanwhile, Uttar Pradesh is planning to privatize 24 economically unviable sugar mills (as their crushing capacity is low) before the new crushing season starts in October 2009. This year alone, worth over Rs 3,300 crores has been spent on import of 15 lakh tons of raw sugar and some quantities of white sugar. lling production has led to unprecedented policy problems and practical hardships to the tens of millions of consumers. India is the largest sugar consumer in the world and second largest producer of sugar.

: The problems can be two pronged. It can be a structured or unstructured problem. Structured problem is the balance in my account. It is also the amo

The problems can be two pronged. It can be a structured or unstructured problem. Structured problem is the balance in my account. It is also the amount I am utilizing. As far as these problems are concerned, a call centre is a perfect example of customer satisfaction and loyalty. For unstructured problems, a human touch is very important and a service agent who knows the bank is needed. Most of us will agree that call centres are outsourced for cost effectiveness and flexibility and that it needs huge infrastructure. There is also the manpower cost.
Nandan: If you are looking for a SO-seater call centre then there are whole lot of things involved. There are shifts, payments, costs, salaries, etc, involved.
Avinash: There are different patterns of calls at night and morning ones.
Nandan: We have looked at both the options. There are two­three models of call centres. One can be fully owned by the bank. Second is space can be ours and infrastructure outsourced and the agents are outsourced. The first question we asked to those who came was whether their agents were trained. They said no. But after all this they can be limited to take simple and basic calls. Inbound call centre are basically for cross-selling, product knowledge, intricacies about the system also have to be told.
Avinash: A call centre is basically an unorganized place.
The attrition rate is high. A employee picks up the work and then quits and joins somewhere else. There is lot of lead generation.
Manoi: What are the constraints? Is it human or technology or infrastructure?
Chaphekar: Some part from the technology and some human side. We outsourced our call centre. The constraints are getting the concerned fellow to use the technology. So whatever schemes or charges we want to talk about, they wont understand the intricacies about our product.
Girish: I have had a look into some of the call centres. There are people who have done wonderful work for the foreign banks. I know of some Indian operators who do undertake loans of up to $5million for the bank. They also send out fa.xes to the bank and no questions are asked. That is their efficiency. We are a lot more concerned about secrecy sometimes where it should not be. So it's a mindset change that comes in. Moving customers away from the branch always backfires. Today in the West, they have reaJised that you cannot call a customer, cannot email him as it will be treated as spam, the printer brochures are junked, and hence you cannot communicate. Therefore bankers have to use delivery channels effectively and also make sure that customers come back to the bank. I would be happy if I saw the younger generation come back to the branch instead of only talking through delivery channels.
Nandan: the PSU banks are also faced with this problem.
The average age of the customer is going down. We at our bank call them GenNext branches. All said and done we want them back at the branches. Human touch is important.
Singh: I was reading a survey that said that there should be at least 7 physical meetings in a year between customer and banker besides internet and phone.
Girish: For me KYC is not legal. It is knowing the customer.
Avinash Chugh KK Sharma
Nandan: On KYC, the former director IIM (Ahmedabad) delivered a speech and defined KYC as kick your customer.
Narang: When I was going through age pyramid of the country, what I realised was that the age group of 20-34 are the people who actually go banking. And an equal number 0­24 will remain constant for the next 20-30 years. The former are tech-savvy and like to use multiple delivery channels. But you have to supplement services in a branch with alternate channels. Today I cannot think of banking with a bank without ATM. ATM is an onsite service. Offsite services or remote services are also important. If at 11 pm, I need to renew my insurance I need phone banking. All these channels need to supplement each other instead of competing with each other. If you talking of services other than cash withdrawals and other services they can be done from remote locations from channels like net banking. Net banking is a powerful channel. But only 6-7% of the population use it. This is where some leading banks have exploited this well. One of the banks has around 4000 agents running their contact centre. There is a team that looks after each aspect such as HNI customers, library assets, etc. The yield from average customer is far less than that of an HNI customer.
KK Sharma: What should be the engagement factors for PSU banks for getting HNls? Effectively ensuring that customers wont try to visit (I am taking about HNI customers) and if they do visit they are looking for exponential kind of banking. This is the same reason why we visit a mall today. If that experience banking is missing then that HNI customer will be disappointed. Once in a while he would like to visit and see. He would expect a special treatment.
Girish: A marketing guru was telling me that if you want to target the HNI customer, get their spouses involved.
Avinash: As for HNI customer, it is a question of segmentation. Every bank has its own set of I-1Nls. Its only a question of segmenting the data. The HNI needs to be positively discriminated. Kakade: as long as provide what the customer wants at his price and at the speed at which he wants, if we deliver all this, any organisation can achieve success. If you know your products well, your customers and people well, then everything revolves around these. You need to perceive their needs and device a strategy so that immense growth potential is relized. You need a proactive effort.

multifunctional ATMs where you can deposit your school fees, take a statement, etc. They are available with manufacturers. But are the PSU banks going

