Oman’s largest bank, BankMuscat has launched a service for the 600,000-strong NRI community in the country, which will offer banking solutions including remittance service.

This is the second announcement by an Omani bank for products targetted at NRIs, the first being by Oman Arab Bank last week.

The new service, called Pravasi, will offer banking solutions for NRIs in India and Oman, with services ranging from basic remittance service, investments in international and Indian funds, wealth management solutions to demat accounts in India and Oman for trading in shares and retirement solutions, the bank said.

Launching the service, AbdulRazak Ali Issa, chief executive of BankMuscat said: “We believe Pravasi has all the necessary ingredients that will allow us to offer end-to-end global financial solutions, from basic remittance services to high-end wealth management solutions and advisory services.”

“Pravasi will offer a range of financial services to suit every segment of the NRI population in Oman,” he said.

BankMuscat Pravasi has partnered with Centurion Bank of Punjab and Mangal Keshav Group, one of the top 20 security houses in India.

Last week, Oman Arab Bank launched an India-centric wealth management product and services scheme that aims to provide an opportunity to potential investors in the country to invest in the Indian economy.

The rupee turned weak and was quoted lower by about seven paise against the US currency at 39.55/56 a dollar in morning trade on heavy dollar demand amid weakness in equity markets, which fell back after a strong start.

Despite weakness in dollar against major currencies in overseas market after the US Federal Reserve announced a surprise rate cut by 75 basis point on Tuesday, the Indian unit came under pressure due to dollar purchases by banks.

In active trade at the Interbank Foreign Exchange (forex) market, the rupee resumed better at 39.40/43 a dollar on the back of a strong bounce in equity market in early trading session this morning. It, however, fell back to 39.55/56 in late morning deals against previous close of 39.4850/4950 as the market failed to hold initial gains.

The BSE benchmark Sensex bounced by 946.66 points to 17,676.60 in the initial five minutes of trade, later later fell back to 17,285.26 at 1030 hrs, up 555.32 points from previous day’s close of 16,729.94.

Forex dealers said there was all-round dollar buying in exchange market in early trade.

Heavy FII pullout from equity also weighed on the rupee sentiment. Foreign Institutional Investors reported outflows of USD 3 billion in the last five days.

The Western Union Company, a provider of money transfer services, announced the opening of its 50,000th Agent location in India at the State Bank of India branch in Gurgaon, Haryana.

To mark the occasion, Hikmet Ersek, EVP and MD, Western Union Europe, Middle East, Africa and South Asia (EMEASA), joined Gautam Kanjilal, Chief General Manager (Delhi), State Bank of India, for a special inauguration ceremony.

Western Union, together with its affiliates, Orlandi Valuta and Vigo, is a provider of global money-transfer services. Consumer demand for Western Union services has grown due to a rise in long-term global migration trends, which have resulted in increasing cross-border remittances. India is one of the world’s largest receivers of remittances with more than 26.9 USD billion remitted into India in 2006-2007, according to the Reserve Bank of India.

“India offers immense growth potential in the money-transfer business, and with the launch of the 50,000th location we re-emphasize our commitment to our customers in the country,” Hikmet Ersek said. “Money transfer is a very unique way of participating in the growth and development of a nation, especially in India where Indian Diaspora income is regularly channeled back into the country. Together with our Agents we aim to contribute to the development of the country by delivering fast and reliable money-transfer services to our customers. ”

Gautam Kanjilal, Chief General Manager (Delhi), SBI, said, “We highly value our relationship with Western Union and look forward to delivering even better services to our customers by working closely together.”

Speaking at the inauguration event, Anil Kapur, MD-South Asia, Western Union Services India Private Limited, said: “Western Union is expanding its services in India by increasing our reach as well as adding value to our service offerings. In November 2007, we announced a pilot Mobile Money Transfer Project in association with Bharti Airtel.”

Western Union has 50,000 Agent locations in India spanning over 5,000 cities, towns and villages. This includes more than 8,500 post offices and more than 14,000 branches of leading banks.

