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Our Bureau

`Indicative of confidence on measures to contain inflation'

Coimbatore April 27 Bankers by and large felt that RBI's Annual Policy has been on expected lines, with no major change.

Mr R.M. Nayak, Chairman and Managing Director of Lakshmi Vilas Bank, said the announcement indicated the Regulator's confidence on the measures taken to contain inflation.

Some forward-looking measures such as setting up of a Working Group on Currency Futures to study international experience and suggest a suitable framework to operationalise the proposal was evident of RBI's stance on money matters. "What is important though is the regulator's assessment of the overall market. Growth-related issues should be kept in mind while dealing in financial matters," he said.

Mr P.T. Kuppuswamy, Chairman and Managing Director of Karur Vysya Bank, said the policy emphasised credit quality and orderly conditions in financial markets. Permission for banks and primary dealers to deal in Credit Default Swaps, he said, was important for management of risks.

Trade reporting platforms for bonds and Rupee Interest Rate Swaps would deepen the market by doing away with information asymmetries and inviting more participants.

`Balancing act'

The City Union Bank Chairman, Mr Balasubramaniam, and its Executive Director, Mr N. Kamakodi, felt that the regulator has performed a balancing act to ensure economic growth and contain inflation.

There is an implication that the liquidity surplus has been created by forex inflows and the announcements are aimed at reducing the liquidity created.

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