Deepak: I say that in future there will be just one handheld device that will do everything for you. All you transactions will be taken care of. In future we will have young tech savvy customers. They would not like to visit your branches and face you. Even for opening of an account, give them the device and it would do everything for them. They can do everything via electronic media. ATM will only be for cash, and even that be rarely used when your handheld can do everything for you.
Manoj: What about customer acquisition?
Sridhar: There was a time when customer relationship was done only through branch banking. With technology growth and a newer form of lifestyle, it became difficult to come to the branch. That's why phone banking is a great help. The advancements in mobile technology are also helping and people are conditioned to using the phone for their transactions. That is why the banks have been able to do at least 15% of their business over the phone.
Girish: We have all been talking about the customer. I am wondering whether this same thing can work for the bank's employees? Can they call up, integrate with the banking system thus leading to a better productivity?
Nandan: In our bank we have a model, RLF (retail loan factory). In that we have telecallers. Their job is to solicit business. Technology provides you with so many tools to make use of. We had two options for the telecallers, especially after the DNC restrictions came in. One was to withdraw the telecallers and transfer them to a branch or whoever might need them. Through technology, my callers have access to all accounts. They then call up customers to remind them about certain things.
Sarang: In such cases, people tend to give direct line to the tclecaller and the latter pick up the number and dial. If you look at the dialing pattern, then there is some right time to call the customer. There are various softwares that help in dialing but also hand over the phone after connecting. So if a telecaller calls up 60-65 customers per day, with this application they can call about 90 customers. There are intelligent things built in this application. If you have called the customer 4 times and 3 times during working hours he was not available, then next time you call him only after working hours.
Karthikeyan: We are in a situation that we have entered today. Unless we are able to personally go and knock at his door and remind him that there is an outstanding due, and as far as PSU banks are concerned I don't think the method of telecalling is going to work in India. If you call him more than 3 to 4 times, I am sure he will complain about harassment. Let us be aware of what we are talking about when we say phone banking.
Manoj: So Nandan, you said you had this choice of disbanding telecallers but you continued. So what changed that they could be effective?
Nandan: We didn't want to withdraw them in totality. We reduced the number. Telecalling cannot be the only remedy for
recovery. It is a supplement. We have all types of customers. A gentle reminder and they come and pay. Some customers don't pay after repeated reminders. One yardstick cannot measure all. You will be surprised that our delinquency ratio is very Jow.
Manoj: Do you use telecalling mostly for recovery or even for cross-selling?
Nandan: It is for all. Normally 60 calls per day is the yardstick.
We will be very happy to implement some better technology that Sarang was talking about. If calls can go to 80 from 60, we will be happy to implement, but everything comes at a price.
Sarang: There has to be an RoI for the investment.
KK Sharma: Change is always there. Two areas they need to work on, is data mining and CRM. But it is not happening and lots needs to be done. This could be one area, if developed, then we could make the customers stick to the bank.
Avinash: Outbound telecalling is regulated by TRAI. RBI regulates only the recovery calls. For these people you need to have a CRM. For that you need data collation. After data collation, you need to slice the data. Till you know what segment is using, it is useless. Along with the KYC, if banks find out about disposable income, family size, life pattern, etc, then these things will be handy in building up a database. Right now if you are generating KYC from routine banking, then you need the mobile numbers of customers.
Nandan: You have raised the phenomenal growth of cell phones to factor in authentications. If a mobile number is not present in your records, then two-factor authentication cannot happen. We are facing the brunt of cyber crimes. To bring in security, you need to bring in two-factor authentications. Without this, you are exposed to lot of risk. Two factor can come through the cell phone.
Manoj: So why not look at incoming calls?
Nandan: Each bank is looking at having a call centre. If you have an outsourced call centre, then how much data access can you give them? I have studied this in detail because I am also in charge of the alternate service in my bank. Call centres set up by various banks were doing only outbound calls. 1 have yet to see one handling inbound calls. But, phone banking will playa major role in the future.

growing, the living standards have gone up too. The corporate world is already targeting the rural areas with their fancy stuff. When this starts, not

conservatism or infrastructure bottleneck?
Atul: Earlier the national banks were lending only to the corporate and large companies. The eye opener for us was when the private and foreign banks focused on them. Then the banks went into cross-selling, targeting their own customers, etc. There was a time when we after haVing lent a corporate Rs 50 crore, he would go to another bank for a Rs 20 lakh car loan.
Nandan: Post liberalization, the purchasing power of the middle class was always there, but the spending pattern was different. People were not keen on spending as much as they are tOday. Those banks that started the retail race had probably forgotten about the quality. Public sector did not compromise on a lot of things. If you grow at 25<)1), that's a decent growth. In future, growth may go up to 30%. High growth could also mean that banks might compromise on quality. But there is a realization that bottom lines do matter. I think growth should come with caution.
Karthikeyan: For SBl, retail banking also included personal banking and small business and agriculture. It is only in the last five years that retail banking margins are found to be much higher. Private banks were focusing on the core customers of the PSU banks. So PSU banks had no option but to step into retail banking, because their share of customers was being targeted by the new wave of banks.
Girish: There is never appropriate growth. More growth seems to be better. But from a risk perspective, when something is doing too well, you have to really focus on it or else you will sell out everything and what happened in the world was exactly that. Certain things went on a very high growth target and what goes up must come down. But what we need as bankers is to moderate the growth with caution. Quality is what we need to look for.
Chopra: Yes, retail banking was a byproduct of the economic liberalization. But to me technological innovation has contributed to the retail growth. It is this that has led to the potential for the retail banking.
KK Sharma: Retail banking is not just about projects and advances only. We always regarded a consumer as either a depositor or a borrower. But we forgot that he requires life insurance, a demat account, credit card, etc. This is where growth will come from. So you will see multiple revenue streams coming from the same customer which was not happening earlier. Life insurance has not yet been exploited. Franking of documents is another area not tapped by banks.
Sarang: Technology plays an important part in retail banking.
I will touch upon two things - potential of retail banking and ability to tap this potential. In terms of potential, I was reading a survey and it said that 35% of Indian citizens today come under the banking services network which actually means there is a huge untapped potential. Now let's look at our ability to tap this potential. Today's technology had taken a huge leap from the one in the 90s. In early 90s, telecom infrastructure was not available beyond 83 locations. Today it is available in 2000 cities and 1000s of villages across the country. The data network reqUired to connect an ATM or a branch to a CBS is available easily. Second, we used the bank branch as a front-end to service the customers. But the ATM revolution and other technologies have helped us to approach the customer after banking hours. With so many facilities, banking has become a 24x7 service.
Avinash: If you stress on one retail product, the other products come as by-products. For eg, with car loan, insurance will come as a by-product. With online trading, the demat account comes as a by-product.
Manoj: In the last few years, ATMs have been the cornerstone of retail banking strategy for the public sector banks. That is one of the reasons why the common man continues to bank with a public sector bank. But also what has happened is that phone connections have grown exponentially. Indian cellular growth is the fastest in the world. Should phone banking become a key banking channel?
KK Sharma: Usage comes in due course. People need time to adopt technology. People were earlier hesitant about using ATMs. Now they are used all the time. The convenience of 24x7 was good. ATMs have been able to create huge capacity. Phones and cell phones are slowly getting used to the banking system. Mobile penetration has grown vastly. This is how technology adoption grows by leaps. We need to prOVide impetus, make things easier and the volumes will come.
Manoj: My concern is that there is demand for so many products, but the ATM fulfils only one. This should become a constraint if you are trying to evolve a basket of products. So do we see other channels help banks proliferate products?
Vikram Kakde: There are lots of banking channels available now. The question is the future of phone banking and whether PSU banks should seize this opportunity. We should first find out whether phone banking is cost effective. But there are some who still prefer to walk in and seek an entry into the pass book. This mindset needs to change.
andan: The psyche of the customer also has to be kept in mind.
When we talk about financial inclusion, let us keep the low fees in mind. There are instances where banks are charging customers for services. The segment of a pensioner, which is sizeable for any PSU bank, has an entirely different psyche. Now the demand is for

