The Hindu Business Line : Inflation

Inflation in the primary articles group rose to 9.3 per cent, as on May 24, over the year with cereals recording 7.2 per cent. Government facilitated edible oil imports by abolishing customs duty to improve supplies and thus contribute to an easing of the price situation. Are the stocks being held back from the market by importers with the help of bank credit?

For the first time in recent years, in its Annual Policy statement for 2008-09, the RBI sought to undertake a review of loans to the agricultural commodity sector by banks.

They were required to review their advances to traders in agricultural commodities including rice, wheat, oilseed and pulses as also advances against warehouse receipts. They were further advised to exercise caution while extending such advances to ensure that bank finance was not used for hoarding.

The first such review was to be completed by May 15 and forwarded to the RBI. But the public has not so far heard from the RBI on the findings of its investigation.

A. Seshan Mumbai

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