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Today's Hot Stories - April 20, 2010

10 Headlines for Today

(1) The Chhattisgarh government has banned teachers and students from using mobile phones
(2) PM should give reasons for accepting Tharoor's resignation: BJP
(3) US to remove all its forces from Iraq by 2011: US Vice President Joe Biden
(4) BSNL employees on strike to protest voluntary retirement and divestment proposals
(5) The Reserve Bank of India said unchecked price rise can spoil India’s long-term growth party
(6) Computer services provider IBM has reported 13 per cent growth in net income
(7) IPL: 3 – Kolkata thrash Mumbai by 9 wickets
(8) US veteran Jim Furyk wins Heritage Classic Golf tournament in playoff
(9) English Premier League - Liverpool beat West Ham United and won by 3-0.
(10) Flights to European destinations of Air India, Jet and Kingfisher Airlines remained cancelled

5 Stories for Today

(1) Opposition wants ban on IPL and JPC probe into funding
(2) Karzai to visit US in May, Hillary to attend Kabul conference
(3) Indian Banks not to hike interest rates immediately after RBI steps.
(4) Global markets mostly higher after US rebound
(5) RBI hikes short term rates and CRR by 25 basis points

(1) Opposition wants ban on IPL and JPC probe into funding

An unrelenting Opposition mounted a sharp attack in the Lok Sabha on the United Progressive Alliance government on Monday, demanding a ban on the Indian Premier League and the setting up of a Joint Parliamentary Committee to probe the sources of funding of the cricket teams.

This came a day after Shashi Tharoor resigned as Minister of State for External Affairs over his controversial role in the Kochi IPL franchise.

The government said “no guilty or wrongdoer” would be spared and assured the House that all aspects of funding would be probed.

While the Opposition parties slammed the IPL format of the game, alleging that it was a “betting and gambling ring” where black money was being “white-washed,” Union Finance Minister Pranab Mukherjee said “appropriate action as per law” would be taken if any wrongdoing was found in the manner of funding.

“The department concerned has already started investigation. All aspects, including sources of funding and routes through which the funds arrived, would be looked into. No guilty or wrongdoer will be spared,” Mr. Mukherjee said.

His response came after the Left parties, the Bharatiya Janata Party, the Rashtriya Janata Dal, the Samajwadi Party, the Janata Dal (United), and the Bahujan Samaj Party alleged that the IPL tournament involved “laundering of blackmoney” and demanded that the government take over it. They also welcomed Prime Minister Manmohan Singh's decision to seek the resignation of Mr. Tharoor.

The IPL issue was raised as soon as the House assembled for the day. RJD leader Lalu Prasad, SP president Mulayam Singh and JD(U) leader Sharad Yadav demanded that the Centre ban the tournament.

Even as Speaker Meira Kumar appealed to them to allow question hour proceed peacefully, Mr. Sharad Yadav said: “The moot question is the IPL, and not Shashi Tharoor.”

Raising the matter during zero hour, CPI leader Gurudas Dasgupta said that while he welcomed Dr. Singh's decision to ask Mr. Tharoor to quit, the main issue related to the IPL. Alleging that the game involved “laundering” and “white-washing” of blackmoney, he said it was an “aberration” taking place right “under the nose of the Finance Ministry.”

Mr. Dasgupta termed the T20 format a “caricature” of cricket, which was only “maligning and diluting cricket, sending a message to budding players to go to 20:20 to earn huge sums of money.” “Players are bought like vegetables. Betting is taking place openly. It is not cricket, but an organised gamble.” He also pointed to reports that funds were coming from dubious sources in Mauritius and Dubai as well as from Swiss banks.

BJP's Deputy Leader in the Lok Sabha Gopinath Munde said the IPL was not set up to encourage cricket, but to make money. “It involves a lot of blackmoney.”

In the Rajya Sabha, the issue was raised by Shivanand Tiwari of the JD(U), who demanded that the funds of the IPL and the BCCI be confiscated.

(2) Karzai to visit US in May, Hillary to attend Kabul conference

In an "extremely important trip" to US next month, Afghan President Hamid Karzai will meet his American counterpart Barack Obama, while Secretary of State Hillary Clinton will fly to Kabul in July to attend an international conference, a top US official has said.

