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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: ratan lal who wrote (2554)	8/25/1998 4:18:00 PM
From: Nandu	Respond to of 12475

Did you see some guy in NY sued SBI for not offering the high interest to other than NRI's ? Saw the snippet on rediff. Anybody have more details? The SBI branches in the US are under US law, so they may not be capable of offering bonds to only NRIs. However, in this case, all that the branches are doing is collecting the money and application and forwarding it to SBI proper, in Bombay. The decision to approve the application is made by SBI in Bombay, and thus will be out of NY jurisdiction. This is only my opinion, of course. BTW, if you applied for the RIB, you would have noticed that other than checking a column saying you are an NRI, there is no actual data gathered in the application form that will allow the SBI to verify that you are an NRI. No passport number or Indian address or anything of that sort was required. I think anybody could have applied, and if there is any problem at redemption time, the redemption can easily be accomplished through a real NRI.

To: ratan lal who wrote (2554)	8/25/1998 4:22:00 PM
From: sea_biscuit	Read Replies (1) \| Respond to of 12475

India is giving interest as if it was a junk bond. BUT is very safe. That's what you think! Read the following article excerpt. It explains two alternatives -- one that provides short-term comfort but long-term pain, and another that necessitates taking short-term hits but gives India a fighting chance over the long-term. No prizes for guessing what alternative India has chosen to take! :-) Dipy. ---- BEGIN EXCERPT ---- The challenge can be met and there are two ways in which the Government can do so. The first is easy but leads to ruin. The second is harder but will lead to an overall strengthening of the economy and an increase in private investors' confidence in the country. Mr. Sinha is bound to receive both kinds of advice. He would do well to weigh his decisions carefully. The easy way is to raise interest rates yet again ( for instance by one per cent or more at the advent of the busy season, if not earlier). Real rates of interest are already five to six per cent above world rates and this has played no small part in attracting portfolio capital to India in the past two years. Despite the increase in fragility of the economy after the sanctions come into force, there will always be enough speculators in the international market prepared to bring money into India for short term gain, if interest rates are raised high enough. The additional inflow could easily offset the fall in bilateral and multilateral lending. But this is the road to Thailand. An increase in interest rates will further depress the share market, further raise the cost of new investment and therefore prolong the drought in investment. This will extend the stagnation of industry and the slowdown in economic growth. At the same time it will prop up an overvalued rupee and perpetuate the stagnation of exports. Sooner or later confidence in the economy will evaporate and foreign money will go rushing out. The rupee will collapse, and India will not even have the option of turning to the IMF for short term help. The terms that will be set by the U.S. for a bail-out will then be entirely political and will crush India's remaining sovereignty. The other, indeed the only, course that is open to the government is to lower the Bank Rate by another two percentage points at the very least, and lower the cash reserve ratio. This will cause a sharp fall in deposit rates, a transfer of money to the share market, and a fall in the cost of investment. The resulting increase in investment will kick start economic recovery. Lower interest rates will also lead to an outflow of short term foreign money and a fall in the value of the rupee. A 15 to 20 per cent devaluation will not only make exports competitive once more, but give the Government a windfall increase in customs revenue of more than Rs. 10,000 crores, which will help reduce the fiscal deficit. ---- END EXCERPT ----

To: ratan lal who wrote (2554)	8/25/1998 4:44:00 PM
From: Nandu	Respond to of 12475

Did you see some guy in NY sued SBI for not offering the high interest to other than NRI's ? Read and save the following article. nytimes.com

To: ratan lal who wrote (2554)	8/25/1998 4:45:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

Ratan: I don't know whether India could have borrowed for any less from the outside sources considering the downgrade by Moody's et al. Now even if they could the proceeds along with the profit would most likely end up in another country from where the funds came where as in this instance at least part of the amount paid in interest along with the proceeds will in all likelihood end up back in India in some NRE/NRNR/FCNR scheme. Also remember a whole lot will depend on how the money raised will be deployed.Since the the borrower is a Nation one can not just look at it in terms of the interest paid but rather one would have to look at the over all scheme of things and see what the ultimate effect of the funds raised will have on the economy of the country. Also remember this is not the first time India has raised funds in this manner, I believe there was a bond issue called India Development Bonds a few years ago.