Customer Engagement Strategies for Retail Banking

Manoj: India's middle class is huge. Obviously it presents a great opportunity for the financial sector. Has the retail industry has its heydays in the last 8-10 years? How was it? How do you see it going ahead?
Marathe: As far as PSUs are concerned, we have been into retail as far back as I can remember. But this branding around retail started with the new generation banks around the mid 90's, who came out with an idea of capturing the retail business in the urban metro areas and more so on the assets side. India was a capital starved country and finance was low and there was a rationing of credit. But when reforms came in, there was some relaxation in capital availability and consumer loans became the fashion. So banks started capturing customer where loans are given for consumption purposes and not just production purposes. As far as retail asset side
products are concerned, our speed was slow. We have been overtaken by private sector banks because of technology and other issues.
KK Sharma: Largely it is reach and depth of coverage. So far, what has been achieved is largely restrained to metro and urban centres. In the semi-urban centres and rural areas, lot of work remains to be done. If we look at NREGS, the funds will directly reach the poorer sections of society, and the scope for banks will soon be tremendous. Banks should gear up for this challenge, and maximize opportunity. It is good for banks to be at the lower tier of the pyramid to reach out to everyone.
Atul: The middle class will continue to grow. I think this class of Indians and Chinese will lead the world out of recession. Retail has been a late opportunity, because once the capital started floWing into the country and the middle class started

and non-instruments. The last mile between corporates and the banks needs to be standardized because large corporates are no longer married to only on

Manoj: What is SAP's view on SLA for financial supply chain and what role does technology play?
Rajamani: Corporates looks at cash management as outsourcing some of their activities, be it funds, collection, payments to a bank, and even today if you see, cash management services are being set up. You will find SLA getting established, between the service provider and the service taker. Today you find the nerve system of financial management of a corporate is definitely being connected to a bank and where working capital is managed / funded by a bank. So the expectation really comes as to what is reflected as an SLA.
Ravi Shankar: The first step actually is to understand the business. If you go and tell the customer I can really do cash management for you, he would say you do not understand my business. If I say I would like to do collection for the agri sector, the government will ask what you understand of the business - do you know where the smallest value comes from, where the value goes to, etc. So, today most bankers here would see the client groups they are addressing and build people skills and industry skills around them and then they work with technology partners to build solutions specific to them and SLA comes after that. Within India itself there are so many defined trade routes which have changed now because companies are moving in a different chain, finding cheaper sources or alternate sources. So all of this is becoming more specialized and every bank today is not saying I am offering everything to everybody.
Pathak: I would like to add that this SLA is still at the stage of evolution. There are no standards and terms and conditions which can be uniformly applied to all corporates - it basically has to be decided on a case to case basis.
Vijay Kumar: The corporates not only have to face competition in India but also internationally. So, now the corporates also want to focus on their core business, so they look forward to the banks to find solution for their payments and collection mechanisms. For that purpose I think channel financing is the best option the banks can provide to the corporates.
Manoj: What are the risk factors or business constraints factors pertaining to online connectivity?
agarajan: With the introduction of RTGS, NEFT and ECS, 90% of corporate customers want everything online. But problems arise when somebody wants, say 10,000 payments to be pushed at the last moment. When this used to happen a couple of year ago, we had to go back to the customer and say that this needs to be done on a piece meal basis only. Also, if it is online, the customer expects more and more MIS from us. Corporates want everything electronically, but still the maturity level is not there because their internal process and our internal process do not mix together.
R Mani: What happened in one case was that the business group came to us and said they want online connectivity. But
when we met their IT team, they come out with a different version saying they didn't want real online connectivity. What they were talking about was a facility by which there will be a download from their ERP, and manually put into transaction in the bank's system - why, because their internal information security team did not allow online connectivity in a seamless manner. So there is a difference in perception between the business teams and the IT teams.
Harshan: At the gate, we are supposed to provide filtrations in respect of AML.
Vispi: We don't actually get access to the server, they create a path and give us a folder, the file comes from there and we pick it up. We too do not want to give them access to our servers. On the business angle, today there are mandates from different divisions within the corporate to connect with banks. Moving from one division to another also requires customization.
Manoj: Cash forecasting, planning, liquidity management - what would you see as a scope for improving corporate banking on these parameters?
Rajesh Lahori: Cash management has always been about liquidity, and liquidity had a credit link, because of the inefficiencies in the system. Technically it's largely a treasury function - its nothing but cash forecasting, planning and liqUidity with overall improvement in local settlement systems. One model for efficient management of liquidity is to concentrate on large towns and large settlement areas where automation has caught on. The other model is large retailers and distributors, who are working on hybrid models which are more zonal and business linked and are a mix of offline and online. Corporates are actually now focusing on building models creating ways and means where partners, technology players or banks are able to aggregate that and give them something on a common platform rather than talking to multiple entities.
R Mani: Yesterday I was pleasantly surprised when a small PSU was talking about online connectivity. Unlike some of the other large corporates, they are ready to operate on a real time basis, they are even ready to make some changes in their own systems, even those PSUsin tier 2 and tier 3 towns.
Vipul: Credit forecast is generally for corporates where the amount is too high. If you look at the telecom business, where there is a huge customer base and individual payments are very small, there to go for credit forecasting is really a big task.
Manoj: Banks are into variety of adVisory services. Can we use business processes and technology to take one step further,

