IDBI Bank raises $ 300 million through offshore bonds

State-owned IDBI Bank on Wednesday has raised Rs 1,828 crore or US $ 300 million through offshore bonds offering 5.05% coupon over five years. The bank will use the proceeds at their Dubai branch only. 

"Our issue was oversubscribed by seven times," said N S Venkatesh, head - treasury at IDBI Bank. "We collected about 2.02 billion as against the stipulated size. We have refunded the oversubscription. There is a huge appetite for Indian securities." 

As per initial guidance IDBI Regulation S bonds were initially proposed to be priced at 370 basis points over the five year US Treasury rate. But, the final price was derived at 350 over US Treasury, which is at 1.55%. This was due to higher subscription demand. The lender needs not to take any hedging as it is a natural hedge as funds will not be brought back to India.Investors from Asia, Europe and Middle East have invested in the IDBI Bank bonds. The bank has planned to raise about US$ 5 billion under the medium term notes or MTN of which it has already exhausted US$ 3.2 billion. 

US Regulation S is a securities offering, both public and private, which is made by an issuer outside of the United States. 

RBI allows more banks to import gold under 80/20 scheme

Easing some restrictions on inward shipments of gold, the Reserve Bank of India (RBI) has allowed more banks, including Axis Bank and Kotak Mahindra Bank, to import gold under the 80/20 scheme. Till now, only six banks and three financial institutions were allowed by the central bank to import gold under the 80/20 scheme.

Gold is the second largest import item for India after crude oil and is mainly utilised to meet the demand of jewellery industry. The government had taken various measures like high customs duty of 10% and 80/20 rule to curb gold shipments to check country’s widening current account deficit (CAD). Under the 80/20 scheme, which was introduced in August last year, nominated agencies could import gold on condition that 20 percent of the shipment would be exported and the remainder would be kept for domestic use.

Meanwhile, the government’s measures to contain gold imports have started yielding results as imports of gold and silver declined by 70% to $1.6 billion during first eleven months of current fiscal from a year earlier. India’s gold import is likely to come down to around 550 tonnes in FY13 from 845 tonnes in FY13 due to these restrictions. Contracting India’s gold imports also helped to contain the current account deficit (CAD) to $31.1 billion (2.3% of GDP) during the April-December FY14 period as compared to $69.8 billion (5.2% of GDP) reported in the same period of previous fiscal year. The CAD is expected to narrow to around $50 billion during the current financial year.

SKS Microfinance strengthens on completing Rs 26.73 crore securitization

SKS Microfinance on March 19 completed the tenth securitisation transaction of Rs 26.73 crore during the current financial year. With this, the total sum of securitisations completed for FY14 (year-to-date) is Rs 1,377.94 crore, the company said in its filing.The entire pool qualifies for priority sector treatment as per RBI's priority sector lending guidelines.

The pool is rated A1+ (SO) by a leading rating agency signifying a very strong degree of safety regarding timely payment of financial obligations. Such instruments carry the lowest credit risk.

Deposits continue to outpace credit growth; up 15.55%: RBI

Bank deposits continued to outpace credit growth, clipping at 15.55 percent year-on-year to Rs 7,692,309 crore as on March 7, according to RBI. Deposits of commercial banks stood at Rs 6,657,109 crore during the same period last year, according to RBI fortnightly data released today.

Meanwhile, credit grew at 14.65 percent year-on-year to Rs 5,937,249 crore as on March 7, as against Rs 5,178,577 crore in the same period last year. The RBI's estimate of the credit growth for the current fiscal is 15 percent, while for deposits it is 14 percent. During the period, the time deposit grew 15.70 percent at Rs 6,989,150 crore as against Rs 6,040,646 crore in the same period last year. Demand deposit rose 14.06 percent to Rs 7,03,162 crore from Rs 6,16,463 crore in the year ago period. During the fortnight ending February 21, deposits grew at healthy 16 per cent year-on-year to Rs 7,605,171 crore as against Rs 6,565,137 crore during the same period last year, according to the data. In previous fortnight, bank credit grew at 14 percent year-on-year to Rs 5,861,736 crore as on February 21, as against Rs 5,127,264 crore in the same period last year.