Karzai accepted Obama's invitation to Washington, which was extended to him during the US President's last month visit to the Afghan capital, Special US Representative for Pakistan and Afghanistan Richard Holbrooke said.

This would be Karzai's first trip, which is scheduled from May 10 to 14, to the United States in his second term and also under the Obama Administration.

Observing that the visit is going to be very intense, whole-of-government effort, Holbrooke yesterday said the Obama Administration is taking this trip very seriously. "Our number-one project right now is planning for that (Karzai's) trip."

Kabul Conference, as a follow up to the London conference held early this year, will be held on July 20, he said.

"That will be a conference hosted by the government of Afghanistan. It will involve a domestic portion and an international portion, and the international portion Secretary Clinton plans to attend, and other internationals will be coming as well," he said.

"That is an important conference, obviously. "Details will be extrapolated from the previous two. But it will be an affirmation of international support for the government, and it is the follow-on to the London conference," Holbrooke said.

The Special Representative noted that the next round of trilateral talks between the US, Pakistan and Afghanistan would be held between July and September.

The last of two trilaterals, held at the Presidential level, was organised in 2009 before the Afghan presidential elections in August.

(3) Indian Banks not to hike interest rates immediately after RBI steps.

Retail and corporate borrowers can breathe easy as bankers today said an immediate hike in lending rates is unlikely, although the RBI tightened monetary policy by raising key rates.

"There was no surprise in the policy as RBI's action was factored in by the market. Thus, there would not be any impact on interest rates and status quo would be maintained," Central Bank of India Executive Director Arun Kaul told.

Retail and corporate borrowers can breathe easy as bankers today said an immediate hike in lending rates is unlikely, although the RBI tightened monetary policy by raising key rates.

"There was no surprise in the policy as RBI's action was factored in by the market. Thus, there would not be any impact on interest rates and status quo would be maintained," Central Bank of India Executive Director Arun Kaul told PTI.

The RBI in its monetary policy for 2010-11 increased short-term lending and borrowing rates and the portion of banks' deposit with it by 25 basis points each, in a move aimed at controlling the inflation spiral without choking growth.

The RBI also said it expects inflation to come down to 5.5 per cent by this fiscal end from near ten per cent now.

The apex bank hiked its repo, reverse repo (overnight lending and borrowing rates) to 5.25 per cent and 3.75 per cent, respectively, while the Cash Reserve Ratio, or the portion of deposits banks park with RBI, to 6 per cent in line with analysts' expectations.

The hike in CRR, which will come into effect from April 24, will absorb Rs 12,500-crore excess cash from the banking system. Banks have already indicated that they may not pass on the increased cost to the borrowers immediately as liquidity still remains sufficient in the system.

"There wouldn't be any short term impact on interest rates as there is enough liquidity in the system and the credit offtake is subdued," said IDBI Bank executive director Sushil Muhnot.

According to Oriental Bank of Commerce Executive Director S C Sinha, RBI's steps would help in taming inflationary expectations. However, policy action would not translate into interest rate hike immediately.

Interest rates could go up after there is substantial pick up in credit, Sinha said, adding that it could happen in a couple of months.

According to RBI's Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks released yesterday, annual credit growth was 12.2 per cent -- half the pace it recorded last year.

"I don't see interest rates going up before July. At this point, there is abundant liquidity in the system and liquidity is coming from overseas as well," Yes Bank Managing Director Rana Kapoor said.

The policy action would result in cost of fund going up which would be absorbed by the banking system. There would be very gradual transmission of policy action on retail borrowers depending on the credit offtake during the course of the year, Kapoor added.

Royal Bank of Scotland country executive Meera Sanyal also said RBI's policy action would have limited impact as there is no dearth of liquidity in the system.

(4) Global markets mostly higher after US rebound

Most global markets rebounded modestly Tuesday, following Wall Street higher as financial stocks recovered from a sell-off prompted by the US government's fraud case against Goldman Sachs.

Many Asian and European benchmarks were up less than 1 percent, while oil regained some ground after a big tumble. The dollar strengthened against the yen and the euro.

Markets worldwide retreated after Goldman Sachs & Co. was charged with fraud for its dealings in subprime mortgage securities in the years before the global financial crisis.