. What we did was implement an online wealth management system (WMS) integrated with the banking portal. For some banks wealth management is about man

in addition to the website. They are interested in a particular product, then that information is given by us.
Lavale: For investments, we have opened many representative offices in the Gulf countries and other countries also. We are deputing their representatives and giving 24x7 services with respect to opening accounts, funds transfers, remittances, etc. Their account will be opened in India, whatever is the nearest branch of the residence of that NRI here. We have also started advisory services in collaboration with some FIs. So we train our people because customers tend to believe their bankers more rather than other private Fls. Based on their current annual income, the amount they need to invest at the end of the year, counting their expenses we advice them. People have started believing in public sector banks. Customers now prefer safe investments instead of looking for higher rate of interest.
Asha: In my own bank, we have a forex division that brings out a newsletter where there is a country outlook, monetary outlook and forecast for various currencies and currency rate movements and changes in FDI norms. Everything that is required for an NRI to make a decision. Apart from that we have an NRI cell that sends out a banking update, an email newsletter, where we do not address these purely monetary things. We tell them about things like reduction of stamp duty which happened yesterday from 7.YJ.6 to 6.5%. That catches their fancy. Then what is the real estate market looking like in the future? What is the investment that is recommended in the current scenario? These are the sort of questions that NRls usually ask us. The newsletter is immensely popular among them.
PK Nair: The point here is that in your bank the NRI division is a cell. Suppose the NRI wants to buy a mutual fund, then since your bank is divided into sections, you have to move that information to someone else and then that person will start the interaction. This can be distracting.
Hegde: In Indian Bank we have introduced wealth management on a pilot basis. So we have tied up with some leading financial companies. Hopefully, we expect to introduce it in other parts of the country also depending on the success rate.
Rajesh: In Axis Bank we have this service. We have a relationship manager who will be a single point for any service. The RM will hold only 4-5 customers.
Taneja: Wealth management is something that lends itself nicely to a relationship concept. There is one individual at your branch who manages your entire relationship. An ING wealth manager is responsible for the casa accounts, investments, insurance, etc. Typically there are about 200 customers mapped to a relationship manager. We found that

technology has a huge role to play in this. What we did was implement an online wealth management system (WMS) integrated with the banking portal. For some banks wealth management is about managing the entire wealth through the lifecycle of that individual. This involves education, retirement, inheritance planning, tax implications, if you have a large family distributing your wealth in a particular manner - all advice comes from the bank.
Srinivas: In our bank, in addition to wealth management, we also offer finance health checkups. We already have a collaboration with some players in insurance. For example, we have tied up with LIC, New India Assurance and mutual funds. The representative of all these companies, including our bank, has been brought under a single umbrella and customers can contact them.
PK Nair: Take the simple case of a mutual fund. The registrar actually sends the statement. That's a different entity altogether. He will have the actual record of your transaction. About 20 statements will come to me and I have to keep a track of it. Here technology can help you talk to your partners.
Taneja: Actually, that is what we have done. A wealth client at ING receives only an annual statement because that's mandatory from the registrar of the AMCA taking mutual funds as an example. Otherwise he receives a quarterly statement from ING explaining the portfolio. Because sometimes entry or exit loads are changing, etc. He gets these updates online as well as through the statement. Here technology has to talk to them. It's the system that has talk to them so that the customer's life is convenient.
Kannan: We checked out some solutions on the wealth management system also. It came to light that it is not the question of only technology availability. What is needed is skillsets and knowledge of the people in the organization about portfolios, equities, etc. What is most needed is the maturity of the bank to offer these kind of wealth management services. If you are not careful, then wealth management could become wealth mis-management.
Asha: In wealth management, we tend to focus on urban elite. But if you have seen the pattern of wealth distribution, it is slowly moving to tier 2 cities. Even consumer goods are doing better business in tier 2 cities. So there's a semi-urban / rural customer who is having wealth to be managed where we need to play.
Manoj: What about Axis and ING?
Rajesh: We have started in tier 2, but it is mapped to the urban centres.
Taneja: I would agree with that. I think most banks in India, even those doing well, is a metro or urban centric model right now. The individual in the semi-urban or rural area who has wealth to be managed has different views, has different needs and different expectations. They have different timelines. They may not need the returns in two years.
Manoj: Any other suggestions on using the Web or using any technology? Asha: I think more than the banks using the web, customers have begun using it. Many of the students who approach us for a loan say that their seniors put it on Facebook, or blog and got to know about the brand

of production of processed raw sugar would be Rs 22.50 per kg. With this processed sugar, total sugar production will be about 6.3 lakh tonnes in SS 2

