28.11.2007

• SBI follows US diktats and refuses to honour Iranian LCs
• SBI has refused to honour LCs (Letters of Credit) issued by Iranian banks following US diktats that have to be followed by all banks operating in the US.
• The US is able to thus hurt the trade between India and Iran, as the trade is carried out in dollars and all dollar trades are ultimately settled in US. This makes it mandatory for SBI to follow the US diktats.
• UNDP targets 50% emission cut by 2050
• The UNDP has asked nations in its latest report on climate change to reduce GHG emissions by 50% over the 1990 levels.
• It has also recommended the creation of a Climate Change Mitigation Facility to mobilize between $25 to $50 bn per year to support low carbon transition in developing countries.
• Our planning commission has rejected this report outright. Planning Commission Chairman MS Ahluwalia pointed out that the recommendations of the UNDP ought to be based on per capita emission figures and not on total emission by a single country.
• Economicspeak!!
• I am referring to the coverage on BANCON 2007 given in today’s ET.
• Want a high funda, one sentence definition of carry trades? Look at this:
• Carry trades are leveraged cross-currency positions designed to take advantage of interest rate differentials across currencies.
• Domestic liability dollarization
• It is defined as the domestic bank’s foreign exchange denominated loans as a share of GDP and is a considered risk factor because systemic sudden stops are associated with large real devaluations, increasing the chances that foreign exchange denominated loans will be defaulted.
• India’s largest ever securitization deal
• ICICI Bank is reported to have carried out a transaction of securitizing Rs. 1929 crores of its used and new car loans.
• Coming as it does in the backdrop of the subprime crisis; it is certainly an eyebrow raising move on the part of the bank. You may remember that the securitization is one financial aspect that is being blamed for the emergence of the crisis.
• The problem with this is – though the credit rating agencies may rate it very well – it is very difficult to know how much of the portfolio is subprime in nature.
• US housing may be facing subprime woes; but in India it is a different story
• There will be demand for over 24.3 mn new dwellings in urban India, and over half of this will come from outside top 100 cities, according to a study “Housing Skyline of India 2007-08”.
• Curbs likely on CCDs with put option
• CCDs: Compulsory Convertible Debentures. These are basically in the nature of equity.
• Realty companies are found to be structuring the issuance of CCDs to foreigners in such a way that it resembles debt issuance rather than equity issuance. At the time of issuance itself, the issuer undertakes to buy (put option for the foreign buyer) the CCDs at a later date.
• Real estate companies are barred from tapping debt through ECB route. But there is no restriction on pure equity investment. Hence the real estate companies are found to be circumventing this restriction by a clever structuring of the issuance.
• Government may come out with some measures to plug this.
• About SIMI
• Want to know a bit about the history and growth of SIMI? You must read today’s centre page article in The Hindu. It traces it very well.
• Unique water conservation method
• The Orange County Water District in US has come out with the world’s largest plant devoted to purifying sewage to step up drinking water supplies.
• The finished product though will not be directly fed into the kitchen and bathroom taps. Instead it will be injected underground to form a barrier against seawater intrusion and recharge underground aquifers.
• Namibia’s capital Windhoek is reported to be the only place in the world where recycled water is put to ‘direct potable reuse’.
• Administrative Reforms Commission’s VI report
• The commission headed by Veerappa Moily submitted its 6^th report to the Prime Minister.
• India’s interceptor missile to be tested in December
• This will intercept and destroy an incoming missile. It will reportedly help India into developing a full-fledged Ballistic Missile Defence shield.