Banking and Financial News – 06 June 2014

RBI allows FPIs, NRIs to invest up to 26% in insurance - (The Hindu)

State Bank group plans surveillance system for ATMs. – It will be Electronic Surveillance, to strengthen security at ATMs. (The Hindu)

Hedge fund banned for insider trading - The Securities and Exchange Board of India (Sebi) has banned Factorial Master Fund, a Cayman Islands-domiciled hedge fund, from dealing in Indian stock markets for allegedly indulging in insider trading.

The capital market regulator, in a interim ex-parte (without hearing the entity banned) order released late on Thursday, said it noticed that Factorial had taken an unusual and aggressive short position in the F&O segment ahead of the L&T Finance Holdings' (LTFH) offer-for-sale (OFS) while in "possession of unpublished price-sensitive information" regarding the likely floor price of its OFS. The order is preliminary and is subject to further hearings. (Economic Times)

Deflation-wary European Central Bank cuts deposit rate to below zero - In a bid to spur growth and avert the dangerous threat of deflation in the sluggish eurozone economy, the European Central Bank cut its benchmark interest rate to a record low and took the unprecedented step of lowering the bank deposit rate below zero. This is the first time that a major central bank has pushed a key rate into negative territory. By lowering the overnight bank deposit rate to negative 0.1 percent from zero, the ECB will be charging lenders to park their funds with the central bank. The hope is that this will spur banks to make more loans and also weaken the euro, helping to lift an inflation rate that dropped to a four-year low of 0.5 percent in May. (Star Tribune)

RIL open offers for Network18, group firms to start 21 July - Reliance Industries Ltd (RIL) said its open offers to acquire a controlling stake in media group Network18 and its subsidiaries will begin on 21 July. RIL proposes to acquire control over the media group through Independent Media Trust (IMT). On 29 May, RIL’s board approved funding of up to Rs4,000 crore to IMT, of which RIL is the sole beneficiary, for acquisition of control in Network 18 Media & Investments Ltd (NW18), including its subsidiary TV18 Broadcast Ltd (TV18). (liveMint)

RBI allows share pledging in favour of NBFCs - The Reserve Bank has allowed pledging of shares of an Indian company held by non-resident investors in favour of non-banking financial companies (NBFCs) for business purposes to secure the credit facilities extended to the resident investee company for bona-fide business purposes/operations. Equity shares listed on a stock exchange(s) only can be pledged in favor of the NBFCs, it added. (Times of India)

Important Financial Terms in the News explained.

Deflation is the continuous decrease in prices of goods and services. Deflation occurs when the inflation rate becomes negative (below zero) and stays there for a longer period. Deflation cuts into business profits, raises real debt burdens and discourages consumer purchases, hampering investments and jobs. (This should not be confused with disinflation, a slow-down in the inflation rate.)

Inside Information: Non-public knowledge about a company possessed by its officers, major owners, or other individuals with privileged access to information

Insider Trading: The illegal use of non-public information about a company to make profitable securities transactions

Hedging: Making an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a futures contract.

PERSONALITIES

Chairperson of State Bank group – Arundhati Bhattacharya

President of European Central Bank - Mario Draghi.

TITBITS

India is the world’s second largest producer of sugar, after Brazil.

If you cannot learn to forgive, you shall stay imprisoned with the unforgiven, let go of what was & live in the present. ~ Anonymous

Courtesy : The Hindu , Economic Times