Economy News Notes:

The Reserve Bank today deregulated interest rate on savings accounts in all State and Central Co-operative Banks, a move that will fetch better returns for depositors.
Under the first condition, the notification said, "Each bank will have to offer a uniform interest rate on savings bank deposits up to Rs 1 lakh, irrespective of the amount in the account within this limit".
The other condition states that for savings bank deposits over Rs 1 lakh, a bank may provide differential rates of interest, if it so chooses.
It also said interest rate on Non-Resident (External) accounts scheme and Ordinary Non-Resident Deposit under savings account, which has been prescribed at 4 per cent per annum at present, will continue to be regulated until further review.

The core sector grew by 6.8% in November compared to 0.1% in October and 3.7% in the year ago.
Electricity has been doing reasonably well at steady clip

Indian Ports Association (IPA) expects to see normal growth of ports in 2012 despite continuing global economic recession and the April-November period, 2011, providing a grim picture of just 1.33 per cent cargo growth for major ports
But India's relative economic buoyancy and other indications pointed to normal growth in cargo movement during the New Year when exports were likely to pick up.
The association was a key player in drawing up the National Maritime Agenda.
The Maritime Agenda, which was launched in the first quarter of the current year, was a plan and policy framework for the forthcoming decade
A substantial number of private-public partnership projects in creating more deep draft ports; large-scale mechanisation of cargo operations and establishing better and more effective hinterland connectivity are the key areas which will get immediate attention.

Even the as they are readying to ring in the new year with quite optimism, the Reserve Bank of India has dampened their spirits by tightening rules for the non-banking finance companies.
- NBFCs could participate in the credit default swap market only as users.
- They would be permitted only to hedge their credit risk on corporate bonds they hold
- They are not permitted to enter into short positions in the credit default contracts
- They are not permitted to sell protection.
- They “are permitted to exit their bought CDS positions by unwinding them with the original counter-party or by assigning them in favour of buyer of the underlying bond
RBI also has tightened the capital adequacy norms for all NBFCs.
- The rule tightening exercise comes in the wake of their stepped-up exposure to off- balance sheet items.
- The RBI has tightened the off-balance sheet regulatory framework by prescribing that the total risk weighted off-balance sheet credit exposure be calculated as the sum of the risk weighted amount of the market-related and non-market related off-balance sheet items.

RBI has said that consolidation in the banking sector would pave the way for stronger financial institutions with the capacity to meet corporate and infrastructure funding needs, and to rescue distressed lenders.
However, it has prescribed a `non-operative bank holding company' structure to avoid creation of complex institutions.
It added that India needs bigger banks to meet its infrastructure needs and to finance large industrial projects.
However, the Competition Act, 2002 (as amended by the Competition (Amendment) Act, 2007) could come in the way of consolidation.
RBI's comments come at a time when many in the Indian industry feel that Indian banking has not kept pace with India Inc's funding requirements.