The Hindu : Business : RBI deploys $35 b in international securities

Online edition of India's National Newspaper
Tuesday, Jul 06, 2004

Business

Business

RBI deploys $35 b in international securities

MUMBAI, JULY 5. The Reserve Bank of India deployed $35.024 billion dollar in international securities for the year ended March 31, 2004, higher than $26.929 billion invested in 2002-03 even as pre-payment of high-cost foreign currency loans of the Central Government was pegged at $3.7 billion in 2003-04.

Out of total foreign exchange reserves of $107.448 billion in 2003-04 ($71.890 billion in 2002-03), deposits with other central banks and Bank for International Settlements (BIS), and foreign commercial banks accounted for $45.877 billion ($33.463 billion) and $26.547 billion ($11.498 billion) respectively, the RBI said in its report on foreign exchange reserves released here today.

The ratio of volatile capital flows to reserves declined from 146.6 per cent as at end-March 1991 to 36 per cent as at end-March 2004, the central bank added.

The significant increase in forex reserves enabled prepayment of certain high-cost foreign currency loans of the government from the Asian Development Bank and the World Bank (IBRD) amounting to $3.03 billion in February 2003.

During 2003-04, prepayment of certain high cost loans to the IBRD and the ADB amounting to $2.6 billion was carried out by the Government. Additionally, prepayment of bilateral loans amounting to $1.1 million was made taking the total quantum of prepayments to $3.7 billion in 2003-04.

The RBI said Resurgent India Bonds (RIB) were redeemed on October 1, 2003. The total amount of redemption, inclusive of the interest component was of the order of $5.2 billion.

Referring to the Financial Transaction Plan (FTP) of the International Monetary Fund, it said the IMF designated India as a creditor under its FTP in February 2003.

In terms of this, India participated in IMF's financial support to Burundi in March-May 2003 with a contribution of Special Drawing Rights (SDR) five million and to Brazil in June-September 2003 with SDR 350 million.

In December 2003, SDR 43 million was made available to Indonesia under FTP. Thus, the total quantum of India's contribution under FTP was SDR 398 million at end-March 2004.

The RBI said at end-March 2004, the import cover of reserves was of 17 months. The ratio of short-term debt to foreign exchange reserves declined from 146.5 per cent at end-March 1991 to 6.1 per cent at end-March 2003 and further to 4.2 per cent at end-March 2004. — PTI

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