Ethical hacking tutorials

Gearing up with gizmos: BS
From anti-theft devices to ?carputers?, your wheels can now have it all.Here are some numbers for you to
chew on: Last year, according to the National Crime Record Bureau, more than 40,000 cars, worth over Rs
150 crore, were stolen in the country. This piece of statistics is sure to worry all car owners, especially those
who plan to have a smarter car in the near future.
So, how can you make your car safer? If you are already rich enough to drive one of the high-end cars, in all
probability your car is already safe to a certain extent. For the rest, the ?thrill? of a smarter anti-theft device or
service can come at an extra cost. The Auto Expo 2010, which will conclude today, offers several solutions
in this regard. Of these, vehicle tracking has proved to be the biggest draw, partly due to the growing
consumer awareness about Global Positioning System (GPS) navigators.
Fleet management solutions company Trak-n-Tell, for instance, has systems that enable two-way
communication. It also has hidden microphones that allow you to listen to conversations in the vehicle ?
really handy if your vehicle is frequently driven by your teenaged kids, or if you want to keep an eye on your
drivers. At Rs 15,000, you can tune in to conversations while you aren?t even in the car and track your
vehicle too.
Then there?s MapMyIndia, which has taken GPS devices to a new level. The company has launched a GPS
system for superbikes. The system is waterproof and equipped with an FM transmitter, which allows bikers
to listen to navigation instructions on their FM receivers. The gadget also comes loaded with maps of 620
Indian cities, making riding across cities simple. Priced at Rs 18,990, it is ideal for those who cannot stay
away from their bikes.
Predictably, new-age car multimedia systems, too, have generated ample buzz at the Auto Expo. The
message is loud and clear ? in-car PC, or the ?carputer?, is going to be the next best thing to flaunt in your
car. These carputers are touch screen machines that double up as infotainment devices on which you can
have music, games and GPS ? all rolled into one. Many local manufacturers are betting on carputers, with
the price ranging between Rs 25,000 and Rs 40,000. Get these smart things if you see yourself surfing the
web on the road or watching movies on long drives, and want to avoid the hassle of carrying a laptop. If you
fret over missing out on your favourite YTV shows, then Dish TV has the answer to your worries. With its
newly-launched Personal Live TV, you can watch over 70 TV channels on the move. To get a single-screen
live TV in your car, you will have to fork out close to Rs 1.9 lakh, whereas a multi-screen system ? for a car
like Toyota Innova ? would cost close to Rs 2.5 lakh.
It is comforting to see BMW replacing the bewildering array of switches, knobs and buttons with the iDrive
technology. This basically bisects the car?s cockpit into the driving zone, which contains all controls essential
to driving, and the comfort zone, where a central console helps one regulate all the vehicle?s comfort
functions. Users can choose and change functions, right from communications to climate control to
navigation to entertainment, by pushing the console knob forward or back, or side-to-side (just like a
computer mouse). A monitor is positioned in front of the driver, just below his line of vision to the road
ahead.
The Mercedes S 500L, another scene-stealer at the Auto Expo this year, elegantly carries a split ?Comand?
system, which allows passengers to watch separate content (films, videos, etc) on their screens. And even
though the Porsche might have given the Expo a miss, its cars continue to be one of the snazzier ones. For
instance, if you had the Porsche Panamera, you would surely love to show off its automatic window blinds
that operate with just the click of a button. But, if you want to get this automatic feature, you will have to shell
out Rs 82,000.
Even the good old car audio has been overhauled to incorporate a new design. For instance, brands like
Blaupunkt have enlarged the screens on their audio systems, and that too with touch screens. These are
available in high-end models. Suited for SUVs or cars with bigger dashboards, these systems cost upwards
of Rs 40,000.
So, while there are gadget and gizmo galore for your wheels, you may just want to bear in mind the age-old
adage: All good things in life don?t come cheap!

Focus shifts to mid-caps: BL

Investment managers optimistic about first half of 2010, but nervous about second half.


Tightening of monetary policy may limit flow of cash to the stock market this year.
This week Dalal Street may see the Sensex move within a range, but mid-cap stocks may outperform.
Bulls have decidedly shifted their immediate focus out of blue-chips. However, this does not mean that any
good news and better-than-expected numbers would be ignored. Fund managers and investment advisors
are busy looking for room to direct funds. Stock picking in the mid-cap space appear to be gaining
momentum for the time being.
Globally, investment managers and strategist are optimistic about the outlook for the first half of 2010, but
nervous about the second half. Wall Street bankers are not hesitant in recommending fund flow towards
emerging markets.
According to fund flow tracker EPFR, global emerging markets and BRIC funds witnessed record inflow from
investors in the first week of 2010.
Except for Mr Jim Rogers, who has a negative outlook on the US economy and believes that the country is
heading for a currency crisis, an overwhelming majority (80 per cent in the latest Merrill Lynch survey)
among Wall Street fund managers expect the biggest economy would grow.
According to Mr Michael Hartnett, Chief Global Equity Strategist at Merrill Lynch: ?Investors are nervous but
optimistic heading into the new year and respondents (to a survey) are looking for a 7.7 per cent return from
global equity markets.?
Wall Street's most influential bank, Goldman Sachs, is bullish about a continuing rally this year in the US and
Europe, with some moderations. Goldman expects investors to be more daring and BRIC exposure is
among its three key themes.
RBC is also bullish about emerging markets, which it expects will produce strong return, particularly in the
first half. But it feels the second half of 2010 will be fraught with risks that could lead to a sizable market
downturn. It is in favour of a disciplined risk management. RBC has cautioned against a few key risks ?
vulnerability of the US economy to less than expected growth in private sector demand, dollar collapse in a
disorderly fashion, excessive fund flow into emerging markets creating a false sense of security and their
policy makers' inability to handle emerging situations in a market-oriented way.
Despite recovery, UBS feels risks are numerous. It suggests return to fundamentals, ?quality? stock selection
and fair valuation. Morgan Stanley's strategy team thinks the withdrawal of stimulus will be a dangerous
period for the US economy and markets. Market gains will be more difficult going forward and thus the risk-
reward ratio of the current market is substantially more negative than it was a few months ago. Credit Suisse
also believes that 2010 would be a difficult year for equities.
Though Deutsche Bank remains bullish in the near-term, especially the first quarter of the year, it is
increasingly cautious about the prospects in the later part of 2010. Sovereign debt and inflation are
considered as potential hurdles to the continuation of the global equity rally.
The outlook for local equity market may not be an easy one as phased-out policy tightening takes place
through the year. However, early part of the year is expected to see steady gains.

