Money & Banking

RBI wants more FDI, but worried by quality of portfolio inflows

Our Bureau Bangalore | Updated on March 12, 2018

Ms Shyamala Gopinath, Deputy Governor, RBI (file photo). -- Paul Noronha   -  THE HINDU

The Reserve Bank of India is making concerted efforts to attract foreign direct investments into the country though the quality of inflows was a concern.

The RBI Deputy Governor, Ms foreign direct investments speaking to presspersons after the launch of the e-Payment system (‘EASeR) developed by RBI-Bangalore and adopted by the Karnataka's Commercial Taxes Department, said the country has been able to absorb capital inflows due to its current account deficit.

“But we have expressed apprehension about the quality of inflows in terms of portfolio inflows. But as we see today, we are not seeing too much volatility in that sense. But we would want more FDI to come in so that the quality of the flows does alter,” she explained.

Banking licence

On the norms for granting new banking licences, she said the RBI would issue draft guidelines shortly.

“We are in consultation with the Centre. At present, there is no tussle with the Government on the issue,” she said in response to a question, adding that the RBI and the Government converge on many issues vis-à-vis these guidelines.

Asked about SKS Microfinance ‘struggling' with the Andhra Pradesh Government norms, Ms Gopinath said the RBI expects microfinance institutions to be in full compliance with its regulations.

“The RBI hopes the Andhra Pradesh Government takes a relook at the new regulations on MFIs to ensure that they are able to function in an orderly manner,” she added.

Ms Gopinath feared the rising commodity prices, particularly oil and gas, would add to inflationary pressures, adding that the other factor driving inflation is that the price rise has not been factored in by the administered price of items such as fuel.

“So, yes, we will be impacted if commodity prices go up substantially,” she added.

Published on May 12, 2011

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