Mumbai, Oct. 28 The Reserve Bank of India appears inclined to encourage takeover of weak/sick urban co-operative banks (UCBs) by domestic scheduled commercial banks (SCBs). According to the central bank, where proposals for amalgamation within the UCB sector (i.e. amalgamation of weak/ sick UCBs with strong UCBs) are not forthcoming, it is proposed to provide Deposit Insurance and Credit Guarantee Corporation support to the amalgamation scheme involving transfer of assets and liabilities (including branches) of legacy cases of UCBs to domestic SCBs.

Takeover legacy The takeover of legacy cases of UCBs – UCBs having negative networth as on March-end 2007 – by domestic SCBs will be allowed provided the amalgamation scheme ensures 100 per cent protection to depositors, the RBI said in the second quarter review of its monetary policy for 2009-10. The prospect of acquiring a readymade infrastructure and business could prompt SCBs, especially from the private sector, to pursue acquisition of weak UCBs, said Dr Vinayak Tarale, Secretary, Mahahrashtra State Co-operative Banks’ Association. In case the amalgamation scheme provides for each depositor (of a weak UCB) being paid or credited with, on the date on which the scheme comes into force, an amount which is less than the original amount and also the specified amount, the Corporation, according to the provisions of the DICGC Act, will pay to depositors the difference between original amount and the amount so paid or credited/ the specified amount, whichever is less.

Guidelines The central bank said it will be issuing detailed guidelines on DICGC supported transfer of assets and liabilities of UCBs to SCBs in legacy cases. According to the RBI’s latest report on Trends and Progress of Banking in India, out of 1,721 UCBs in India, 23 per cent or 392 UCBs fell in the weak and sick banks category as of March-end 2009.

Aggregate deposits As of March-end 2009, the 392 UCBs had deposits and advances aggregating Rs 24,344 crore and Rs 15,824 crore. The aggregate deposits and advances of all UCBs put together stood at Rs 1,58,733 crore and Rs 97,918 crore as of March-end 2009. Working group Meanwhile, a working group constituted last year to suggest measures, including creation of an umbrella organisation and revival fund for UCBs has submitted its report to the RBI.

NAGPUR: Skipper Mahendra Singh Dhoni smashed a blistering century as India whipped injury-hit Australia by 99 runs on Wednesday to level their India seven-match One-day series 1-1. Dhoni hit 124 off 107 balls and Gautam Gambhir and Suresh Raina chipped in with half-centuries as India, sent in to bat, accumulated their highest One-day total against Australia - 354/7 from 50 overs.

In reply, the world champions, who won the first match by four runs in Vadodara on Sunday, were bowled out for 255 in the day-night international, with left-hander Michael Hussey top-scoring with 53. Indian seamer Praveen Kumar took two wickets in his first spell before young left-arm spinner Ravindra Jadeja polished off the middle order with figures of 3-35. Some 40,000 home fans cheered lustily as Dhoni put on 119 for the fourth wicket with Gambhir (76) and a swashbuckling 136 from 93 balls for the fifth with Suresh Raina, who made 62. Enjoying perfect batting conditions at the Vidarbha Cricket Association stadium, the hosts plundered 108 runs in the final 10 overs, overtaking their previous best against Australia of 315 all out in Bangalore in 2001.

Dhoni reached his century by smashing Shane Watson for a straight six, and celebrated the landmark with another six off the next ball in the same area. The aggressive Indian captain was one of three batsmen to be dismissed in the 50th over, but not before he had taken nine boundaries and three sixes off the truncated Australian attack. The tourists, already without one-day regulars Michael Clarke, Brad Haddin and Nathan Bracken for the series, were further depleted by injuries to paceman Brett Lee and all-rounder James Hopes. However, left-arm fast bowler Mitchell Johnson was declared fit from an ankle sprain and claimed the important wicket of Virender Sehwag in the 11th over, caught at mid-off attempting a big hit.