Finance Ministry to review loan recovery practices: BL
Undervaluation of properties under one-time settlement auctions.
Taking serious note of alleged irregularities in the one-time settlement (OTS) schemes for recovery of non-
performing loans of public sector banks and ?undervaluation? of mortgaged properties during auctions, the
Finance Ministry has called a fact-finding meeting.
The Ministry has also sought proposals ? including amending laws like the Debt Recovery Tribunal Act and
the SARFAESI Act ? from the banks to improve the system. It has also suggested that the PSBs should
make their OTS schemes more transparent.
The meeting, slated for this week, has been called on findings of some instances where PSBs have settled
the NPAs for much lesser amounts than the realisable value, official sources said.
Undervalued prices
Also, there have been incidents where mortgaged properties were auctioned off at ?undervalued? prices, the
sources said. The meeting is to find out whether there was any actual mischief or if it was due to practical
difficulties in finding a buyer to pay a higher value for the property as the registered value shown on paper
would have been lesser than its actual value, they added.
Therefore, to avoid misunderstandings, the Ministry has sought details from PSBs on the gaps between the
outstanding NPA amount and the settlement amount, as well as the practical difficulties in getting back the
loan amount or in realising the actual value of the mortgaged property.
?We want PSBs to run on sound principles. Besides, we are answerable to Parliament regarding their
finances. Therefore, we want to find out the efficiency of PSBs in loan recovery,? an official said.
The Government could also consider suggestions like amending the DRT Act to ensure faster recovery of
the loan amount. In this regard, through amendments, a limit could be set on the number of permissible
adjournments by these Tribunals while hearing cases.
Separate committee
Incidentally, to ensure more transparency in their OTS scheme, some PSBs have set up separate
settlement advisory committee headed by retired High Court judges.
The banks recover bad loans through channels such as DRTs, Lok Adalats and SARFAESI Act. According
to RBI data, the amount recovered as a percentage of the money involved was the maximum through DRTs,
followed by SARFAESI Act. The Ministry also wants to find ways to ensure higher recovery through
SARFAESI Act and Lok Adalats. Besides, the meeting will also discuss incidents of fraud where fake title
deeds of house, building or land were used to get finance from banks many times over on the same
immovable property.

Electric scooters lack power to boost sales: BS
Sales of electric scooters in the country have been sluggish even as manufacturers are trying to improve
their products and service network and match consumer expectations. K K Bhan, managing director of Ultra
Motor India, said the category was not growing as anticipated. ??Last year, the industry sold 110,000 e-bikes;
this year, it will be less than that. Volumes are small and margins are tight. India is a difficult market to
crack,? he said. The nascent industry has been battling on several counts. Though the running cost is low
(an eight-hour battery recharge consumes one unit of energy), the battery in an e-bike has to be replaced
every 20,000 km, or roughly every year, which costs Rs 8,000-10,000.?Consumers in India don?t think of the
battery as a fuel tank, but as a spare part,? said Bhan. Similarly, even though a customer, on an average,
may be driving 30-40 km a day, he is concerned about the limited range (60 km per charge) of these bikes.
The industry has been trying to address these issues. Electrotherm India, which sells YObikes brand of e-
bikes, has come up with batteries that offer a higher range and can be recharged in four hours, in half the
time it takes other bike batteries to recharge.
Similarly, Electrotherm has come up with a stronger chassis for its bikes as there?s a tendency in India to
ride double-seat, though these bikes can carry at best one adult and one child. Similarly, battery
maintenance is another big issue with these bikes.
The industry?s cause has not been helped by regional and fly-by-night operators, who have been importing
containers of bikes from China, and dumping them in the Indian market. Some of these bikes had quality
issues, which led to product failures and left consumers with a bad taste. At one stage, there were 300
players in the market. Today, only four-five serious players are left in the fray, many of whom have invested
Rs 80-100 crore in their venture. These include Hero Motors, which launched three bikes at the Delhi Auto
Expo, Electrotherm, BSA Motors, Ultra Motor (a British company), and Kolhapur-based Emmel Wheelers,
part of the auto component FIE Group.
They are all vying for the 8-million-per-annum two-wheeler market in the country. As there?s increasing
awareness on global warming, e-bike manufacturers hope consumers will shift to these battery-operated,
non-polluting varieties. What could trigger such a shift are incentives from state governments, like Delhi and
West Bengal offers.The Delhi government has waived the value added tax and provides a 15-per cent
subsidy on these bikes, which makes each bike cheaper by Rs 7,000-8,000.

Editors come together to fight 'paid news' BS 241209
The Editors Guild of India has expressed anguish and concern over the increasing number of reports
detailing the practice of carrying "paid news" by some newspapers and television channels, especially during
the recent elections. In a statement released today, the editors said they were deeply shocked and
concerned over the matter. The Guild, at its Annual General Meeting held on December 22, has strongly
condemned this practice, which whittles the foundations of Indian journalism, and calls upon all editors in the
country to desist from publishing any form of advertisement which masquerades as news, the Guild said in a
statement released today.
The Guild noted that it had always stood for publication of news which is in public interest; news which has
been gathered due to the professional efforts of journalists; and news which is not influenced by malice,
bias, favouritism or monetary influence.
The Guild recognised that news media, in print and electronic form, had a genuine right to publish and
broadcast advertisements on all issues, subject to the voluntary Advertising Standards Council code and the
News Broadcasting Standards Code.
''It is imperative that news organisations have to clearly distinguish between news and advertisements with
full and proper disclosure norms, so that no reader and viewer is tricked by any subterfuge of
advertisements published and broadcast in the same format, language and style of news. It is disturbing that
this "paid news" practice is also being used by companies, organisations and individuals, apart from political
parties,'' the editors' body said in a statement.
The Guild further deplored the practice of "private treaties", where news organisations accept free equity in
unlisted companies in lieu of promoting these companies through news columns and television news
programmes. The news organisations should disclose their commercial and equity interests in such
companies to the readers and viewers in a transparent manner.
''The Guild decries the unsavoury and unacceptable practice of some political parties and candidates
offering payment for 'news packages' to news media and its representatives to publish and telecast
eulogising and misleading news reports on the political parties. Both the media organisations and editors
who indulge in it, and the customers who offer payment for such 'paid news', are guilty of undermining the
free and fair press, which every citizen of India is entitled to,'' it said in the statement.
It observed that such irresponsible acts by a few media organisations and journalists is discrediting the
entire media of the country, which has a glorious tradition of safeguarding democratic rights and exposing all
kinds of injustices and inequities. Editors and journalists have been at the vanguard of the movement for
creation of a just society, both during the days of colonial rule and Independent India. The ugly phenomenon
of "paid news" will be a blot on the country's democratic fabric.
The Guild called upon publishers, editors and journalists of media organisations to fight this creeping
menace of commercialisation and bartering of self-respect of the media. During the coming months, the
Guild plans to join hands with other organisations to sensitise the media and civil society, including political
parties and the Election Commission, on the need to eliminate this unacceptable practice.
The Guild will be shortly unveiling an initiative to encourage transparency regarding "paid news" and "private
treaties." ''We appeal to all stakeholders to join us in pushing for a clean, transparent media,'' the Guild said
in its statement.
Rajdeep Sardesai, President of the Guild, announced the formation of an Ethics Committee headed by T N
Ninan, editor, Business Standard. The members are B G Verghese, editor and columnist; Sumit
Chakravartty, editor, Mainstream, and Madhu Kishwar, editor, Manushi.

Cyber Security:Predictions galore: BL
A look at what cyberspace might hold this new year..


