HDFC bank launches India's first secure, online, real-time Internet Payment Gateway.

According to bond dealers, because of the slowdown in the economy, Government securities have become the safest investment, leading to the huge volumes in the market.

With inflation figures dropping, there are increased expectations of a further rate cut by the Reserve Bank of India, said Mr Ashish Parthasarathy, Deputy Treasurer, HDFC Bank. The euphoria in the bond market currently is similar to that in the equity markets when the Sensex was at 16,000-levels. Nobody knows how long it will last. But a 10-year investment at 5.5 per cent does not make sense, said a bond dealer with a private bank.

Total traded volumes on the order matching system were at Rs 27,485 crore (Rs 18,410 crore).

The 8.24 per cent, 10-year 2018 paper opened at Rs 117.82 (5.75 per cent yield to maturity – YTM) and closed at Rs 119.83 (5.49 per cent YTM), against the previous close of Rs 117.42 (5.8 per cent YTM). During the day it touched a high of Rs 120.14 (5.46 per cent YTM).

Rupee appreciates

The rupee appreciated by 70 paise against the dollar as the greenback weakened in the overseas markets due to sustained selling pressure.

The domestic currency opened at 47.33/35 and strengthened to close at 46.93, as against the previous close of 47.64/66.

Sentiments also improved as the domestic equity market ended in the green.

With oil prices falling, the pressure on the import bill has reduced. Also, the pressure on the rupee has eased as the FII outflows have decreased, Mr Parthasarathy said.

State Bank of India has reduced the interest rates for working capital loans to micro, small and medium enterprises (MSMEs) between 50 and 100 basis points, with immediate effect. With this reduction, micro enterprises and small scale industries with working capital limits up to Rs 10 crore will be able to avail themselves of working capital finance at 10.25 per cent, said a press release from the bank.

Other measures taken by the bank for MSMEs include reduction of margin for sanction of limits, extending the working capital cycle to cover longer period of holding of inventory and receivables. The bank has launched a new product ‘SME CARE’ for sanction of additional working capital limits up to 20 per cent over the earlier limits, to meet the longer working capital cycle. The bank has also come forward with a scheme to support MSMEs that require diesel generator sets to meet power shortage and maintain their productive activity.

The bank’s MSME portfolio was at Rs 74,324 crore as at the end of March 2008 and it has increased to Rs 81,794 crore as at the end of November 2008.

The Union Government on Thursday said that it would continue to push for cheaper home loans even for the existing borrowers.

Speaking in the Lok Sabha Union Home Minister P Chidambaram, who earlier held the finance portfolio, said the government has asked banks to cut interest rates on home loans.

"We have now prevailed upon bankers to cut their home loan rates. There was a one time cut. There is another cut. Home loan rates have been reduced. For fresh loans up to Rs 5 lakh home loans are being given at 8.5 per cent and from Rs 5 to Rs 20 lakh at 9.25 per cent.," Chidambaram said in the Lok Sabha.

The former finance minister replied on the state on the economy in Parliament from the government side.

Chidambaram's statement assumes importance as public sector banks on Monday said interest rate for fresh home loans of up to Rs 5 lakh will not exceed 8.5 per cent, while the lending rate is a maximum of 9.25 per cent for new housing loans in the bracket of Rs 5 lakh and Rs 20 lakh.