Facebook Inc. users in Iran are flocking to a page created for Mir Hossein Mousavi, posting information and photographs backing the leading challenger to President Mahmoud Ahmadinejad.

A profile for Mousavi now has more than 63,000 “friends,” up from about 2,500 a month ago, according to Palo Alto, California-based Facebook, the world’s most popular social- networking site.

Activists in Iran are using social-networking sites such as Facebook and Twitter Inc. to organize rallies and attract supporters. Twitter, which lets users post 140-character messages, said this week that it was delaying a network update because of demand for its services in Iran. Closely held Facebook said yesterday it is getting reports that users in Iran are having difficulties reaching the site.

“There was a tremendous amount of activity on Facebook from Iranian users related to the election, with both sides discussing and organizing around their candidates,” said Debbie Frost, a spokeswoman for Facebook.

The state-owned Data Communication Company of Iran, which acts as the gateway for all Internet traffic entering or leaving the country, has slowed Web access to a crawl, according to Arbor Networks, a Chelmsford, Massachusetts-based maker of security software for Internet-service providers.

Censorship Resistance

“The Iranian government hasn’t taken the draconian step of cutting the Internet altogether,” said Jonathan Zittrain, a professor at Harvard Law School in Cambridge, Massachusetts, and co-director of the Berkman Center for Internet and Society. “The government has a lot of tools to effective blocking, but some Web sites are naturally censorship resistant.”

Technology-savvy Iranians are turning to proxy servers, which route Internet traffic around blocked Web sites, Zittrain said. People outside of Iran are also playing a role, letting Iranians use their computers as proxy servers, he said.

That means information is still getting out of Iran, said Turi Munthe, chief executive officer of London-based Demotix Ltd. Set up as an outlet for photographs taken by “citizen journalists,” Demotix lets people submit photos from Iran that can be sold to the press, Munthe said.

“We were flooded with photos before the election, then there was a total shutdown,” Munthe said in an interview from London. “Now there’s a trickle, as the choke on those Internet connections is eased at night. We never know when those gaps will open or how long they will last.”

Election Protests

Protests in Iran began after election officials said Ahmadinejad won about 63 percent of the June 12 vote, to about 34 percent for Mousavi. Mousavi and his supporters have accused Ahmadinejad of vote-rigging. Demonstrations now are entering a seventh day as the authorities struggle to contain popular anger at the election result.

The turmoil is pitting the Islamic republic’s ruling clergy against young Iranians and more educated voters who want social freedom and better ties with the West.

On the Mousavi Facebook page, users are asking for ways to circumvent Internet-filtering software and for information on demonstrations around the country. Most of the posts are in Farsi.

Others are turning to software from Fring.com, which lets users broadcast messages to most social-networking sites, including San Francisco-based Twitter. The software can bypass blocked Web severs, according to Fring CEO Avi Schecter. Traffic to Tel Aviv-based Fring has doubled since the June 12 election, Schecter said.

Niloofar Nafici, 26, a Facebook employee whose family fled Iran before she was born, compared what’s happening today to a student uprising in 1999.

“People are approaching me now and saying, ‘Can you imagine if we’d had this 10 years ago,’” Nafici said. “It would have been a completely different story.”

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When the Indian outsourcing industry is being blamed for taking away American jobs, a study has found that corporate India has created employment for 3,00,000 people in the US between 2004 and 2007.

An India Brand Equity Foundation study released in Washington on Wednesday by Commerce and Industry Minister Anand Sharma mentioned USD 105 billion contribution by the Indian industry to the US economy during 2004-07.

"This revealed a story of commitment to optimise and to invest in the future of the relationship," Sharma said.

The USD 50-billion Indian outsourcing industry has come in for a major attack in the US, bolstered by President Barack Obama's calls to the US companies to move from Bangalore to Buffalo.

Concerned over the backlash in the US, the Indian industry has been trying to lobby with influential Americans and opinion leaders about the benefits that the American can derive from developing economies.