Through the looking glass.
Predictions dished out by astrologers and experts on January 1 each year are lapped up by consumers
whichever walk of life or profession they might be.
The cyber world is no different. I am not for a moment underplaying the importance or utility of such
predictions. What I look for is certain exactitude in warning what one should be prepared for in the New
Year. This is why I am amused when experts say that 2010 will see more intrusions in cyberspace and we
should be more vigilant.
There are, however, a few analyses that are slightly more concrete and therefore meaningful. As for
instance, when McAfee, the reputed anti-virus software vendor, projects a year that will be marked by
intensified criminal concentration on social networking sites such as Facebook and Twitter. Its 2010 Threat
Predictions report suggests that Twitter will, in particular, be the target of those who want to hide sinister
Web sites somewhere so that their detection becomes difficult. There will also be exploitation of popular
applications alongside increased sophistication of cyber criminals. McAfee also believes that HTML5 will be
popular among malware writers. More attacks on Adobe Reader and a rise in banking Trojans are distinct
possibilities.
The prognosis, especially with regard to Facebook and other such sites, seems credible because of the
avalanche of attacks on them that one saw in 2009. Readers may also recall that a number of hackers into
these sites succeeded in breaking into users' profiles and posting links to malware-affected sites.
Notwithstanding these, I do not foresee any drop in new subscribers to Facebook and Twitter, because they
are live and interesting to an average individual looking for excitement in cyberspace. They have also
acquired a certain aura, thanks to VIP users such as our own Minister in the Ministry of External Affairs,
Shashi Tharoor.
Apart from McAfee, there are several other companies offering predictions. One of them is Kaspersky Lab,
again an anti-virus software provider, which is headquartered in Moscow and has offices all over the world.
Although the company indulges in some generalisations, such as an increase in the sophistication of
attacks, it makes bold to predict that next year will witness less number of attacks using Web sites and
applications. There will also be fewer malicious applications making bogus claims of being genuine anti-virus
and security software. Kaspersky attributes this to market saturation of such products and increased
vigilance of law enforcement officials. Also interesting will be to watch how cyber criminals are going to
receive new operating systems such as Windows 7 and Snow Leopard.
Perhaps somewhat contentious is the prediction that black hat hackers will start legitimising their activities
by means of partner programmes, wherein professional criminals will be assisted through monetising spam
botnets, denial of service attacks and malware. It is not clear on what basis Kaspersky is making this
assertion. But it is undoubtedly an interesting speculation that should alert policemen patrolling cyberspace.
Equally intriguing and absorbing is Kaspersky's belief that 2012 will see more pressure on mobile phone
applications, file sharing and peer to peer networks. The Kaspersky analysis sounds erudite and cannot be
ignored. It merits careful analysis.
Another expert surmise is that there will be first time criminal attention to cloud computing services. It is just
possible that these services will be hijacked and used to control and direct attacks. (More about the security
threats to cloud computing in a subsequent column.) Also, botnets will become more sophisticated. Perhaps
the most amusing suggestion is that there will be inter-gang wars where one gang may hijack the botnets
controlled by other gangs. In sum, whatever happens in the real world could be replicated in cyberspace!
Amidst all these conjectures comes the report now of extreme ingenuity on the part of a hacker called Samy
Kamkar who, only the other day, demonstrated how we can identify a browser's geographic location by
exploiting the weaknesses in many Wi-Fi routers. Incidentally, Samy is the hacker who, in 2005, through
what is now known as Samy Worm, put MySpace out of commission by adding more than one million friends
to the author's account. Kamkar tells us of how hardware firewalls can be penetrated with the help of some
JavaScript embedded in a Web page. He is positive that by luring victims to a malicious link, the aggressor
can access any service on the victim's machine. This is a dreadful prospect. The caveat, however, is that the
visitor must have on his machine an application running, such as file transfer protocol or session initiation
protocol. For one Samy known to us, there are a thousand others with a dishonest intention. This is why we
need to do everything within our capacity to educate ourselves on the latest modes of attack and take
minimum possible precautions.
Some cheer news
Against this background of fears of perils in cyberspace, the findings of two recent studies make sense. The
first by PriceWaterCoopers (PwC) claims that there is a nearly 100 per cent improvement in the security
capabilities of the IT-BPO industry in the past few years. Also noteworthy is the shift of accent from
technology to people-related controls through increased importance to employee security awareness
programmes.
Another study, conducted by KPMG and Nasscom, is nearly equally positive. According to it, security has
now become a Board room concern and a majority of companies look upon it as a business enabler.
Information security is now part of the training imparted to newcomers, and this has brought in its own
rewards in terms of protecting corporate information. This is heartwarming if one considers the situation until
a few years ago, when IT security was a very low priority, something of a ritual rather than a protector of a
company's assets and image.
The writer is a former CBI Director who is currently Adviser (Security) to TCS Ltd.

Cyber Quiz: BL
Questions
1. According to ComScore, Inc, US shoppers spent a whopping $27 billion online in the holiday season with
the second most productive day being ?Cyber Monday' with sales of $887 million after the December 15
sales which saw $913 million being spent. When was ?Cyber Monday'?
2. If the signalling rate for USB 2.0 is 480 Mbit/s, what is it for the new USB 3.0?
3. Teenager David Nelson, the founder of a music service, was chastised by Vevo which asked him to stop
using the service's content and trademark. Name the teenager's site.
4. Name the game that has broken many records, earning the distinction of being the ?most pirated game of
2009' with downloads exceeding 4.1 million times till end December since its early November launch.
5. The team from which prestigious varsity won a $40,000 online, nine-day challenge in early December,
proposed by the US government's DARPA, in just nine hours?
6. According to Netcraft's December 2009 Web Server Survey, how many million sites were there across all
domains: 225, 234 or 240?
7. Why is February 4, 2004 a significant date in the online world of social networking?
8. Which OS has the default browser NetPositive (often called Net+)?
9. Which dangerous worm has/had the aliases ?Simpsons', ?Kwyjibo' or ?Kwejeebo'?
10. The popular video capture and video processing utility for Microsoft Windows written by Avery Lee is
called..?
Answers
1. November 30.
2. 4.8 Gbit/s
3. Muziic
4. ?Call of Duty: Modern Warfare 2'.
5. MIT
6. 234 (from about 12 million in 1999).
7. Facebook, initially named ?thefacebook', made its appearance.
8. Be Operating System (BeOS).
9. Melissa
10. VirtualDub.

Corporation Bank targets Rs 1.5 lakh crore-biz this fiscal: BL

We are planning to grow by 52 per cent in the home loan segment.



