Financial Daily from THE HINDU group of publications
Saturday, Mar 25, 2006
Financial Daily from THE HINDU group of publications Saturday, Mar 25, 2006 |
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Financial Policy Money & Banking - Forex Govt firm on early capital account convertibility Our Bureau
BPO INITIATIVE: Mr P. Chidambaram, Union Finance Minister, and Mr N. Kanthakumar, Chairman and MD, Syndicate Bank, in Bangalore on Friday. - G. R. N. Somashekar
Bangalore , March 24 The Union Government is firm on the transition to capital account convertibility of the rupee since most of the milestones laid down in the Tarapore Committee report in 1997 have been reached. The Finance Minister, Mr P. Chidambaram, said here today, "We are within striking distance of capital account convertibility. We have met most of the commitments laid down by the Tarapore panel, contained the fiscal and revenue deficits." He was speaking at the inauguration of Syndicate Bank's Business Process Outsourcing (BPO) office and the installation of core banking solution (CBS) in the bank's 525th branch. The Finance Minister brushed aside opposition to convertibility from certain quarters of the Reserve Bank of India. He said, "Why should some in the RBI oppose the idea? It is an idea that should be carried forward." He said that the country was witnessing inward remittances of $30 billion a year and this would only increase. He also decried the opposition to technological upgradation of the banking system. Technology, he said, would help upgrade the quality of banking services and help increase the coverage and reach of the network. He said the Committee on Banking Inclusion would submit its report with the next few months. The government would take a decision based on its findings.
Indian Bank milestone
Later, speaking at the inauguration of the Indian Bank's 501st CBS branch, the Finance Minister said, "Banking exclusion is not an acceptable situation." He said currently only about 22 per cent of the farm sector had access to bank credit and another 25 per cent to informal moneylenders. The remaining was out of the credit network. Banking inclusion, he said, would help improve productivity in the farm sector by making available crop loans at low rates of interest.
Farm lending
Mr Chidambaram expressed satisfaction at the pace of farm lending in the country. The target of Rs 1.42 lakh this year was likely to be exceeded, he added. He said the success of the self-help groups (SHG) had invited interest from States such as Orissa, Bihar and West Bengal. At least, 30,000 SHGs in these States were expected to be credit-linked, he added.
Sufficient liquidity
Mr Chidambaram said that the current regime of tight liquidity in the markets was not a cause of concern for the government. He told reporters after inaugurating Syndicate Bank's BPO subsidiary liquidity situation was sufficient, he said. "The RBI," he said, "will intervene if required." However, he added that the liquidity would have to be managed to ensure that interest rates remained attractive to depositors. Earlier the Syndicate Bank Chairman and Managing Director, Mr N. Kanta Kumar, said his bank's CBS would cover 60 per cent of the business. He said that the bank's BPO would provide services to customers wanting to file Income Tax returns, government business reconciliation, back office functions for bancassurance tie-ups and credit/debt card services. Dr K.C. Chakravarty, CMD of Indian bank, said, that the bank would ensure coverage up to 70 per cent of the business through its CBS. The bank, he said, was launching a credit card aimed at the rural and semi urban regions along with VISA. This card would be targeted at customers with an income of Rs 3,000 per month. He said Indian Bank had also commenced a project in Pondicherry for inclusion project. This project would allow all the citizens of the State to have a bank account. This project would later be extended to other States, he added.
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