03.10.2008

• Interest rates go through the roof; a look at the reasons for tight liquidity conditions in India
  
• The first effect of liquidity crunch can be gauzed from the fact that several non-banking finance companies (NBFCs) have reportedly borrowed at rates the Mumbai money market has never seen before. Desperation has driven these firms to raise money at an unbelievable 1,000-1,800 basis points (bps) i.e., 10 to 18% above Mibor (Mumbai inter-bank offer rate) — the benchmark rate for overnight lending, which is fixed by polling call money rates from leading banks and bond houses. On Wednesday, Mibor was quoting at 17%. This means an interest cost of 27-35% for the borrowers.
  
• The desperation of the NBFCs can be explained by the liquidity and duration mismatches in their businesses. In the past, they had borrowed cheap money in the short term to give personal loans and create other long-term assets.
• While money markets across the world are grappling with a liquidity crisis, the reasons are different in India. Abroad, banks are hoarding cash and are refusing to lend to each other due to fears that the money could get stuck if the borrowing bank goes down. Here, there is no such mistrust among institutions. The tight liquidity is a combination of massive FII outflow, advance tax outflow and dollar selling by RBI.
• One more reason that is reported is the non-receipt of compensation for the agri-debt waiver.
• US Senate passes the Nuclear bill
• Pushing India into the nuclear club, the US Senate voted overwhelmingly in favour of the legislation — US-India Nuclear Cooperation Approval and Non-proliferation Enhancement Act — with 86 senators voting for the deal and 13 against. Two killer amendments were struck down, much to India’s relief.
• What does it mean for India?
• India joins the nuclear mainstream after 34 years of nuclear isolation.
• India can buy reactors and nuclear fuel from any country in the world.
• Closer strategic ties with the US and greater role on the international stage.
• Recent chronology of events:
  
• Aug 1: IAEA okays India-specific safeguards agreement.
  
• Sept 6: NSG approves a waiver for India opening the doors of civilian nuclear commerce.
  
• Sept 23: Senate Foreign Relations Committee approves the 123 agreement legislation.
  
• Sept 27: US House of Representatives approves deal.
  
• Oct 1: Senate approves the deal with 83/13 margin.
  
• Speaking of chronology of events, you can't get a better picture of India's nuclear isolation and ending of it anywhere better than this one that appeared in today's ET.
• What are the concerns that still remain for India on the nuclear deal?
• While fuel supply guarantees are not forthcoming, reprocessing technology and reprocessing spent fuel remains encumbered under Congressional procedures. The bill mandates the US to ensure a return to the technology denial regime if India tests a nuclear weapon.
  
• According to the legislation (US-India Nuclear Cooperation Approval and Non-proliferation Enhancement Act), fuel supply guarantees now translate into “reasonable reactor operating requirements”.
  
• Similarly, another area of concern is reprocessing technology and fuel. The Congress now has the powers to deny any arrangement by the US government to grant India the right to reprocess spent fuel.
  
• Mumbai to have India's first floating heliport
• India’s financial capital will be home to India’s first floating heliport. Taking a cue from Downtown Manhattan, which boasts of the world’s first floating heliport, Nariman Point will have a similar helicopter landing platform in the next few months.
• The facility will meet the top-gear traffic needs of India Inc. Some of the biggest names in business — the Tatas, Ambanis and Ruias — are clustered around Mumbai’s business heartland Nariman Point. The heliport will serve not only these bulge-bracket CEOs but also some of Dalal Street’s big names, not to mention top politicians and bureaucrats.
• The heliport will be utilised for sightseeing, providing charter and private aviation services, besides serving as a major aviation getaway. It will supplement the chopper service from the Juhu aerodrome, which is also run by Pawan Hans Helicopter Limited.
• Private news channels establish a self regulatory body
  
• Private news broadcasters’ association—News Broadcasters Association (NBA)—formally launched the News Broadcasting Standards (Disputes Redressal) Authority on Thursday.
  
• Chaired by former Chief Justice of India, JS Verma, the authority would act as an independent regulator to look into complaints against its member broadcasters if content aired by them does not adhere to its code of conduct and broadcasting standards.
  
• The Authority is nine member body and has on its board former Nasscom president Kiran Karnik, economist Nitin Desai, sociologist Deepankar Gupta and historian Ramachandra Guha as its ‘eminent’ members. It would also have four editor members—Times Now editor-in-chief Arnab Goswami, India TV MD Vinod Kapri, Zee News group editor BV Rao and Star News MD Milind Khandekar.
  
• The NBA dispute redressal cell has the power to suggest revocation or cancellation of a member broadcaster’s licence to the government authorities concerned. It will also try to complete its enquiry within three months of receipt of a complaint.