Mr J.M. Garg, Chairman and Managing Director
Mr J.M. Garg, Chairman and Managing Director of Corporation Bank, feels that the performance of the bank
has been better than the system in spite of the economic slowdown. For the current financial year, Mr Garg
foresees a business growth of 23 per cent.
In an interview with Business Line, he spoke on various subjects ranging from the bank's targets for the
current financial year, the developments on the deposit and credit front, and the bank's plans for recruitment
among others. Excerpts from interview:
What is the business target for the current fiscal?
We have targeted a business level of Rs 1.5 lakh crore (1.22 lakh crore) by the end of March. This would
translate to a business growth of around 23 per cent, which is quite good, considering the present business
scenario and slowdown in credit offtake.
We have set a target of Rs 90,000 crore of deposits and Rs 60,000 crore of advances by the end of the
fiscal.
How is the growth in CASA?
The focus on CASA (Current Account, Saving Account) has borne fruit in the form of steady year-on-year
growth of around 24 per cent in savings deposits. The slowdown in credit has had its impact on the opening
of current deposits accounts and year-on-year growth has been only 15 per cent.
Growth in retail term deposits has been well over 30 per cent, which should enable the bank to shed some
of its bulk deposits.
Term deposits are growing though the interest rates have come down. People are now putting money in
short-term deposits, and are not going for long-term deposits. That gets reflected in term deposits. With that
the cost of deposits is coming down. I expect it to come down to 6 per cent by March-end. (It was around
6.44 per cent by the end of September).
Incidentally, almost all of the erstwhile high cost deposits have been replaced at very low rates, which will
further bring down the cost of deposits.
What future do you see for the growth of vehicle loans and home loans?
The auto industry is showing signs of revival and production. The passenger car segment has seen an
upturn. The demand for passenger cars has also shown some increase and we hope to see a growth in the
vehicle loans category. The bank has introduced a special product ?Corp Vehi Plus' with a rate of interest of
8 per cent frozen for the first year.
So far we have disbursed about Rs 100 crore under this scheme. We are projecting to nearly double the
vehicle loan portfolio to meet the growing demand in this sector.
As far as the home loan segment is concerned, real estate prices have been showing some corrections and
a number of houses and flats are now being offered by builders at more affordable prices. We are planning
to grow by 52 per cent in this segment. We have launched ?Corp Home Delight' scheme with an interest rate
of 8 per cent in the first year. So far, we have disbursed more than Rs 250 crore under this scheme. For
quickening the pace of sanctions, we have further fine-tuned our centralised processing systems so that we
are able to reduce the time between sanction and disbursement.
(The total vehicle loan portfolio of the bank stands at Rs 960 crore and home loan at Rs 4,400 crore. The
total retail portfolio of the bank is only 18 per cent of the total advances).
How is the performance of agri-loans and what are your plans in this regard?
We propose to increase the share of agriculture in adjusted net bank credit from 11 per cent in March 2009
to 15 per cent by March 2010. To improve performance under agriculture, we will focus on financing well-run
dairy co-operatives and rice mills.
We will also focus on zone-specific initiatives, such as floriculture in Bangalore, organic farming in Hassan,
Hubli and Belgaum, etc. Apart from this, the existing schemes will be made more customer-friendly. Finance
to dealers in fertilisers, pesticides, seeds and farm equipment is also being given focus.
To augment existing technical manpower, a good number of agricultural field officers are being recruited,
who are expected to exploit the hitherto untapped potential in northern and western parts of the country.
Can you explain your plans for increasing non-interest income?
For the current fiscal, the bank has targeted a growth of 45 per cent in non-interest income from core areas
(such as fees, commissions, exchange) from a level of Rs 449 crore in 2008-09 to Rs 650 crore in 2009-10.
The bank has taken several measures such as increase in volume of bank guarantees and letters of credit
business, focus on sale of third party products like mutual funds, bancassurance, gold retailing, garnering
higher share of Government business, and so on. These concerted efforts are showing results and the bank
looks forward to achieving its target.
What plans do you have to raise funds during the fiscal? What amount of funds was raised during the year
till now?
The bank has so far raised tier-I bonds for Rs 500 crore and tier-II bonds for Rs 1,550 crore during 2009-10.
The capital adequacy of the bank was very comfortable at 18.18 per cent (of which tier-I stood at 10.75 per
cent) as at September. This is sufficient to take care of expansion plans in the immediate future. In case the
markets are favourable, we may raise further funds through bonds.
What is happening on the recruitment front?
Corporation Bank has planned to recruit around 1,000 people in the current financial year. About 60 per cent
of these vacancies would be filled in the clerical cadre. Of the remaining, we are planning to recruit around
300 officers in specialist category and around 125 in the general category.

Corporation Bank looking at big-scale branch expansion:BL 241209
To focus on tier-3 to tier-6 centres.

Mr J.M. Garg
Corporation Bank, which has 1,094 branches in the country, is looking at expansion of its branch network on
a big scale in the next five years.Mr J.M. Garg, Chairman and Managing Director, told Business Line that the
bank is planning to open around 700 branches during the next five years.
Asked about the regions of focus, he said the bank has not identified any areas as such. However, he said
the bank will go for opening branches in tier-3 to tier-6 centres of the northern, eastern and western parts of
the country. "We will go in a limited manner in the South," he said.The major advantages for the bank
increasing its share in such centres are that it will be able to garner more CASA (current account and
savings account) deposits and it will help increase its presence in semi-urban and rural areas. "By opening
branches in tier-3 to tier-6 centres, the bank wants to increase the share of CASA deposits in its total
deposits. Those are the places where the CASA is high," Mr Garg said.
The move will also help the bank get additional licences to open branches in urban and metro centres.
To get licences
It will also help the bank get licences from the RBI in metros and urban centres where it does not have a
presence."These licences will be based on how many branches the bank has opened in tier-3 to tier-6
centres," he said.
Of the 1,094 branches of the bank, nearly 40 per cent of them are in semi-urban and rural areas. Mr Garg
said that in the banking industry it is the other way round.
The rural and semi-urban branch share of most of the banks is 60 per cent.Added to this, the move will help
the bank increase its agriculture lending also.To a query on increasing the overseas presence, Mr Garg said
that the bank has representative offices at Hong Kong and Dubai."The Hong Kong representative office is
proposed to be upgraded into a branch. Further we have plans to open offices in important financial centres
in future subject to necessary approvals," he added.

China systematically killing Indian manufacturing sector: L&T: ET

Private sector engineering major Larsen & Toubro has said that China is systematically killing Indian manufacturing
sector and sought 25 per cent anti-dumping duty on Chinese goods. "China has a fixed currency. It is not a market
economy like ours. China is systematically killing the Indian manufacturing sector," Naik, who was here for foundation
stone laying ceremony of a forgings unit at Hazira told reporters here yesterday. "There are taxes on goods
manufactured locally, but none on imported products (from China). This is an unfair situation for Indian goods. This is
why there should be 25 per cent anti-dumping duty on Chinese products," Naik said.

Speaking specifically about power equipment sector, in which L&T is a major player, Naik said, "The Indian power
companies, especially those in the private sector, have placed huge orders for power plant equipment with China. We
can say that Chinese power sector is virtually working for India." "It is not good that 80 per cent of our dependence for
power plant equipment is on one country, and that too China," he said, adding that China should not be allowed to grow
at the cost of Indian companies. "The day China opens its economy, its prices are bound to go up by 25 per cent," he
said. "But unfortunately we are not taking any steps to stop it," Naik further said.

L&T's special steel manufacturing and ultra heavy forgings unit at Hazira is a joint venture with Nuclear Power
Corporation of India Ltd (NPCIL), in which L&T holds 74 per cent stake while the latter 26 per cent. The plant is being
set up at an investment of Rs 1,750 crore, and will supply finished forgings for nuclear reactors, pressurisers and steam
generators, besides heavy forgings for critical equipment in the hydrocarbon sector, as well as thermal power plants and
steel plants. The unit is expected to begin operations between March and May next year.

