• SBI moves up: SBI with over Rs 7 lakh crore assets has improved its ranking from 70th

to 57th position, according to the latest annual top 1,000 bank list prepared by the UK

based leading banking publication The Banker.

• ADB loan to revive khadi industry: The Asian Development Bank (ADB) is extending a

loan of $150 million to India to help revive the khadi, the widely-revered handspun and

handwoven cloth, which has not developed to desired levels owing to poor production

and marketing techniques. According to an ADB statement here, a $ 2-million grant will

also be provided by the Japan Special Fund through the Manila-based multilateral

institution to support the implementation and monitor the progress of the loan-funded

reform package for the khadi industry. The 11th Plan document has laid great stress on

khadi production, mainly owing to the huge employment prospects for women and


• Export to major countries during 2007-08: USA, UAE, CHINA SINGPORE AND UK are

the top five destination for India’s exports during 2007-08 accounting 12.71%, 9.59%,

6.65% and 4.11 % share respectively in the Country’s total exports during the year,

Exports during 2007 -08 at $ 1,62,904. 16 million, went up by 29.02% from the 2006 -

07 level of $ 1,26,262.68 million.

• Biotech sector to touch $5-billion by 2010: India is ranked among the top 12 biotech

destinations in the world and is the third biggest in Asia-Pacific in terms of the number

of biotech companies”. Investments in the segment are also growing at the rate of about

38% for the last three years and have touched $560 million in 2006-07.

• Govt. cuts fee for telcos completing 95% rollout: Government has cut the licence fee

for the telecom service providers which have completed over 95% network roll-out in a

service area, except metros, a move aimed at encouraging operators to increase teledensity.

The applicable universal service obligation levy will be 3% instead of 5%, which

means the licence fee is automatically reduced for category A, B and C circles to 8%, 6%

and 4% respectively, DoT said while amending the UASL licence.

• Saving your savings: One of the key amendments in the draft of the US bailout Bill now

passed by the US Senate and House of Representatives is the move to hike US federal

deposit insurance from the current $100,000 to $250,000. This increase in the federal

insurance limit is expected to calm depositors in the midst of a flurry of collapsing

financial institutions. It is also expected to bring greater stability to the financial system,

particularly banks—if deposits worth $250,000 are guaranteed the chances of a run on a

bank are much reduced. The UK is also seriously considering raising its deposit

insurance from 35,000 pounds to 50,000 pounds. Deposit insurance is a necessity in an

era of fractional-reserve banking India, despite its archaic financial system, has a
surprisingly commendable deposit insurance scheme. India was, in fact, one of the

earliest implementers of deposit insurance way back in the 1960s. Currently, an amount

of Rs 1 lakh is guaranteed to depositors in the event of a failure or closure of a bank.

This is small when compared with the US—Rs 1 lakh is worth just over $7,000 in the US

in PPP terms. India is, of course, a country with much lower average incomes; so the size

of deposits is much less than in the US. The total number of bank accounts (in

scheduled commercial banks) in India is around 5.19 crore. The average size of a deposit

is around Rs. 50,000, well below the deposit insurance level. If one extracts the figures

for metropolitan areas, then the average amount of a deposit is around Rs. 90,000.

Again, this is under the deposit insurance amount. It would seem then that there is little

to worry about in terms of saving the aam aadmi’s savings in the event of a run on a

commercial bank in India. But two things are still necessary: first, the government must

educate the public at large about the existence of a deposit insurance scheme. Second,

there is a need to begin thinking about raising the limit further, as incomes grow. Even

now, many of the 98,31,000 metropolitan accounts would have deposits of more than

Rs. 1 lakh. No need to wait for a crisis to up the limit.

• Global stocks tumble as crisis escalates: World stock markets plunged, striking fouryears

lows in London and New York as the financial crisis showed no sign of abating

despite a multi-billion dollar bailout for U.S. banks. European equities were rattled by

fresh troubles of the leaders of France, Britain, Germany and Italy failed to produce a

joint European financial rescue package.

• Govt. mandate EPF for foreign workers: The labour ministry has made it mandatory

for international workers–both Indians working outside the country and non-Indian

citizens working here–to contribute 12% of their salary (matched by an equal amount

from the employer) to the Employees’ Provident Fund Organisation (EPFO), irrespective

of the contributions they may be making to such schemes in other countries. This new

rule, which applies to all countries, would immediately and adversely affect employees of

those countries that have so far not signed so-called SSAs (social security agreements)

with India, such as the US. The agreements are also called totalization agreements.

