The Hindu : Business : Convertibility parameters within reach: Chidambaram

Online edition of India's National Newspaper
Saturday, Mar 25, 2006

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Business

Convertibility parameters within reach: Chidambaram

Special Correspondent

Pats nationalised banks for becoming financial malls

BANK'S BPO FORAY: Union Finance Minister P. Chidambaram (centre) inaugurating Synd Bank Services Ltd. and 525th CBS branch in Bangalore on Friday. N. Kanthakumar (left), Chairman and Managing Director, and Prakash P. Mallya (right), Executive Director, Syndicate Bank, look on. — Photo: PTI

BANGALORE: Union Finance Minister P. Chidambaram on Friday said that opposition in some quarters to full capital account convertibility was due to the fact that they (those who were opposing) were not "familiar with the idea,'' while the Government, having contained fiscal and revenue deficits, was within "striking distance'' of achieving the goals set by the Tarapore Committee.

Inaugurating SyndBank Services Limited, the first BPO subsidiary of a nationalised bank, Mr. Chidambaram said the idea of capital account convertibility was floated in 1997 by the Tarapore Committee, but could not be implemented as the Asian crisis cropped up. However, the Government keeping the report in mind, moved towards containing the revenue and fiscal deficits, besides checking inflation.

(According to PTI, Mr. Chidambaram criticised "some employees'' of the Reserve Bank of India for opposing the full float of the rupee. "`They should examine the idea and contribute to the debate if they so wish. But an idea should not be opposed merely because one is not familiar with it,'' he said).

Speaking about the performance of nationalised banks, Mr. Chidambaram said they were responding "admirably'' to the suggestions put forth by the government and using technologies these banks would soon become "financial malls'' offering services such as banking, insurance and mutual funds under one roof. The public sector banks had grown from strength to strength. The banks, he said, had a challenging task ahead of them of implementing the decision of seven per cent interest on farm loans. Agriculture credit would surpass the target of Rs. 1,42,000 crore set for the year. The number of education loans extended during the first nine months of 2005-06 had crossed 1,76,000 and that of self help groups covered had crossed 3.25 lakh by February-end. Banking services, he said, should be available to a larger population and that had been the goal of the government. Banks should not be afraid of technology or new ideas and said the BPO idea of Syndicate Bank had to be "given a chance.'' At the inauguration of the 501st (core banking solution) branch of Indian Bank, Mr. Chidambaram said the Government had appointed a committee to examine why a large section of the citizens were excluded from the financial system.

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