The Indian Overseas Bank (IOB) plans to open a representative office in Dubai as part of its foray into the Gulf region.

Indian Overseas Bank Chairman and Managing Director S A Bhat said the bank was given go-ahead by Reserve Bank of India for its Dubai entry, and he would be meeting UAE Central Bank officials to take up the matter.

Bhat said IOB has arrangements with 20 exchange houses and two banks in the Gulf region. “With a direct presence in this vibrantly growing region, we seek to boost our business and profile,” he said.

During April to September 2007, IOB recorded total remittance of $18.42 billion.

“UAE Exchange has been one of our oldest of partners. This association has helped IOB reach out to a wide base of customers, benefiting from the immense goodwill that UAE Exchange has in the region,” he said at a press conference.

The Indian diaspora seems to be taking a long-term view on India. They are shunning NRI deposit schemes and are sending higher amounts instead to relatives back home.

In the July-September 2007 quarter, remittances touched a new high of $10 billion. While NRIs parked only about $346 million in various bank deposit schemes.

For the fiscal year so far (April-September ’07), while there has been a net outflow of $76 million from NRI deposits, remittances, as reflected in ‘private transfers’, amounted to $18 billion, an amount that the diaspora sent back home until 3-4 years ago.

Remittances, which comprise a portion of the current account on the balance of payments and are permanent in nature, have always been substantially higher than NRI deposits, which form part of capital account and are repatriable, at any point of time in the past. But what is discerning now is the pace at which the two are growing.

Interestingly, the non-resident external (rupee account) (NRE(RA)) is an attractive proposal, when the rupee is appreciating as the foreign currency gets converted into rupees at the time of deposit. It again gets reconverted into dollar at the time of redemption. In a scenario of an appreciating rupee, one tends to get more dollars on maturity of a deposits.

According to Punjab National Bank chairman and managing director KC Chakravarty, rupee deposits fetch a higher returns than in any NRI scheme. Besides, there is a provision to convert rupee funds back to dollars up to $100,000.

Indian Overseas Bank executive director G Narayanan said at a time when stock and real estate markets are booming, it is natural that interest in NRI deposits is flat. Moreover, returns are also regulated.

NRI deposits were marketed by banks initially to shore up the country’s foreign exchange reserves. But in the past few years, with the reserves pile-up getting stronger and forex inflows adding to the liquidity management problems, the central bank is, in fact, trying to discourage such flows through caps on the returns that one can earn on such deposits, especially since the rupee started appreciating against the dollar from mid-2002 onwards.

Besides, in the present scenario, with Indian markets offering better returns on most assets, there is no incentive to convert rupee funds to dollars since returns are higher here, pointed out a banker. Data on NRI investment in other assets such as stock, real estate and other physical assets is not readily available in the public domain (unlike bank deposits).

But a recent RBI study on the use of remittances by the relatives back home shows that about 46% of the proceeds are invested in stocks, properties, bank deposits and deployed in other avenues. Only 54% of the money is used for family maintenance.

Moreover, with the US economy, which has the highest NRI population and a major source of remittances, showing signs of a slowdown, and at the same time, brightening of prospects for the Indian economy, many NRIs are coming back which is also adding to the remittances figure.

Source : India Times

The risk of Bank of America Corp. defaulting rose to the highest since at least November 2001 after the biggest U.S. bank by market value said it will rescue Countrywide Financial Corp.Credit-default swaps tied to the bonds of Charlotte, North Carolina-based Bank of America increased 12 basis points to 92 basis points, according to broker Phoenix Partners Group in New York, suggesting deteriorating perceptions of credit quality.

Bank of America may take on too many liabilities in its $4 billion acquisition of Countrywide, the money-losing mortgage lender besieged by bankruptcy speculation, the contracts show. Bank of America would inherit the “heightened” credit risk of Countrywide’s home equity loans and option adjustable-rate mortgages, analysts led by David Hendler at bond research firm CreditSights Inc. said in a report today.