Effective 1 October, international workers will be able to export, or transfer back, their

contributions only to countries with which India has signed SSAs, essentially Belgium

and France so far.

o India has signed SSAs with France and Belgium, will sign a pact with Germany.

o Concluded negotiations on SSA with the Netherlands and the Czech Republic.

o Negotiations on with Norway, Switzerland and Hungry.

o SSAs proposed with all European Union countries and Australia.

• CRR cut by 50 bps, first in five years: To reverse the tight liquidity situation in the

dimestic markets brought on by the global financial turmoil, the reserve Bank of India

duced the cash reserve ratio (CRR) the amount of reserve banks keep with RBI by 50

basis points, the first time in five years. It also made it clear that liquidity concerns, not

inflation, will get priority now the new CRR of 8% in place of 9% will come into effect from

October 11 Since September 16, when the global crises broke, the daily borrowing by

banks through the repo window has jumped from an average of Rs. 15000 crore to above

Rs. 50,000 crore. The bank said the CRR reduction will release Rs. 20,000 crore into the


• FDI heads for China, India: Despite the current global economic slowdown and financial

instability, India and China continue to be the most preferred FDI destination in 2008-

2010. The United Nations Conference on Trade and Development (UNCTAD) survey titled

“World Investment Prospects (WIPS) 2008-10” released points to an upward trend among

developing and transition economies especially in Asia, Central and Eastern Europe, and

Latin America, both for FDI inflows and outflows. The six preferred destination for FDI in

the survey are the same as last year’s: China takes the lead, followed by India, the United

States, the Russian Federation, Brazil and Vietnam. The next in order of preference are

Germany, Indonesia, Australia, the United Kingdom, Mexico and Canada.
• ECB cap on exploration, mining raised to $500m: The government allowed companies

operating in the refining, exploration & mining sectors to bring into India up to $500

million of external commercial borrowings (ECBs), a ten-fold expansion from the earlier

cap of $50 million. This would significantly benefit companies. The timing of the relaxation

could not have been better as Indian companies have been finding it difficult to raise

money from the equities market, down 40% this year. Also, the rapid rise in the domestic

borrowing costs.

• Credit of Rs 150 cr for constant IOC supply to Nepal: As a goodwill gesture, New Delhi

has agreed to allow a credit of upto Rs 150 crore for uninterrupted supply of petroleum

products by the state-owned Indian Oil Corporation (IOC) to Kathmandu during the

festival season. “The Prime Minister has agreed to allow a credit of upto Rs 150 crore to

the Nepal Oil Corporation (NOC) for the next three months. NOC imports all its petro

products from India and had even defaulted on payments for its POL supplies from India.

Its dues had mounted to Rs 400 crore in March last year. Under an agreement between

IOC and NOC, the outstanding dues are being liquidated at the rate of Rs 15 to 20 crores

per month which has brought down the dues of NOC significantly from Rs 400 crores to

Rs 44.36 crore.

• Iron ore: India’s exports of iron ore to China have declined to almost nothing since August

following a slump in demand for the commodity in that country, resulting in an almost

50% decline in the price of the mineral in the global market. China has, over the past few

years, been the single largest consumer of iron ore, a key input in the manufacturing of

steel. Iron ore is India’s biggest export to China by value. India’s mining industry has

grown significantly over the past five years, largely on the back of a construction boom in

China. The growth rate in iron ore production in India ranged between 9.49% and 18%

during the period.

• $2bn fund for secondary agriculture: A panel formed by the government in 2006 has

proposed the creation of a $2 billion fund to boost so-called secondary agriculture.

Secondary agriculture typically includes activities such as extracting vitamins from food

grains, medicines from herbs, fibre boards from rice straw, oil from rice bran and so on.

The 15-member committee, headed by D.P.S. Verma. Suggested setting up the fund–called

the secondary agriculture innovation fund, or SAIF–during the 11th Plan (2007-12).

Agriculture, which provides a living to some 70% of India’s population, accounts for just

19% of the country’s gross domestic product. Development of secondary agriculture may

help raise the sector’s contribution, according to Tacsa.

• Exports surpass target in 2007-08: India succeeded in surpassing its export target of

$160 billion in the last fiscal (2007-08), as per the latest date released by the Directorate

General of Commercial Intelligence and Statistics. The cumulative value of exports for

2007-08 stood at $162.9 billion, registering a growth of 29.02 per cent over the same

period last year, while in rupee terms, it reached a level of Rs. 6.55-lakh crore as against Rs. 5.71-lakh crore, a growth of 14.71 per cent.

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