L&T is also investing over Rs 5,000 crore for setting up facilities to manufacture boilers, turbines, modular
fabrications. It is also establishing a ship-building unit and a power plant at its Hazira facility. "The boiler shop will be
opened in March or April this year, which will be followed by the turbine shop in August or so," Naik said.

Check out FD schemes for saving income tax : ET

Fixed deposits offered by banks have been the favourite traditional saving and investment instrument for Indians. In
the union budget of 2006, the long-term bank deposits were made liable for the tax benefit under section 80C of
Income Tax Act, 1961.

It means investments up to Rs.1,00,000 in Bank FD at least for 5 years qualify for deduction from the gross total
income for purpose of tax calculations.

On the backdrop of high interest rate last year, banks were flooded with deposits under this scheme. Now, it is a time
to make tax planning for the financial year 2009-10 .

In view of this we bring out a ready reckoner on the tax savings deposit schemes offered by leading commercial
banks.

Deposit Amount (Per financial year)

Minimum: 1000
Maximum: 1,00,000

Tenure

Minimum: 5 years
Maximum: 10 years

Mode of Payment: Lump sum at the time of maturity or quaterly

Current Deposit rate (% per annum): 7.25 (Note: Additional 0.25% if the tenure of deposit is
8 years and up to 10 years)

Deposit Amount (Per financial year)

Minimum: 10, 000
Maximum: 1,00,000

Tenure

Minimum: 5 years
Maximum: 10 years

Mode of Payment: Lump sum at the time of maturity or quaterly

Current Deposit rate (% per annum): 7.00

Deposit Amount (Per financial year)

Minimum: 5, 000
Maximum: 1,00,000

Tenure

Minimum: 5 years
Maximum: 10 years

Mode of Payment:

Maximum: 1,00,000

Tenure

Minimum: 5 years
Maximum: 10 years

Mode of Payment: Lump sum at the time of maturity or quaterly or monthly

Current Deposit rate (% per annum): 6.75

Deposit Amount (Per financial year)

Minimum: 100
Maximum: 1,00,000

Tenure

Minimum: 5 years
Maximum: 10 years

Mode of Payment: Lump sum at the time of maturity or quaterly or monthly

Current Deposit rate (% per annum): 7.00


Deposit Amount (Per financial year)

Minimum: 10, 000
Maximum: 1,00,000

Tenure: 5 years

Mode of Payment: Lump sum at the time of maturity or quaterly or monthly

Current Deposit rate (% per annum): 7.75



Deposit Amount (Per financial year)

Minimum: 100
Maximum: 1,00,000

Tenure: 5 years

Mode of Payment: Quaterly or monthly

Current Deposit rate (% per annum): 6.00

Deposit Amount (Per financial year)

Minimum: 100
Maximum: 1,00,000

Tenure: At least 5 years

Mode of Payment: Lump sum at the time of maturity or quaterly

Current Deposit rate (% per annum): 7.00

Central Bank's 99th Foundation Day:BL 241209

Central Bank of India, NS Road Branch, Kolkata, along with the bank's offices in several parts of the country,
celebrated its 99 {+t} {+h} Foundation Day here on Monday, according to a press release. An old customer
having savings bank account since 1935 showed up with her passbook, the release adds.

Call rates unchanged:BL 241209
Call rates closed unchanged at 3.25-3.3 per cent on Wednesday. In the one-day reverse repo auction, under
the liquidity adjustment facility, the Reserve Bank of India received and accepted 24 bids amounting to Rs
37,050 crore. There were no repo bids. In the CBLO auction, there were 537 trades for Rs 63,188.2 crore in
the rate range of 3-3.25 per cent.

Bonds yields may ease: BS
The yield on the government bonds may ease on Monday as investors await fresh cues on interest rate
trend. Dealers said yields may buck the trend (of hardening) which was driven by the rising inflation and
apprehension over Reserve Bank of India making a start for tight monetary policy. Investors could chose to
stay light until fresh cues on interest rates emerge.
The selection of papers for auction on Friday, movement in US Treasury notes and global crude oil futures
may also influence sentiment in domestic bonds. On Friday, the G-Sec market improved on value buying
and amidst the auction cut-offs being in line with expectations. The benchmark 10-year paper (6.90 per cent
paper 2019) closed at Rs 94.30 implying a yield of 7.76 per cent.
Call rates to remain steady
The interest rates in the overnight inter-bank market are expected to remain steady on ample liquidity in the
system. Banks have made provision for meeting reserve requirements. There are sufficient resources in the
system to manage any increase in demand for funds, dealers said. On Friday, call rates moved in the range
of 3.20 per cent to 3.40 per cent, which is around reverse repo rate as the liquidity in the money markets
was comfortable.
Rupee may turn weak
After witnessing sharp rise in value against the US dollar last week, Indian rupee may turn weak on increase
in demand from importers. The flow of overseas capital in stock market and from dollar?s movement against
major currencies would also influence the rupee.

Bond prices close higher:BL 241209

Bond prices opened stronger and closed higher from the previous close on positive sentiments. But the
huge gains made by the equity markets prevented prices from rising further, said a bond dealer with a
private bank. After comments by the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia,
on Tuesday, it seems unlikely that a rate hike will happen before the January monetary, said the dealer. The
expectation is that a rate hike now could adversely impact credit demand. Therefore, the RBI may not take a
rate action immediately. The total traded volumes on the order matching system were higher at Rs 9,610
crore (Rs 8,965 crore).

BoI to launch 8% home loan plan on Jan 1 BS 241209
State-run Bank of India was set to launch an 8 per cent home loan scheme from January 1, M Narendra,
executive director of the bank said today. "We are in the process of launching such a scheme. The scheme
will be open to applicants from January 1 to February 28," he said. A senior official of the bank said an
official announcement of the scheme was being finalised and would be made in the next 2 days. Under the
scheme, the bank would offer home loans at 8 per cent for the first two years, after which floating rates
would be charged, the official said.

Banks shore up funds fearing rate hike:BL 241209
Issue certificates of deposit for Rs 20,000 cr.