of production of processed raw sugar would be Rs 22.50 per kg. With this processed sugar, total sugar production will be about 6.3 lakh tonnes in SS 2009-10 - more than 40% over the year.
Current sugar realisation is in the range Rs 25 per kg and prices are likely to remain firm in the coming quarters with an upward bias owing to deficit in India. Due to huge import demand from India and lower sugar production in all major sugar producing coun­tries, except Brazil, where production would be marginally higher, international prices are also expected to remain firm.
Balrampur Chini Mills sold 2.03 lakh tonnes of sugar in Q3 ofFY 2009 (1.411akh tonnes in Q3 of FY 2008) and had sugar in­ventory of2.28lakh tonnes valued at Rs 19.26 per kg end June 2009. It plans to sell about 1.5 lakh tonnes of sugar in Q4 September 2009 of FY 2009 and expects to have 0.781akh tonnes of sugar end September 2009. The company had molasses inventory of 4.6 lakh quintals and alcohol inventory of 1.35 crore liters val­ued at Rs 15.5 per liter end June 2009. Power production is expected to be about 50 crore units (49.49 crore units in SS 2008-09) and realisation is likely to increase to at least Rs 4 per unit in SS 2009-10. The company has bid for ethanol supply contracts and expects the contract price to be Rs 26-Rs 27 per liter.
Sterlite Industries
Expansion mode
Expects to complete the Asarco acquisition by August 2009
Sterlite /ndustries held a cor!frrence calion 29 July 2009 post announcing its results .fOr the quarter ended June 2009. Executive f/ice Chair­man Navin Agrawal with other senior man­agement members addressed the call and dis­cussed the business developments and fUture plans if the company. Highlights ifthe concall:
Consolidated revenue of Sterlite Industries dipped 21 % to Rs 4579 crore in the June 2009 quarter (Q I ) of fiscal ended March 20 I 0 (FY 20 I 0) over the June 2008 quarter. The operating profit margin declined 22.3% from 32.1% in QI ofFY 2009. The net attribut­able consolidated group profit was 42% lower at Rs 672.66 crore. Gross consolidated debt was Rs 8200 crore and consolidated cash and equivalent Rs 18536 crore.
Sterlite Industries sold surplus power in the commercial power market following the closure of its aluminium smelter at its BharatAluminum Company's (Balco) plant
I in Korba, Chhattisgarh. It has no plans for restarting the Balco plant I in near future and will continue to sell surplus power. The company is considering to revive its 1,980­MW captive power plant in Punjab. How­ever, it will take at least 30-334 months to start the first unit.
For Asarco, a copper mining, smelting and refining company in the United States, Sterlite Industries has revised the bid to US$ 1.87 bil­lion from US$ 1.7 billion earlier. It expects the takeover to be completed by late August 2009 as the company has support from creditors, management and unions. After the Asarco ac­quisition, the group (Vedanta) will have 1.05­million-tonne copper smelting capacity amounting to 7%-8% of the world's total re­fmed copper production, making it the third largest player global. Sterlite Industries is per­suading the Indian government to sell its stake in Balco and Hindustan Zinc to the company. It is optimistic about this considering the di­vestment plans of the government.
The unit cost of production of aluminium at Balco increased to US$ 1290 per tonne in Q I ofFY 20 10 as against US$ 1177 per tonne in the March 2009 quarter. This is, however, lower than the average cost ofUS$ 1385 per tonne in Q4 March 2009 of FY 2009. The cost increased due to the appreciation in the rupee against the dollar and shutdown of Balco's plant I. However, it expects that once the bauxite supply from the Niyamgiri mine in Orissa starts, which is expected by De­cember 2009, the cost of providing aluminium will reduce to sub-US$ 900 per tonne, with less than US$ 600-650-per-tonne smelting cost and US$ 250-per-tonne alumina cost. Then the company will be among the lowest
cost producers in the world.
Construction of the new 3,25,000-tonne aluminium smelter and the 1,200-MW cap­tive power plant at Balco are progressing well and are on schedule for the first metal tapping from October 20 I O. The second phase comprising 2,50,000 tonnes of Vedanta Aluminium's 5,00,000-tonne alu­minium smelter in Orissa is in the process of commissioning. It will be completed by end FY 2010. The construction of the new 1,25,000-tonne Jharsuguda II aluminium smelter project in Orissa is progressing well, with more than 50% of civil works com­pleted. Overall, the project is on schedule for phased commissioning from March 20 I O.
Construction on the new three million­tonne Lanjigarh alumina refinery expansion project in Orissa is in full swing. It is on schedule for completion by mid 2011. Work on the 6,00,000-tonne de-bottlenecking project at the Lanjigarh alumina refinery is also progressing on schedule for completion by March 20 I O. Construction at the 2, I O,OOO-tonne zinc smelter and the I,OO,OOO-tonne lead smelter at Rajpura Dariba in Rajasthan is progressing. They are on schedule for completion by mid 20 I O.
Sterlite Energy achieved financial clo­sure of its 2,400-MW power generation project at Jharsuguda in Orissa. The project is on schedule for commissioning its first unit in Q3 December 2009 of FY 20 I O. The other three units will be commissioned after a quarter. The company has part fuel link­age for the first unit and expects to get fuel linkage by then for the other as well.

The low fee income was due to reduced corporate activity in the system. Operating expenses declined 19% to Rs 1546.02 crore, with the cost to average

The low fee income was due to reduced corporate activity in the system. Operating expenses declined 19% to Rs 1546.02 crore, with the cost to average assets coming down to 1.6% from 1.9% in the corresponding previous quarter.
Total consolidated income was flat at Rs 14615.06 crore. Consolidated profit after tax increased 68% to Rs 1035.26 crore (US$ 216 million), driven primarily by the higher profit after tax offCICI Bank and a sharp reduction in losses of ICICI Prudential Life Insurance Company (ICICI Life). Consolidated loan book stood at Rs 2.4 trillion compared with Rs 2.3 trillion a year ago.
Gross non-performing assets (NPA) rose II % from Rs 8511.36 crore in the June 2008 quarter and declined 2% from Rs 9649.31 crore in the March 2009 quarter to Rs 9416.32 crore in the quarter ended June 2009. Net NPA increased 14% from Rs 4033.57 crore over the year and a marginal 1% to Rs 4607.84 crore in the June 2009 quarter from Rs 4553.94 crore in the June 2008 quarter. The percentage of gross NPAs increased from 3.72% over the year and 4.32% over the quarter to 4.63%. On the other hand, percentage of net NPAs moved up 1.8% over the year and 2.09% over the quarter to 2.33% in the quarter ended June 2009. Increase in the NPA ratio was due to reduction in customer assets.
Reflecting the moderation in systemic credit offtake and its conscious strategy of risk containment, the standalone loan book of rerCI Bank decreased 12% to Rs 198102 crore (US$ 41.4 billion) end June 2009. The dip in the loan book was largely due to reduction in unsecured loan portfolio including personal loans, credit card, and two-wheeler loans. The retail loan book stood at Rs 96000 crore.
Total deposits declined 10% from Rs 234461 crore to Rs 210236 crore (US$ 43.9 billion) end June 2009 over end June 2008, with wholesale deposits coming down sub­stantially. Total assets dipped 7% to Rs 367418.92 crore. There was improvement in the current-account-savings-account (CASA) ratio to 30.4% end June 2009 from 28.7% end March 2009 and 27.6% end June 2008 on increase in the savings-account de­posits. Capital adequacy as per the Reserve Bank of India's Basel II norms was 17.4% end June 2009 as against 15.5% end March 2009. Tier-I capital adequacy was 13.1%. Book value of the share stood at Rs 451 per share end June 2009 compared with Rs 426 per share end June 2008.