Anxiety about the financial sector's prospects, however, was tempered somewhat after Citigroup Inc. reported a surprise first-quarter profit Tuesday. Goldman Sachs is set to report its quarterly results later in the day.

John Mar, head of sales trading at Daiwa Capital Markets in Hong Kong, said heavy selling in Asia after the Goldman news may have been overdone.

``What impact does it really have on this part of the world? I view it as an excuse to take profits,'' Mar said. ``The outlook is still fairly positive _ corporate earnings have been good, the economic news is still improving, with the worst behind us in the U.S.''

Europe followed Asia, with benchmarks in Britain, Germany and France adding about 0.5 percent or less. U.S. futures pointed to mildly stronger open on Wall Street Tuesday. S&P futures were up 1.2 points, or 0.1 percent, at 1,196.80.

Hong Kong's Hang Seng index rose 1 percent to 21,623.38 and South Korea's Kospi was up 0.8 percent at 1,718.03.

Markets in India, Australia and Taiwan also gained. Thailand's key stock measure surged more than 3 percent _ bouncing back from a sell-off triggered by deadly clashes between protesters and soldiers just over a week earlier.

Bucking the trend, Japan's Nikkei 225 stock average turned negative later in the session, shedding 0.1 percent to 10,900.68.

Chinese shares, down nearly 5 percent the day before after government took more action to restrain property prices, fell early in the session before stabilizing to close flat. The main Shanghai index finished virtually unchanged at 2,979.53.

Banking shares rose in Asia, with Japan's Sumitomo Mitsui Financial Group Inc. up 1.1 percent and National Australia Bank ahead by 2.8 percent.

Benchmark crude for May delivery was up $1.03 at $82.48. The contract fell $1.79 on Monday to settle at $81.45.

In currencies, the dollar rose to 92.82 from 92.47 yen late Monday. The euro fell to $1.3475 from $1.3488.

Monday in New York, the Dow rose 73.39, or 0.7 percent, to 11,092.05. The Standard & Poor's 500 index rose 5.39, or 0.5 percent, to 1,197.52, while the Nasdaq composite index slipped 1.15, or 0.1 percent, to 2,480.11.

(5) RBI hikes short term rates and CRR by 25 basis points

The RBI on Tuesday hiked short-term lending and borrowing rates and the portion of money banks deposit with it by 25 basis points each, in a move aimed at controlling the inflation spiral without choking growth.

The apex bank hiked its repo, reverse repo (overnight lending and borrowing rates) to 5.25 per cent and 3.75 per cent, respectively, while the Cash Reserve Ratio or the portion of deposits banks park with RBI, to 6 per cent in line with analysts' expectations.

The hike in CRR, which will come into effect from April 24, will absorb Rs 12,500-crore excess cash from the banking system. Banks have already indicated that they may not pass on the increased cost to the borrowers immediately as liquidity still remains sufficient in the system.

RBI began exiting its accommodative policy stance in January by hiking CRR to 5.75 per cent and the short term rates by 0.25 per cent each in March.

"There wouldn't be any short term impact on interest rates. This has been already discounted by the market," IDBI Bank executive director Sushil Muhnot said.

Assuring that the policy actions would not halt the recovery, the RBI pegged the FY'11 GDP growth at 8 per cent. It also pegged the wholesale inflation, which is currently hovering close to the double-digits, at 5.5 per cent for FY' 11.

Warning that demand side pressures have clearly emerged in the economy, the central bank said its medium term objective is to contain the inflation at 3 per cent and reiterated that the policy will be tuned in a calibrated manner to support the recovery process.

"There is clear evidence of demand side pressures building up...with the recovery now firmly in place, we need to move in a calibrated manner in the direction of normalizing our policy instruments," the RBI said.

Announcing the policy measure, the central bank said it would closely monitor the price situation in the economy and would take further action as warranted.

The central bank, which has visibly shifted its policy priority to inflation from growth, also warned that with growth expected to accelerate next year, capacity constraints are likely to put additional pressure on prices and "there was a need that demand side inflation does not become entrenched."

On the other side, the huge Rs 4.57 lakh crore government borrowing is likely to pose a bigger challenge to the central bank to manage in the current fiscal as compared to the last year and expressed concerns that this may crowd out the private demand.




           
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