The Reserve Bank of India (RBI) ruled out the possibility of full rupee convertibility as of now and said the failure of the $23 billion Bharti-MTN deal cannot hasten the process.
Asked if complete capital account convertibility is possible, RBI deputy governor KC Chakrabarty replied in the negative. "We have to examine whether it's desirable or not and whether we have the capability to do so,"he said.On the possibility of Bharti-MTN deal failure quickening theprocess of complete convertibility, Chakrabarty said, "Nothing will quicken the capital account convertibility ."
While the rupee is fully convertible on the current account, it is not so in capital account.This means that control exists on converting rupee into other currencies when there is movement of capital from a country to India and viceversa.
The Tarapore Committee as well as other experts have recommended full convertibility of the rupee in a phased manner.
The deal was called off last week after regulatory hurdles in the way of dual listing could not be removed. That India does not have full rupee convertibility was yet another hurdle that the deal had to confront with.
Chakrabarty also indicated that RBI is considering plea from the banks for a hike in a limit for bonds that can be held till maturity .
Initially, he said the issue did not come under his purview but later, when asked if RBI favoured raising the held-to-maturity cap, he added, "My knowledge is that they were considering it."
Asked if RBI proposed to revise its expectation on inflation, he said the policy statement would be released (by RBI governor) on October 27."We don't predict about inflation everyday . It will be known on October 27."
Chakrabarty also said the wholesale banking and banking services for the rich world over, including in Indian metros, are becoming unviable but it was opposite in the case of poor.
"Banking for the poor is more viable, whereas that for the rich is becoming unviable," said Chakrabarty .
"Banking is becoming unviable in the USA and the UK.That's why the banking sector is facing a major setback. Banks have become unviable in London, New York, Tokyo, Hong Kong and Singapore. Wholesale banking is becoming unviable even in Delhi, Kolkata and Mumbai,"he said.
Asked if complete capital account convertibility is possible, RBI deputy governor KC Chakrabarty replied in the negative. "We have to examine whether it's desirable or not and whether we have the capability to do so,"he said.On the possibility of Bharti-MTN deal failure quickening theprocess of complete convertibility, Chakrabarty said, "Nothing will quicken the capital account convertibility ."
While the rupee is fully convertible on the current account, it is not so in capital account.This means that control exists on converting rupee into other currencies when there is movement of capital from a country to India and viceversa.
The Tarapore Committee as well as other experts have recommended full convertibility of the rupee in a phased manner.
The deal was called off last week after regulatory hurdles in the way of dual listing could not be removed. That India does not have full rupee convertibility was yet another hurdle that the deal had to confront with.
Chakrabarty also indicated that RBI is considering plea from the banks for a hike in a limit for bonds that can be held till maturity .
Initially, he said the issue did not come under his purview but later, when asked if RBI favoured raising the held-to-maturity cap, he added, "My knowledge is that they were considering it."
Asked if RBI proposed to revise its expectation on inflation, he said the policy statement would be released (by RBI governor) on October 27."We don't predict about inflation everyday . It will be known on October 27."
Chakrabarty also said the wholesale banking and banking services for the rich world over, including in Indian metros, are becoming unviable but it was opposite in the case of poor.
"Banking for the poor is more viable, whereas that for the rich is becoming unviable," said Chakrabarty .
"Banking is becoming unviable in the USA and the UK.That's why the banking sector is facing a major setback. Banks have become unviable in London, New York, Tokyo, Hong Kong and Singapore. Wholesale banking is becoming unviable even in Delhi, Kolkata and Mumbai,"he said.
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