The provision for contingencies in­creased 67% to Rs 1323.65 crore. About Rs 200-crore provisions were on account of re­structuring of assets, which were predomi­nantly in the power sector. ICICI Bank wrote off of Rs 1100 crore on non-perform­ing loans. Of this, Rs 450 crore was sold to the Asset Reconstruction Company (Arcil). Cumulative loans sold to Arcil stood at Rs 3570 crore end June 2009. The bank started the fiscal with an opening balance of Rs 5900 crore of restructured loans, of which Rs 3200 crore of loans were upgraded in the quarter. On net addition ofRs 1450 crore in the quar­ter, net total restructured assets were Rs 4150 crore end of June 2009. Net restruc­tured loans were Rs 4146 crore end June 2009. There were no new pending applica­tions on restructuring. The next two-three quarters will see some upgradation in re­structured loans. Credit derivative exposure stood at Rs 5405 crore end June 2009. In the UK, rerCI Bank carried a net mark-to­market write-back ofUS$ 48.5 million (post­tax) in reserves in QI ofFY 2010.
The June 2009 quarter witnessed sharp reduction in losses of ICICI Life to Rs 36 crore compared with a loss of Rs 322 crore in the corresponding previous quarter. This was due to increase in new business pre­mium. rClcr Bank expects the life business to break even by 20 I I.
Going forward, ICICI Bank's strategy is to revolve around 4 Cs: capital conserva­tion, credit monitoring, CASA improvement and cost control. The bank is targeting a balancesheet growth of 5% for FY 20 I O. It will follow caution in unsecured lending as this has contributed to deterioration in its asset quality. The prime focus will be on home loans and corporate lending. ICICI
Bank is planning to grow its home loan and corporate lending portfolio by 20%. Despite a target of adding 580 branches, the bank is confident of keeping its cost under control for the full year FY 20 I O. It is not planning to infuse capital into any of its subsidiary, except around Rs 300 crore in ICICI Life in FY 20 I O. The bank is also aiming to take the CASA ratio up to 33% in FY 2010 com­pared with 30% end June 2009.
Balrampur Chini Mills
Sitting pretty
Projects 40% higher sugar production in FY 201 0 over the previous year
Balrampur ChiniMills conducted a cOl!ler­ence calion 29 July 2009 to discuss its ji­nancial perfOrmance and ./itture outlook jOr the third quarter ended June 2009. Manag­ing Director f/ivek Saraogi addressed the calL Highlights o/the concal!·
With a noteworthy performance of the sugar division, whose revenue was up 104% to Rs 480.94 crore, contributing 86% of total revenue, in the June 2009 quarter over the June 2008 quarter, the overall rev­enue ofBalrampur Chini Mills was up 70% to Rs 538.07 crore. The revenue of the sugar division was higher due to increasing in sugar realisation (sugar prices rose 59% to Rs 23.06 per kg in the quarter) as well as higher sugar sales volume: 2.03 lakh tonnes as against IAI lakh tonnes in Q3 June 2008 of the fiscal ended September 2008 (FY 2008). The performance of the distillery and cogeneration business was, however, sluggish over the year due to lower cane crushing and, thus, lower production. The operating profit margin was at 24.2% as against 26.4% in Q3 ofFY 2008, resulting in 55% higher operating profit at Rs 130 crore. Profit after tax was 293% higher at Rs 66.29 crore.
Sugar recovery is expected to be 90-100 basis points more than 10% in the sugar sea­son (October-September) (SS) 2009-1 0 from 9.14% in SS 2008-09. Further, yield from cane is also expected to be higher. As a com­bined impact of both these factors, Balrampur Chini Mills expects sugar production to be about 5.5 lakh tonnes (excluding that from processing imported raw sugar) in SS 2009­10 as against 4A21akh tonnes in SS 2008-09.
Balrampur Chini Mills has contracted to import 85,000 tonnes of raw sugar and will process it in the next crushing season to start mid November 2009. The expected cost

