RBI shelves credit derivative

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RBI shelves credit derivative introduction

On 19th June, 2008, RBI postponed the introduction of credit derivatives in view of the volatile international financial markets. Credit derivatives are bilateral negotiable contracts, which allow its users to hedge the risk exposure. These are a category of financial assets. The amount of Credit risk is an important determinant of the price of a credit derivative.

Industry analysts have hailed RBI's decision as an appropriate one under the prevalent volatile market situation abroad.In the present situation, it has become extremely tough to formulate an accurate risk estimation. So it is equally difficult to properly price the derivatives contracts.As per industry analysts the Indian derivative market is a 'shallow' one. It is mostly the private and foreign banks, which dominate this market.

Indian Corporate Bigwigs playing it safe

Indian corporate players seem to be staying away from any fresh debt issuance for the time being. The industry is wary of any further tough stance from the RBI, for containing the highest inflation faced by the country in the last 13 years.Inflation in the country has already attained double digit figures. The increasing fuel prices have further contributed to the financial mess. As warned by the Finance Minister the country is in for some strict anti-inflationary measures.The RBI has already increased the key lending rate and the CRR. RBI aims to sop up the excess liquidity from the system. This will in effect augment the borrowing cost. The business companies are waiting for the situation to stabilize. Tight cash conditions imply that potential debt issuers would have to offer higher interest rates, which will be dearer for the company.

Societe Generale expansion on anvil in India

France based bank Societe Generale is planning to expand its private banking network in India. The bank is set to double its staff strength. Societe Generale is targeting the 'nouveau riche' segment of the Indian population as its prospective client base. The bank plans to expand its operations in around ten Indian cities. At present Societe Generale, India operates from offices in New Delhi and Mumbai. Liberalization of India's financial market has generated the scope for accelerated wealth accumulation in the country. Societe Generale eyes to tap this resource base.Increased wealth accumulation by a cross section of the Indian population and the general policy deregulations have made India a favored business destination for international banks.

Scotiabank forges relationship with HDFC, India

Scotiabank will be shortly signing a formal agreement with HDFC Bank, India. This agreement will enable Scotiabank to expand its range of financial services, extended to the Indian immigrants to Canada.

The proposed agreement between the two banking majors will provide Scotiabank with a unique leveraging position in the market. As per Sabi Marwah, Scotiabank's Chief Administrative Officer, Scotiabank will now be in a position to better serve the Indian immigrants to Canada. The bank's Canada based customers can also gain referral to HDFCs banking services in India. The services rendered to clients under this agreement will be subjected to the existent local banking regulatory framework.

It may be noted that Scotiabank is a leading Canadian bank, which operates globally with a particularly strong presence in Latin America and the Caribbean.