“There’s probably a little doubt here,” Brian Yelvington, a strategist at CreditSights in New York, said in an interview. “They say the due diligence is done, but is it?”

Moody’s Investors Service today said it may cut Bank of America’s A financial strength rating. The ratings company said it may raise Countrywide Home Loans’ Baa3 ranking.

Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company’s ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. A rise indicates deterioration in the perception of credit quality.

Countrywide Contracts

Bank of America will buy Countrywide for about $7.16 a share in stock, the company said in a statement today. The offer is 7.6 percent below yesterday’s closing price on the New York Stock Exchange. Countrywide gives Bank of America about 9 million borrowers and fees from servicing $1.5 trillion of mortgages.

The purchase would put Bank of America in an “all-out capital replenishment phase” to ensure it meets regulatory guidelines, Hendler said in today’s report.

Contracts on Calabasas, California-based Countrywide plunged to 325 basis points, Phoenix prices show. Investors yesterday sought 7.25 percentage points, or $750,000, upfront and 500 basis points a year for five years to protect Countrywide bonds.

Sellers of default protection on Countrywide demanded an upfront fee of as much as 31 percent, or $3.1 million, earlier this week on concern the company was headed for bankruptcy. Soaring defaults on mortgages as the U.S. housing market endures its worst slump in 27 years prompted Countrywide’s market value to drop 82 percent in the past 12 months.

Narrowing Gap

Credit-default swap prices suggest that investors for the first time in about three months see Bank of America as risky as Citigroup Inc., the U.S. bank that replaced its chief executive officer after writedowns on subprime mortgage securities. JPMorgan Chase & Co. and Bear Stearns Cos. analysts today said the New York-based bank may write down as much as $16 billion when it reports fourth-quarter earnings.

Bank of America contracts have traded an average 17 basis points below Citigroup in the past three months. The gap has narrowed to 1 basis point, according to CMA Datavision and Bloomberg data.

The Markit CDX North America Investment Grade Index, a benchmark gauge of default risk tied to the bonds of 125 companies including Countrywide, rose 3.25 basis point to 96.25 at 10:23 a.m. in New York, according to Deutsche Bank AG. The index rises as investor sentiment worsens.

A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.

In Europe, credit-default swaps on the Markit iTraxx Europe benchmark index of 125 companies with investment-grade ratings fell 0.25 basis points to 66.25, according to JPMorgan. The index rose to 67.5 basis points this week, the highest since the start of the credit slump in July.

Source : Bloomberg

Bank of America Corp. will buy Countrywide Financial Corp. in an all-stock transaction worth about $4 billion.

The purchase will make the Charlotte-based bank the nation’s largest mortgage lender and loan servicer.

Bank of America (NYSE: BAC) is the largest mortgage lender in Harris County based on loans and the second-largest financial institution in the Houston area based on deposits.

Calabasas, Calif.-based Countrywide has more than 1,000 offices, including nine in the Houston area, and a sales force of nearly 15,000.

Under Bank of America’s ownership, Countrywide will no longer offer subprime mortgages and will continue to operate separately under the Countrywide brand with integration occurring no sooner than 2009.

Countrywide had $408 billion in mortgage originations in 2007 and has a servicing portfolio of about $1.5 trillion, with 9 million loans.

The purchase is expected to close in the third quarter and to be neutral to Bank of America earnings in 2008 while boosting results in 2009, excluding merger and restructuring costs

The Indian rupee was little moved on Thursday, with dealers saying the market was caught between the prospect of strong overseas interest in Indian equities and the spectre of central bank intervention.At 9:50 a.m. (0420 GMT), the partially convertible rupee was at 39.305/315 per dollar, slightly softer than the previous finish of 39.28/29.

The rupee hit a peak of 39.16 in November, its highest in almost 10 years. Suspected central bank intervention has blocked attempts to test that level this week, and dealers said the central bank has bought around $1-$2 billion so far this year.

“So far the central bank has been able to defend the 39.30 level, but as we move closer to the Reliance IPO, perhaps it won’t be that easy, or at least it will be a lot more expensive,” said a dealer with a private bank.