Gujarat State Petronet

Gujarat State Petronet (GSPL) organtsed a conference calion 26 July 2009. AssIstant General Manager Finance Mantsh Seth and General Manager Commercial Ravindra Agrawal addressed the call Highlights:
After a dismal performance in Q3 Decem­ber 2008 and Q4 March 2009 of fiscal ended March 2009 (FY 2009), GSPL bounced back in Q1 June 2009 of FY 2010. Net profit grew 147% to Rs 80.49 crore and net sales 76% to Rs 210.82 crore. The company sup­plied around 25 million standard cubic metres per day (mscm) per day of gas vol­ume in QI ofFY 2010 as against 12.8 mscm per day of gas in Q4 FY 2009.
The improvement in gas volume was accompanied by two factors. The increase in naphtha price removed the mismatch in gas and naphtha prices. This had delayed the renewal oflong-term gas contracts, which were done in the quarter. Thus, volume spurted. Second was the pent-up demand in the spot market and new supply coming from Petronet LNG and Reliance Industries' (RlL) Krishna-Godavari (KG) D6.
GSPL supplied around seven mscm per day from RlL's KG basin. Of this, around two mscm per day was supplied to RlL for testing. RlL was also supplied around five mscm per day for its Jamnagar refmery from Petronet LNG. Around 1.5-2 mscm per day of gas was supplied to Torrent Power. Gradu­ally, this gas will stabilise to around four mscm per day during the course ofthe year. More clarity on the volume of gas exclu­sively for RIL and for other players is awaited from regulatory authorities.
By July 2009, GSPL shipped around 30 mscm per day of gas. The key sources of gas are around 12 mscm from Petronet LNG, 10 mscm from RIL's KG D6, four mscm from Cairn India's Panna-Mukti­Tapti gas field, and the rest fi;om other mis­cellaneous sources. Overall, with more gas coming from RIL's KG basin and Petronet LNG, the company aims to ramp up vol­ume to 40 mscm per day by year end. Next year, it expects to increase supply to more than 45 mscm per day, with growth mainly from the KG gas basin.
The average tariff stood at Rs 915 per
II
trillion cubic metre (tcm) in the quarter. This, however, includes a combination of long­term and spot-price contracts and, hence, cannot be considered as benchmark tariff.
No take-or-pay revenue accrued in the quarter as all long-term players picked up the volume and adhered to the contract, un­like in Q4 of FY 2009, when they carried higher inventory of low-cost naphtha and went for take-or-pay clause. RlL and Tor­rent Power's take-or-pay clause continues to be in litigation. Take-or-pay clause stipu­lates that the customer takes the fixed quan­tity of gas or else has to pay a fix price, irrespective of offtake.
GSPL added around 100 km of pipeline connecting Rajkot and Jamnagar in Q4 ofFY 2009 and Bhabdhut and Gana in Q 1 of FY 2010. With this, the current length of pipe­line in Gujarat is at around 1,400 km. Fur­ther, three more pipelines of total length of around 450-500 km connecting Anjar-Morbi­Mudra, Darud-Pipavav and Anand-Rajkot will be laid before FY 2011. This involves a capex of around Rs 1500 core.
GSPL's current gross block stands at Rs 2700 crore and debt around Rs 1200 crore. Debt will be of around Rs 1900 crore by year end, given the capex required for the expansion of the network. These new pipe­lines will transport around 10 mscm per day of gas once volume is ramped up. The incre­mental gas will be from Petronet LNG and RlL's KG gas basin.
A lot will depend on the spot gas require­ment and volume of gas sold for GSPL to maintain the operating profit margin of around 94% (achieved in QI of FY 2010). However, margin of around 89% (87% re­ported in FY 2009) is very much sustainable.
1(10 Bank Focus on 4 Cs
Capital preservation, credit monitoring, CASA improvement and cost control to boost margin
ICICI Bank conducted its conference calion 25 July 2009 to dISCUSS its first quarter re­sults ended June 2009. The call was ad­dressed by CFO N S. Kannan and Deputy CFO Rakesh Jha. Highlights oJthe call'
1CICI Bank's standalone net interest in­come dipped 5% to Rs 1985.26 crore, with advances falling 12% in the quarter ended June 2009 over the June 2008 quarter. However, net profit rose 21 % to Rs 878.22 crore on jump in other income by 36% to Rs 2089.88 crare. Net interest margin stood at 2.4% compared with 2.6% end March 2009 owing to decline in advances and ex­cess liquidity maintained in the balance sheet. Treasury income recorded a profit of Rs 714 crore compared with a loss of Rs 594 crore in the corresponding previ­ous quarter. Fee income for Q I June 2009 of fiscal ended March 2010 (FY 2010) stood at Rs 1319 crore - same as that of the March 2009 level.

Meanwhile, the buoyant secondary

as on 31 July 2009. From a three-year closing low of
8,160.40 on 9 March 2009, the benchmark index has risen 7,509.91 points, or 92.02%, as on 31 July 2009.
Indian stocks are trading at around 17.5 times one-year forward earnings, lower than the valuations of the main in­dexes in Shanghai and Hong Kong but well above the level of Brazil, Russia, South Ko­rea and Indonesia. Investors
continue to bet that the deci­sive mandate for the Congress-led United Progressive Alliance (UPA) government in parliamentary election in May 2009 will help it pursue economic reforms such as PSU divestment, hike in foreign direct in­vestment ceiling in insurance, liberalisation of the banking sector, education reforms and tax rationalisation over the coming years. Reforms will help boost economic growth and corporate earning.
Another reason why foreign funds are bullish on India is that domestic consump­tion makes up almost 60% of India's economy. In the current low-growth world, India's 6.7% growth in the year ended March 2009 (FY 2009) was quite good. The big­gest positive for India is the strong demo­graphic profile and entrepreneurial talent. Seventy per cent ofIndians will be of work­ing age in 2025. Spending on infrastructure will also boost growth over the medium term. The government aims to raise investment in infrastructure to 9% of GDP by end of FY 2012, from less than 6% now. A strong growth in the economy is also necessary for poverty reduction.
Meanwhile, the buoyant secondary
market has revived the initial public offer (IPO) market. The recently concluded IPO of power generation firm Adani Power was subscribed 21.64 times. State-run hydropower pro-
ducer NHPC hits the capi­tal market with an IPO on 7 August 2009. As per Assocham, companies in in­frastructure, texti les and other sectors are planning to raise over Rs 16000 crore through IPOs in the remain­ing months of this fiscal.