Sehwag smashed a typically robust 40 off 31 balls to give India the momentum after veteran batsman Sachin Tendulkar was removed by Peter Siddle in the fourth over. Australia's chase of the mammoth total faltered after India removed the first three batsmen, including skipper Ricky Ponting, by the 11th over to make it 45-3. Wickets fell at regular intervals to hand India an important win ahead of the third match, in New Delhi on Saturday. For the second match in a row, two Indian umpires took charge in the middle after the International Cricket Council-appointed Mark Benson of England failed to recover from a viral infection.

MUMBAI: The Reserve Bank of India may have left key policy rates untouched in its review on Tuesday, but it doesn't mean status quo on interest rates. According to money market observers, the policy statement clearly heralds the end of soft rates in the economy. If that is true, it will definitely have an impact on both your debt and equity investments.

"RBI may not have hiked cash reserve ratio, repo or reverse repo rates and only increased statutory liquidity ratio, but the tone of the policy clearly indicates that rates may go up in the near future," says Mukesh Dedhia, director, Ghalla & Bhansali Securities. "The SLR hike impact would be temporary, but there is a general feeling that the RBI may hike key rates in its next policy review in three months. It may even raise rates before that," says D Sundararajan, investment consultant, Trendy Investments, a wealth management company. Most analysts believe there won't be much impact on the money market liquidity by the SLR hike, as several banks have already exceeded the required exposure limit.

Does that call for a change in investment strategy for individual investors? "As such, there are no fundamental changes. Even if there is a hike in CRR, repo or reverse repo rates, the market would have already priced it. Unless there is a surprise change in policy or rates, there won't be a fundamental shift in the market," says Navneet Munot, chief investment officer, SBI Mutual Fund. "The current happenings in the equity market is not a direct fall-out of the RBI policy, it has more to do with the huge run-up and correction," he adds. According to him, a small investor is still safe with a diversified equity scheme in the long run. He also suggests multi-cap schemes for investors who want their fund managers to move across market capitalisations for maximum gains.

"The market has moved up quite a bit on its way to 17,000-plus level, which is almost three times from the base of 7,700. So it's natural that there would be a correction," says Dedhia. "Investors can exit totally if they think the market has run-up too fast. Those who have faith in the market in the long run can book profit and keep the principal amount in the market," he adds. According to Sundararajan, the market may witness steep corrections. "The market may come to even 15,000 in the short term. Investors who are looking to enter the market should use these corrections if they want to participate in the rally. For those sticking with SIP, there is nothing to worry as the long-term outlook for the market is still bullish," he says. According to him, the market may even test the all-time high in the next 12-15 month period. That leaves investors of debt schemes out, where they are likely to see the yields dance wildly on every small monetary step taken by the central bank.

MINNEAPOLIS: Struggling US Airways has said it will cut some 1,000 jobs next year, shift nearly all of its flying to its three hubs and Washington, and suspend several international routes.

The retrenching is aimed at putting its airplanes where the money is its hubs at Philadelphia, Phoenix, and Charlotte, North Carolina, as well as Washington. US Airways said flying from its hubs has been profitable. Once the changes are made early next year, 99% of its flying will be to or from those cities, up from 93% now. It's also keeping its US Airways Shuttle between Boston, New York, and Washington, although some of the Boston flying is shifting to its smaller Embraer 190 jets.

US Airways has said its domestic flying will drop slightly next year, while international flying will rise a little. The carrier is scaling back international flying from Philadelphia. It will suspend flights between there and London Gatwick; Birmingham, England; Milan, Italy; Shannon, Ireland; and Stockholm. It will also formally give up its government permission to fly between Philadelphia and Beijing, which it never used.

Us Airways said its first flights across the Pacific will now be on its planned route to Tokyo, beginning in 2012 "or when market conditions become favourable." The company said revenue on trans-Atlantic routes has fallen $273 million this year through September.