Commercial banks appear to be trying to second-guess Reserve Bank of India's moves on interest rates and
liquidity management.There is fear that the RBI might suck out excess liquidity through a hike in cash
reserve ratio to rein in inflation. Banks have issued certificates of deposit (CD) aggregating to about Rs
20,000 crore in the past two weeks to mop up resources before they become dear.
Tax outflow
The rash of CD issuances - coming as they do in the backdrop of advance tax outflows from India Inc
totalling Rs 54,000 crore in the December quarter - has led to interest rates on these money market
instruments nudging up by about 25 basis points in the last fortnight.Certificates of deposit are short-term
money market instruments issued by banks. Generally, banks, mutual funds and large companies invest in
these instruments, which have a face value of Rs 1 lakh.
Fortification
Anticipating an upward pressure on interest rates, commercial banks are fortifying themselves with cheap
funds by issuing CDs of longer duration - up to one-year maturity, said a senior bank official with a State-
owned bank.That the flurry of CD issuances has pushed up interest rates on these instruments is
underscored by the fact that while State Bank of Travancore issued one-year duration CDs at 5.75 per cent
on December 7, Bank of Baroda issued one-year CDs at 5.97 per cent on December 18.
Among those that have raised between Rs 500 crore and Rs 1,000 crore through certificates of deposit are
UCO Bank, United Bank of India, Central Bank of India, Punjab National Bank, Corporation Bank, Central
Bank of India, Canara Bank, Bank of Baroda, State Bank of Travancore and State Bank of Hyderabad."One
reason why CD rates have moved up in the last 15 days or so is the cyclical raising of funds by banks to
shore up their top line as the quarter comes to an end. Moreover, liquidity is at a premium currently, as funds
have gone out of the system due to advance tax payments. Hence the rush to issue CDs before rates start
moving up," said a dealer with a public sector bank.
Banks, depending upon their credit rating, are able to raise one-year funds through CDs at a coupon rate of
5.95-6.00 per cent. In the corresponding period last year, banks had raised resources at a higher rate of 9.5-
10 per cent, as liquidity was tight then.According to RBI data, banks have garnered about Rs 83,000 crore in
the first 10 months of the current calendar year through CD issuances against Rs 27,000 crore in the
corresponding period last year.

Banks returning to retail advances: BL

Fallout of ample liquidity, healthy economic outlook.


Housing loansdriving growth.
Banks are cautiously increasing their focus on the retail segment after a period of going slow on this
business.
Compared with the private banks, public sector banks appear more aggressive on retail business now.
This is due to a variety of factors including the tardy growth in corporate credit offtake, which has resulted in
ample liquidity in the system.
Banks had also reined in credit to the retail sector due to the perceived increased risk on account of the
general slowdown.
Slowdown fear fading
However, according to experts, the scenario is now changing due fears of the economic slowdown fading
away and more importantly, ample liquidity.
?Many banks have now launched marketing campaigns for their retails products such as home loans, vehicle
loans, gold loans/sale of gold coins, educational loans and personal loans,'' an economist with State Bank of
India told Business Line.
According to Ms Renu Challu, Managing Director, State Bank of Hyderabad , a strong focus on retail
advances led to a pick-up in credit growth during October-November 2009.
?Our retail focus has started paying-off. From 3.8 per cent, the advances grew to 9.2 per cent in October and
the November/December figures are likely to be more,'' she said.
The bank, which had done ?significant' sanctions in November, would register a credit growth of 20 per cent
for the year, she said.
Looking up
For most of the banks, housing loans, among others, are driving growth in retail advances. For instance, at
Rs 458 crore at the end of October, 2009, the housing loan portfolio grew by over 87 per cent for SBH.
The year 2009 had, in fact, ended on an optimistic note for housing loans. With many banks offering loans at
rates as low as 8 per cent, this segment is looking up.
With economic growth looking healthy and property prices stabilising, most players are upbeat about good
growth in the home loans segment next year, feel experts.
Public sector banks are also willing to tap the potential in the demand for personal loans though they are
generally being extended to their own customers.
In fact, it is time for the public sector banks to occupy the space vacated by private sector majors.
Private banks, that were aggressive on personal loans till last year, are now hesitant due to high default rate.
They are also reducing their exposure to retail. Other segments such as car loans, gold loans and sale of
gold coins are receiving attention.
The State Bank of India even opened its first exclusive gold coin outlet at Hyderabad.
The third quarter figures would showcase the growing focus of banks on retail more categorically, feel
analysts.

Banks get more time to rejig loans to mutual funds:BL 241209
Banks have got an extension of six months to restructure their loans to mutual funds and Irrevocable
Payment Commitments (IPCs) issued in favour of stock exchanges.The Reserve Bank of India, in a
notification issued on Wednesday, extended the time for banks to comply with the guideline from December
31, 2009 to June 30, 2010.
The RBI had asked banks to be judicious in extending finance to mutual funds and grant loans to MFs only
to meet their temporary liquidity needs. Bank loans to MFs should be only for the purpose of repurchase or
redemption of units within the ceiling of 20 per cent of the net asset of the scheme and should not be for
more than six months, the RBI said. Such loans to equity-oriented MFs would form part of banks' capital
market exposure.
With regard to IPCs, the RBI said that they should be treated on par with guarantees issued for the purpose
of capital market operations and will, therefore, form part of the capital market exposure.

Banking facility at every 5 km radius in three years in Guj: ET


People of Gujarat would have access to the banking facilities at every 15 km radius area by March 2010 and that
distance will be brought down to five km in next three years.

At present, there are only 405 villages in 28 blocks in 14 districts which are without bank branch in the radius 15 kms,
which is termed as under banked areas.

"The State Level Bankers' Committee (SLBC) in consultation with Bhaskaracharya Institute for Space application and
Geo informatics (BISAG) has undertaken the exercise of mapping of block wise bank branches in the state," said
Mukesh Kumar Jain, General Manager of Dena Bank Gujarat which is convenor for SLBC in the state.

According to Jain, in the last meeting of SLBC, it has been decided to provide banking facility either through fell-
fledged branch, satellite branch or business correspondent model.

"Once we achieve the target of providing bank facility at 15 kms radius, we will further bring down the distance from
15 kms to 5 kms in next three years," he said.

As per the figures provided by SLBC, in Gujarat, there are total 5881 bank branches in the state as on September 2009
and 376 applications were pending before the Reserve Bank of India for opening of new branches.

Bank staff productivity doubles in five years : BL

Growth in business outpaced that in manpower.
Employees of Indian banks have become more productive over the last few years.According to ?A Profile of
Banks 2008-09' released by the RBI, the average business and profits per employee for Indian banks more
than doubled in the five years from 2004-05 to 2008-09.
The improvement was due to business growth outpacing that in manpower. Indian banks registered a total
business (advances plus deposits) growth of 135 per cent from 2004-05 to 2008-09, while their employee
strength edged up only by 10 per cent. Their branch network grew by 21 per cent.
Public sector catches up
Contrary to the general perception, public sector banks' (PSB) employee productivity grew at a faster rate
than that for private sector banks in this period. As of March 2009, both private banks and PSBs had
average business per employee of Rs 7.44 crore. However, private banks generated higher
profits/employee (Rs 6.1 lakh) with fee income forming a significant proportion of their earnings (which is
outside the core business). Fee income for private listed banks contributed 25 per cent of their net revenues
for FY09.
PSBs increased their branch network by 2 per cent between 2004-05 and 2008-09.However, the employee
strength has fallen by 1 percentage point in spite of recruiting more than 26,000 people in 2008-09.
Shrinking PSB workforce
The decline in employee base of PSBs during this period was due to a good portion of the workforce getting
superannuated and the implementation of VRS scheme in 2000 to rationalise the workforce. More than 1.26
lakh employees of 26 banks were given the VRS option.
Punjab National Bank, Canara Bank and Central Bank of India have seen their employee strength fall the
most among PSBs. IDBI Bank, Corporation Bank and Oriental Bank are the top three PSBs in terms of
productivity. IDBI Bank has business per employee of Rs 20 crore even as it added around 5,600
employees during 2004-09. Corporation Bank also increased its manpower by 2,200. As the PSBs'
productivity doubled during this period, they caught up with its private sector peers in terms of business per
employee.
Whither private banks
Private banks increased their workforce by more than 110 per cent over the five-year period. Private banks
improved their business per employee by 28 per cent. Some private banks employ direct selling agents who
bring in business but don't figure on the bank's payroll; this could overstate their productivity to some extent.
The new-age private sector banks such as ICICI Bank, Axis Bank and YES Bank witnessed improvement in
their employee productivity in terms of both business and profits.HDFC Bank, Kotak Mahindra Bank and
IndusInd Bank are the only banks which have witnessed decline in their productivity over the years. HDFC
Bank's merger with Centurion Bank of Punjab has taken a toll on its productivity.
As productivity of bank employees shot up, so did their compensation. Even as the total employee count for
Indian banks grew by 15 per cent, employees' wages grew by 85 per cent over five years.