The SSE Sensex jumped 925.39 points, or 6.27%, in the fortnight and rose 1,314.56 points, or 9.15%, in the year to 31 July 2009

stimulus measures like cuts in excise du­ties helped India Inc report better-than­expected Q I June 2009 results. A likely recovery of the economy may aid the top line growth of India companies in the coming quarters. On the flip side, the re­cent surge in commodity prices and a likely rise in interest rates in 2010 may cap bottomline growth.
Copper prices jumped 15% on the Lon­don Metal Exchange in July 2009 - their biggest monthly gain since March 2009, when prices rose about 20%. Yet, those com­panies with pricing power and price escala­tion clause on their contracts with custom­ers will be able to protect margin.
In the near term, investors will watch the progress of the monsoon and its impact on the agricultural sector. India's rural popu­lation accounts for a large share oftotal con­sumption. About 17.5% of the gross do­mestic product comes from agriculture and related industries. Insufficient crops will also add to inflation pressure.
After a solid surge this year, it is likely that the Indian market may consolidate in the coming days. The Sensex is up 6,023 points, or 62.43%, in calendar year 2009

The SSE Sensex jumped 925.39 points, or 6.27%, in the fortnight and rose 1,314.56 points, or 9.15%, in the year to 31 July 2009

Meteorological Department said on 29 July 2009. On the
flip side, water levels in India's 81 main reservoirs rose to 35% of capacity in the week to 30 July 2009, up from
23% a week earlier and 31 % a
year ago. This bodes well for
irrigation in the forthcoming rabi (October-March) season and for hydropower genera­tion. Union farm minister Sharad Pawar said on 31 July 2009 summer-sown crops such as sugarcane, oilseeds and
cotton have covered more than half the nor­mal area, and sowing is likely to rise. He predicted weak monsoon rains would have a marginal impact on inflation.
Firm global markets aided the rally on the domestic bourses. World stocks rallied to a fresh 9-1/2- month high as favorable corporate earning fueled recovery hopes. Orders for US durable goods, excluding au­tomobiles and aircraft, unexpectedly rose in June 2009, signaling manufacturing may ex­pand in the second half of the year. Chinese stocks recovered after a 5% slide on 29 July 2009 triggered by speculation the central bank was poised to order lenders to set aside larger reserves. The People's Bank of China signaled no reversal of its moderately loose monetary-policy stance, aimed at spurring growth in the world's third-biggest economy.
World equity funds garnered US$ 9.5 billion in the week ending 29 July 2009, according to latest data from global fund tracker EPFR Global. The inflow was the highest since June 2008. Emerging markets continued to be the darling of investors, with dedicated BRIC (Brazil, Russia, India and China) equity funds seeing net inflows for a 19th straight week. India equity funds took in a high US$ 211 mil-
lion in the in the year to the
most recent week, while China
and Greater China stock funds
saw US$ 711 million in fresh money. Foreign funds have bought a massive Rs 35369.90 crore more shares than they have sold in calendar 2009 so far in India.

Robust global risk appetite, improved 01 June 2009 results and signs of economic recovery send stocks surging

been extended. Producers of natural gas from coal-bed methane blocks would also be ex­tended tax breaks.
Some companies that announced spectacu­lar results included cement maker ACC, trac­tor maker Mahindra & Mahindra, diversified Grasim Industries, drug maker Dr Reddy's Laboratories and two-wheeler major Hero Honda. India's biggest commercial vehicle maker by market share Tata Motors surprised the market with a 58% growth in the bottom line as against market expectation of a sharp fall. The strong result sent the stock surging.
India's biggest commercial bank by branch network State Bank of India (SB!) also cheered the market with a stronger-than-expected 42% growth in the bottom line, sending the stock up nearly 10% in just two days after the result hit the market during trading hours on 29 July 2009. India's biggest small-car maker by mar­ket share Maruti Suzuki surged to a record high after reporting a forecast-beating 25% growth in the bottom line in QI June 2009. The stock galloped 19.2% to Rs 1413.25 in the fortnight ended 31 July 2009.
However, India's biggest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) disappointed the street by reporting a larger-than-expected 12% fall in net profit due to sharp decline in refining margin, causing a near 4% slide in the stock on 27 July 2009 after it announced the results after trading hours on 24 July 2009.
Meanwhile, some top Indian companies raised large sums of money that will help
fund expansion and reduce debt. On 16 July 2009, copper major Sterlite Industries raised US$ 1.5 billion through American depository shares (ADS). Parent Vedanta picked up US$ 500 million. On 21 July 2009, Tata Steel raised US$ 500 million through issue of glo­bal depository receipts (GDR) in London. This is the biggest issue on the London Stock Exchange so far tills year and, in fact, exceeds the total raised through all new issues in the first six months on the London bourse.
On the same day, wind turbine maker Suzlon Energy raised US$ 202 million through issue ofGDRs and convertible bonds (CBs). Another Tata group major Tata Power took the opportunity to tap the same market. The company raised US$ 335 million in a GDR offering. The target was US$ 250 million, although the company had shareholder ap­proval to go up to US$ 500 million.
The latest economic data indicated im­proving economic activity. The six infra­structure industries - crude oil, refining, coal, electricity, cement and steel - to­gether grew at an annual rate of 6.5% in June 2009, faster than the previous month's rise of2.8%, data showed on 23 July 2009. The infrastructure sector accounts for 26.7% of India's industrial output.
But weak monsoon remains a cause of concern. After being above normal in the preceding two weeks, the monsoon rains were 18% below normal in the week to 29 July 2009. Total rainfall since the beginning of June was 19% below average, the India

Good 01 results cheer

Better-than-expected QI June 2009 results from most top line companies, signs of eco­nomic recovery, buying by foreign funds and firm global stock markets bolstered bulls as the barometer BSE Sensex struck its highest level in more than 13 months_ At its quar­terly policy review on 28 July 2009, the Re­serve Bank of India (RBI) kept key short­term interest rates unchanged at their histori­callow levels, adding to the positive mood_
The central bank, however, raised its inflation forecast for the year to 31 March 20 J 0 to around 5% from an estimate of 4% in April 2009, citing elevated food and com­modity prices.
A day before the RBI's monetary policy review, Union finance minister Pranab Mukherjee announced after trading hours on 27 July 2009 tax breaks for industrial park schemes and developers of real estate and road projects to stimulate the economy and lift growth to 8%-9%_ He also prom­ised I % subsidy on home loans up to Rs 10 lakh, when the overall cost of the house does not exceed Rs 20 lakh_
In another measure that could provide a boost to the realty sector, the Centre has allowed developers of housing projects a tax holiday under Section 80 IB(lO) of the Income Tax Act, 1961, on profit from projects approved between I April 2007 and 31 March 2008. The benefit is subject to a condition that the projects are com­pleted on or before 31 March 2012. A tax holiday f6r food processing firms has also