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Indian banks are likely to resist mounting government pressure to sharply cut rates as they grapple with expensive deposits raised at the height of the credit crisis and rising bond yields.

India's newly elected government wants its banks to lend more and cheaply to boost economic growth, following other Asian economies such as China, which lifted limits on bank lending to grease the wheels of its economy.

The pressure is adding to the risks for shares of state-run banks, which have underperformed the bank index and privately held banks this year.

"Profitability and margins could be under pressure particularly if specific Indian banks pursue a very aggressive growth strategy and decrease the spread earned on banking products," said Brayan Lai, a credit analyst at Calyon in Hong Kong.

"From a top down perspective, I prefer Indian state-run banks due to their quasi-sovereign backing and recapitalisation plans but, from a bottom-up approach, I'd be worried as some dubious lending may take place," he said.

Shares of the country's biggest lender State Bank of India (SBIN.NS) have gained 32 percent so far this year, lagging a 46 percent gain in the bank index and a 57 percent jump in shares of privately held ICICI Bank (ICICIBANK.NS).

SBI and its associates control a quarter of all loans, and state-run banks as a sector corner 55 percent of all assets.

SBI cut its deposit rate by 25 basis points, its fourth cut in 2009, but has yet to reduce its lending rate. Chairman O.P. Bhatt said the economic recovery was yet to reflect on banks' asset growth and passing on rate cuts to customers will take time.

WORRIED POLICYMAKERS

With bank loan growth slowing sharply, policymakers worry that by not passing on to customers the deep cuts in official rates these banks may threaten an economic revival.

While the central bank has cut its main lending rate by 425 basis points since October, state-run banks have cut their lending rates by 150-200 bps.

Loan growth has slowed from around 27 percent in November to around 15 percent in early June and halved from rates of around 30 percent seen in the financial year to March 2008.

At a meeting with the heads of state-run banks last week, Finance Minister Pranab Mukherjee urged them to follow the central bank and reduce interest rates.

Bankers say more deposit rate cuts would lead to a flight of money from bank deposits to federal schemes that yield an attractive 8 percent tax-free rate.

"Banks are at a crossroads: if they keep cutting their deposit rates, they won't get the funds and if they don't get the resources what will they lend," said K. Ramakrishnan, chief executive of the Indian Banks Association, an industry body.

CARE research data showed these schemes have lost heavily to bank deposits which accounted for 55 percent of household schemes at March 2008. In 2004, these schemes garnered 20 percent of savings and their pool shrank by nearly 4 percent last year.

"To me, current interest rates are fair and are conducive enough for healthy loan growth when the economy turns," Ashish Parthasarthy, deputy treasurer at HDFC Bank, said.

Private sector lenders such as HDFC Bank and ICICI, while free from government pressure to cut rates, will still need to follow state-run banks or lose customers.

Angel Broking analyst Vaibhav Agrawal estimates a 10-20 bps drop in margins in the next two quarters after a 40 bps fall in the March quarter.

Privately held banks such as ICICI, Yes Bank (YESBANK.NS), Kotak Mahindra Bank (KOTAKBANK.NS) and mid- to smaller state-run banks such as Dena Bank, Corporation Bank and Oriental Bank of Commerce (ORIENTBAN.NS) will gain as they rely more on bulk deposits, he said.

Goldman Sachs said banks' return on equity will fall to 14.3 percent in 2009 from 16.6 percent a year ago as net interest margin shrinks to 3.45 percent from 3.65 percent in 2008, with state-run banks being affected the most.

Another factor worrying banks are rising bond yields.

Banks have to park roughly a quarter of their deposits in bonds, and benchmark yields are up 156 bps this year, squeezing their margins.

"You can't have a situation where banks' deposit rates are falling and benchmark yields are going up," said J. M Garg, chairman of state-run Corporation Bank.

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