Bank charges may be capped: BS
Banks may soon have to cap the charges on basic services such as issuing a draft, remittances or for stop-
payment instructions. Faced with a rising number of customer complaints on excessive charges, the
Reserve Bank of India (RBI) has asked the Indian Banks? Association (IBA) to come up with guidelines on
what the reasonable charges should be.
Accordingly, the industry lobby has asked its Committee for Customer Service headed by Standard
Chartered Bank CEO Neeraj Swaroop to submit a report to the regulator. In turn, a sub-committee of
bankers from State Bank of India, Corporation Bank, Citibank and ICICI Bank, which is headed by Union
Bank of India Executive Director S Raman, has been tasked with framing the guidelines.
Sources associated with the sub-committee told Business Standard that the panel has been mandated to
look into 27 items categorised as basic transaction services.
Apart from charges for issuing cheque books and drafts, the committee is looking at charges for cheque
return, reviving inoperative accounts, issue of duplicate pass books and others such as not maintaining the
prescribed minimum balance.
Charges for special services such as loans and credit cards are not within the committee?s purview.
?There is wide disparity between what different banks charge their customers. The committee will come up
with caps on what banks can charge for basic services,? said a member of the sub-committee.
For instance, public sector lenders such as State Bank of India (SBI) require regular savings account
customers to maintain a minimum average balance of Rs 1,000 per quarter, while private sector lenders
such as ICICI Bank and HDFC Bank require a minimum balance of Rs 10,000.
Foreign lenders such as Citibank, Standard Chartered and HSBC have minimum balance requirements of
Rs 25,000 per quarter.
The penalties for non-maintenance of minimum balance are also steep for private and foreign banks.
SBI charges Rs 75 per year for non-maintenance of minimum balance. ICICI Bank and Citibank charge Rs
750 per quarter.

SERVICE FEE
Service SBI ICICI Bank Citibank
Issuing demand draft 30 onwards 50 onwards 150 onwards
Cheque return (outward) 75.00 100.00 100.00
Cheque return (inward) 75.00 350.00 350.00
Setting up standing instructions 50.00 150.00 NA
Min balance penalty 100-200/ quarter 750/ quarter 250/ quarter
Stop payment 50.00 quarter 50.00 quarter 50.00 quarter
National electronic fund
transfer
5-25/
transaction
5-25/
transaction
5-25/
transaction
Amount in Rs, NA: Not available, *Issued through branches,
**Free if instructions given online Source: Bank websites
?A lot of these charges are deterrents and the banks don?t really make money from them. They are used to
increase efficiency and improve customer behaviour,? said another sub-committee member.
The committee is expected to submit its recommendations next month, and if RBI accepts them, the
guidelines will come into effect from 1 April 2010.
Banks are currently required to prominently display their service charges and fees in an RBI-prescribed
format on their website and at all branches.
Before 1997, service charges and fees were governed by IBA guidelines. Later, RBI decided to allow banks
to frame their own charges subject to approval from respective boards.
Similarly, RBI had asked IBA to come up with guidelines on the use of ATMs for inter-bank transactions.
Adherence to IBA guidelines on reasonable service charges and fees would be voluntary.

Axis Bank recasts retail banking BS 241209
Instead of products, consumer groups come into focus. After restructuring its corporate banking operations,
Shikha Sharma-led Axis Bank, the country's third-largest private sector lender, has initiated a
comprehensive recast of its business, including the retail side.
While a large-scale recast is likely to be discussed by the board shortly, marking a fundamental shift in the
way it goes about its retail business, the bank has regrouped its operations under two new divisions. One
will be known as mass and mass-affluent banking, while the other will be called affluent banking."Earlier the
retail set-up was organised on the basis of products. Now, the operations will be organised on the basis of
customer groups," said Snehomoy Bhattacharya, president (human resources) of the bank.
Manju Srivatsa, who was previously head of retail banking, will now head the mass and mass-affluent
banking division. The lenders retail assets, retail liabilities and credit cards groups will be housed under this
division. The bank's priority banking offering is part of the mass-affluent category.
Sonu Bhasin will head affluent banking, which includes the bank's fledgling private banking group. Bhasin
was previously president (retail financial services), which oversaw distribution of third-party products such as
insurance and mutual funds.
There will also be some new faces at Maker Tower, the looming high-rise overlooking the Arabian Sea,
which houses the bank's headquarters. The lender is looking at bringing in a new head for retail assets and
credit cards, which are currently two separate groups. According to sources, the top candidate for the job is
Jairam Sridharan, who is currently with US-based lender Capital One Financial and has worked with ICICI
Bank in the past.
He will be Shikha Sharma's second senior recruit after V Srinivasan, who left JP Morgan to join Axis Bank
as executive director for corporate banking in September.
The bank has already seen one high-profile exit in Hemant Kaul, who was executive director of retail
banking and also in the running for the position of chief executive officer.
According to sources, the bank is also planning some changes on the human resources front and may
increase the number of grades.
Axis Bank has scrapped the practice of having a separate division for distribution of third-party products.
Now, each of the two divisions will look after third-party distribution among their respective customer
segments.
In keeping with the theme of customer service, the bank has merged its operations and IT divisions and split
them into retail operations & IT and wholesale operations. Retail operations and IT is headed by Rajagopal
Srivatsa, who was previously head of business banking. The division will deal with customer service issues
such as new account openings, follow-ups and cash management.
Axis Bank has retail assets worth Rs 17,984 crore as on September 30, accounting for 22 per cent of its
loan book. The percentage of retail assets on its loan book is much smaller than other large private such
bank such as ICICI Bank (45 per cent) and HDFC Bank (54 per cent).
The sweeping changes in the bank's retail operations come close on the heels of the recast in the bank's
overall structure. In October, Axis Bank had organised its business into strategic business units -- retail
banking, small and medium enterprises (SMEs) and agriculture; corporate banking; non-banking retail
subsidiaries and corporate centre. Earlier, the bank had a vertical structure with executive directors in
charge of retail, corporate banking, mid-corporate and SME banking, and IT and business process.
The lender has also brought many changes on the corporate banking side. Most notably, it has put together
a 60-member strong group headed by Siddharth Rath to focus on lending to the infrastructure sector, which
is the biggest contributor to the bank's corporate loan book. The lender has also created the position of a
chief risk officer, which has been filled by Bapi Munshi, earlier president for treasury.

