Recent Posts

Reluctance to lower prices a hurdle for growth

Indian currency

The economic value of cutting prices should not be underestimated. In March 2004, Procter & Gamble cut prices of Tide by 47% and Ariel by 28%, challenging Hindustan Lever’s pole position in this market. HLL responded in like and a furious battle ensued. How this ended is another story. What’s relevant is this: P&G’s volume growth did increase, but HLL’s growth did too, and so did its market share. Continue Reading →

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Why the RBI is in no hurry to cut interest rates (in charts)

Inflation and interest rates

The RBI is in no hurry to cut interest rates despite inflation trending low for several months now and there being no obvious immediate reason why it should move up sharply. Raghuram Rajan, the RBI governor, may have good reasons to be cautious though, considering what happened during the previous governor D. Subbarao’s tenure. He took charge as the governor in September 2008 and stayed on for 5 years. His tenure’s start coincided with the global financial crisis. The governor and the government joined hands with a monetary and fiscal stimulus to protect India’s economy and financial markets. Continue Reading →

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Customers Bancorp invests in Religare’s banking ambition

NASDAQ listed Customers Bancorp Inc. is investing $51million or Rs 310 crore in the Malvinder Singh and Shivinder Singh promoted financial services company Religare Enterprises. The stake purchase comes at a time when a bunch of companies are applying for a banking license to be one of the new batch of private sector banks to enter the Indian market.

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Indian PSU banks turn contrarian by cutting interest rates

Some large public sector banks have begun cutting rates of fixed deposits and loans, despite no change in the Reserve Bank of India’s stance towards interest rates. The RBI has held that inflation is an overriding concern, and holding interest rates high may affect growth but will help in curbing inflation. So, what explains the action of public sector banks?

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ICICI Bank’s loan provisions halve, net profit up by 31%

ICICI Bank’s December quarter results were better than expectations, and it appeared to be benefiting from a phase, when rising interest rates result in better yields on loans, as the cost of funds rises with a lag. It has also managed to improve its asset quality during the quarter, which is a positive sign.

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Union Bank of India’s net profit up 91%, over September quarter

Union Bank of India’s net profit growth continued to be affected by higher provisions for non-performing assets in the December 2010 quarter, rising by just 8.5% to about Rs 580 crore, compared to the same period a year ago. But the bank’s performance improved compared to the September quarter, with profit rising by 91%, chiefly due to a sequential decline in provisions.

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IndusInd Bank net profit rises by 75%, stock unmoved

IndusInd Bank has done well in the December quarter, with its net interest income rising by 53% to Rs 363 crore, in the quarter ended December 2010, over the same period a year ago. Its net profit has risen 75%, to close at Rs 154 crore in this quarter. The bank’s year on year growth is similar to that for September 2010 quarter, when its net profit rose by 71% and net interest income rose by 58%.

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