Reliance Power, is set to raise up to $3 billion in an initial public offer next week, which would be India’s biggest-ever IPO, and currency dealers expect a net of about $1 billion to flow in from overseas investors.

Sentiment was slightly cautious after Asian markets eased on Thursday despite a late Wall Street rally, on worries about global growth after Goldman Sachs forecast a US recession this year, helping gold hold near record highs.

But dealers also focused on the rise in the Indian benchmark share index, which hit its fifth record high in as many days in early deals on Thursday.

Traders also looked on likely outcomes of policy meetings of the Reserve Bank of India and the US Federal Reserve at the end of the month.

Source : LiveMint

First Gulf Bank (FGB), one of the UAE’s leading financial institutions, has stepped up its offering to the country’s vast non-resident Indian (NRI) market through a tie-up with India’s leading and fastest growing financial conglomerates Kotak Mahindra Group.

The tie-up will benefit FGB’s expanding First Wealth client base – customers who utilise the bank’s bespoke wealth creation service which provides a comprehensive range of investment products and services tailored to the financial planning needs of local and expatriate clientele.

The tie-up will enable remittances to go directly from FGB to Kotak, provide access to a dedicated ‘Value Account’ which enables holders to hold savings in both banks in UAE Dirhams and the Indian Rupi, gain access to brokerage and insurance products as well as more than 250 India-based mutual funds and offer convenience with cheques being able to be issued on either bank and cleared by the other.

This is in addition to FGB’s First Wealth services which also oversee client’s other investment portfolios such as health plans, savings and insurance, offering a holistic personal finance management service ensuring unparalleled efficiency.

‘With the economy growing at over 8% and the Sensex delivering close to a 50% return in 2007, India is fast emerging as a key economic force on the world map. We are now the third largest private sector bank in India in terms of market capitalization and have 150 bank branches. Having presented resident Indians with great investment opportunities in the past, we are now keen to offer high quality investment solutions to NRIs and foreign nationals. We are confident that through this alliance between Kotak and FGB we shall be able to complement each other’s efforts to present the best investment opportunities to the investors in the UAE,’ said Somer Massey, Director International Business.

The move is also a further widening of FGB’s product and client base as it continues its drive to evolve into a full-service, international financial institution.

What’s a Power of Attorney (POA)?

A POA is a document by which you can authorize some other person to act on your behalf. You can issue a General POA or a Specific POA (only for a specified transaction or purpose).

POA for NRI accounts

A shortcoming of being an NRI is that you cannot be physically present to handle your financial matters for most of the year. However, you can solve this problem by issuing a POA in favor of any resident Indian you trust – a friend, family member, etc. – to act on your behalf. For example, you can legally authorize your parents to operate your NRI bank account via a POA.

Importance of POA for NRI accounts

POAs are especially important in operating NRI bank accounts. Most NRIs hold NRI accounts with banks so that they can provide for their loved ones in India. Another common reason is to make investments. A POA can be useful for both these purposes. A POA holder can withdraw money from the account to make local payments, say monthly bills. S/he can also make investments on your behalf using the funds in the account.

Limitations

The Indian legislation limits the powers of a POA holder for some transactions.

• A POA holder cannot open an NRI account but can only operate it.

• cannot transfer funds outside India through the NRI Account (except to the account holder).

• cannot transfer funds in the NRI account as a gift to another resident.

• cannot transfer funds from an NRI Account to another NRE Account.

How can you draw a Power of Attorney?

Most banks have a readymade format called the ‘mandate letter’. It’s generally provided at the time of opening the NRI Account. You can even fill it up and submit it to the bank at a later time. If the bank doesn’t give you a format, then you should get the POA drafted through a lawyer. However, note that you can issue a POA only to a resident Indian.

A word of caution

A POA to operate a bank account bestows tremendous authority upon the POA holder. Hence, be sure that the person to whom you give your POA is trustworthy and will act in your best interest.

Source: Window2India