• NBFCs rush to seek banking licence- Nearly 11 years after the Reserve Bank of India (RBI) issued the last of the two banking licences to private sector entities, the government has again started the process of allowing non-banking finance companies (NBFCs) to graduate to fullfledged banks. Finance minister Pranab Mukherjee’s budget proposal on Friday was the first step in that direction. The second step will be taken on Tuesday morning. A select group of officials from top NBFCs, under the aegis of Finance Industry Development Council (FIDC) — the trade body for NBFCs in India — is meeting R Gopalan, the banking secretary in the finance ministry, to present a case for select NBFCs to be converted into fullfledged banks, sources said. About 12-15 NBFCs and corporate houses with a presence in the financial sector are expected to join the race to launch banks.

• RIL may lose Lyondell bid, eye Canada company- Reliance Industries (RIL) is on the verge of losing its bid for bankrupt petrochemical company LyondellBasell, as it baulks at rising valuation due to the recovering global economy, but that may help it focus on the possible acquisition of Canada’s Value Creation. The bid by the nation’s largest private sector company, which was raised 21% to about $14.5 billion from the initial $12 billion in November, may not be acceptable to creditors who are leaning towards the revival plan proposed by the current management. Lyondell’s reorganisation plan to be filed with the US bankruptcy court in Manhattan on Monday will influence the final decision. RIL has raised about $2 billion selling its own shares from the vault between November and now to possibly bid for Lyondell. It still has shares worth about $7 billion for which it has not publicly spelt out a strategy.

• No restraint on revenue deficit yet- In Finance Minister Pranab Mukherjee may have earned plaudits for projecting a decline in the fiscal deficit to 5.5 per cent of gross domestic product (GDP) for 2010-11, but his targets for revenue deficit reduction are relatively modest and represent a departure from the 13th Finance Commission’s recommendations. Mukherjee’s Budget for 2010-11 proposed to reduce the fiscal deficit from 6.9 per cent (including the impact of oil and fertiliser bonds) in 2009-10 to 5.5 per cent next year, lower than even the 5.7 per cent mandated by the 13th Finance Commission. But the revenue deficit has been pegged only at 4 per cent of GDP in the Budget for 2010-11, down from 5.3 per cent according to the revised estimates for the current financial year. In sharp contrast, the Commission had recommended a reduction in the revenue deficit next year to 3.2 per cent of GDP.