AV Rajwade: It's the rupee, stupid! : BS
While many in the government are talking of tax and other sops, it is the value of the rupee that determines
exports.
Last week, when the rupee appreciated to below 46 per dollar, there were reports about the ?sops? expected
to be offered to exporters in the next few days (One has always wondered why any procedural simplification
or other benefits given to exporters are referred to as ?sops?: The dictionary meaning of the word is
?conciliatory bribe, gift or concession?). Incidentally, the series of import duty cuts over the last two decades
have rarely been referred to by the media as ?sops? to importers. These seem to consist of extension of
some schemes (export credit interest rates?), increase in duty drawback rates for exports to ?specific
markets, of specific products, and of specific products to specific markets?! One wonders whether anybody
has quantified the actual benefit of such ?sops? as a percentage of exports. According to my estimate, a 1
per cent cut in export credit interest rates, even if you assume it is honestly passed on to the exporters by
lending banks, improves the margin by just 0.1 per cent of exports! In contrast, the rupee?s appreciation
against the dollar and the inflation differential together mean a loss of competitiveness of as much as 10 per
cent in the current year! ?Sops? are no substitute to a competitive exchange rate! The recent appreciation of
the rupee has had me wondering whether our domestic currency has become a ?commodity currency?:
Media short form for currencies of large commodity exporters ? Australia, for example. (While we do export
one commodity in significant quantities, namely iron ore, we are hardly a major commodity exporter: Indeed,
our import bill for commodities is much larger than export earnings.) These currencies tend to appreciate
when global commodity prices are rising, which is exactly what has happened with the rupee recently. At the
opening rate last Friday morning, the rupee had appreciated about 14 per cent against the dollar since
March 2009. To be sure, most Asian currencies have appreciated against the dollar during the period, but
these countries have surpluses on the current account. Last Thursday, the newly appointed finance minister
of Japan expressed his desire for a weaker yen and hinted at intervention in the market if needed.
One currency which has remained rock steady against the dollar during this period is the Chinese yuan. The
Economic Times reported on January 7 that the ?yuan revaluation move? took the rupee to a 12-week high.
The ?move? is a recommendation by a ?think tank? which, of course, may or may not be accepted by the
authorities. To my mind, it is extremely unlikely that, from a ?big power? perspective, China would make a
change in policy at this stage. In the last couple of months alone, it has been publicly pressured both at the
Apec Summit, and bilaterally by senior EU officials, to change its policy: A change now would clearly create
an impression that it has succumbed to external pressure, an impression the Chinese would be most
reluctant to create. Surely, one reason for our $20-billion bilateral trade deficit with China is the difference in
exchange rate policies?
The reason for the rupee?s appreciation is not so much competitiveness of the domestic economy as capital
inflows. As per the balance of payments data for the first half of the year, published on December 31, the
current account deficit has gone up from $15.8 billion in H1 2008-09 to $18.6 billion ? or, say, 3 per cent of
GDP. The current account deficit has gone up despite a reduction in the merchandise trade deficit, the latter
primarily due to lower oil prices. (These have gone up ever since and analysts expect the price to go up
further as global economy recovers more strongly in the current year.) The surplus on invisibles has dropped
even more sharply, leading to an increase in the current account deficit. One point should not be forgotten:
The deficit is suppressed by the inclusion of inward remittances as part of the current receipts. While this is
the accounting convention, the fact is that, in terms of economic analysis, remittances are more like capital
transfers than current receipts. For analytical purposes, the deficit needs to be regarded as closer to 9 per
cent of GDP, a horrendously large figure. And, an appreciating rupee certainly does not help improve it.
One wonders whether the central bank is looking at an appreciating currency as an anti-inflationary
measure. This has turned out to be a costly and risky course for many countries. Also, capital flow-induced
appreciation is not a sign of strength: It is swelling, not muscle. In a panel discussion, while talking about
capital inflows, the RBI governor said, ?No policy option, including Tobin tax, is off the agenda. In the long
list all this is there. The question is what instruments do we use and when?? So far the only option he seems
to have chosen is rupee appreciation. On this subject, we do need to learn more from our northern
neighbour than our western friends: After all, China is undoubtedly the most successful growth economy
ever. But more on the yuan next week.

Asci upholds Tata Sky's complaint against Airtel's DTH campaign:
BS
The competition among the half a dozen rival direct-to-home (DTH) operators in the country has once again
spilled over to the advertising arena. The Advertising Standards Council of India (Asci) has upheld a
complaint by Tata Sky against rival Airtel Digital TV for misleading the consumers in its ?Dil Titli? television
campaign featuring Saif Ali Khan and Kareena Kapoor. In its complaint to Asci made in November 2009,
Tata Sky had called the campaign ?misleading? for suggesting that the picture quality of Airtel Digital TV was
superior as it used the MPEG4 and DVB-S2 technology. The Asci, in its final hearing last week, upheld the
Tata Sky complaint and may soon ask Airtel to either modify or withdraw the campaign, sources in Asci said.
The Asci is the apex self-regulation body of the advertising industry. It deals with the complaints received
from consumers and industry against advertisements that are considered as false, misleading, indecent,
illegal, leading to unsafe practices, or unfair to competition.
In 2008, Tata Sky had dragged its rival Dish TV before the fair trade regulator ? Monopolies and Restrictive
Trade Practices Commission ? terming the Dish TV advertisement offering free set-top boxes as
?misleading? and ?deceptive?.
Tata Sky and Dish TV, the top two private DTH operators in the market, use MPEG2 technology while the
remaining DTH operators, including Sun Direct, Digital TV, Big TV and D2H, use MPEG4 technology.
In its complaint to Asci on the Airtel Digital TV advertisement issue, Tata Sky said that while MPEG4 was a
video compression standard and DVB-S2 was a satellite transmission standard, both these specifications
had no relationship with video quality. ?MPEG4 is a video compression technology that helps in packing
more channels within a given bandwidth. This has no relation with the picture quality, and it has been
scientifically proven. This is what we have told Asci. We are not there to stop anyone from advertising, we
just want the right message to go to the consumers,? said Vikram Mehra, CMO, Tata Sky. When contacted,
Airtel Digital TV CEO Ajay Puri said: ?We did receive a communication from Asci asking us to explain the
MPEG4 technology. We have not received any notice from them to withdraw the campaign yet.? ?MPEG4 is
a proven better compression technology and that is what we have said in our communications to the
consumers. Our ads are not directed against anybody,? he said. Industry sources, however, said that since
the DTH market had been extremely competitive, such ad campaigns may affect the consumers decision to
opt for one DTH operator over another. Currently, between the six DTH players, an average of around
18,000-20,000 DTH connections are being sold each day with Airtel Digital TV alone selling over 7,000
connections, higher than some of its rivals.
?We are selling 200,000 DTH connections each month,? confirmed Puri. Tata Sky, which is now the third-
largest DTH operator behind Dish TV and Sun Direct, is adding over 100,000 subscribers per month. ?Till
November 2009, our subscriber base stood at 4.5 million ?on a monthly basis, we have been selling far
more than 100,000 subscribers,? Mehra of Tata Sky said.