CHENNAI: The Reserve Bank of India will come out with a fresh draft guidelines on rationalisation of the priority sector lending policy in the next few weeks, according to the RBI Governor, Y. V. Reddy.

Replying to questions during a teleconference on Tuesday on the occasion of the quarterly review of the central bank's annual credit policy statement, Dr. Reddy said the RBI's attempt was to make priority sector lending more "more simple and focused.'' Exercises were on in this regard following the recommendations of an internal group headed by C. S. Murthy and the "conflicting responses" received on it. Dr. Reddy said the apex bank was "committed" to developing the corporate debt market in tune with the government's policy indicated by the Union Finance Minister in his budget speech and was examining the report of the R. H. Patil committee in this regard. It was an area requiring urgent action, he added.

Asked about the continuance of regulation of the savings bank interest rate at a level that was well below the RBI's own "informal, indicative and self-imposed" inflation targeting of 5 per cent to 5.5 per cent, he said the savings bank system in India was "unique" and pointed out that many foreign banks had minimum balance requirements that did not earn interest. Bankers felt that the savings bank system was being used (by consumers) as a current account, apart from for purposes of savings.

The question of deregulation of the savings bank deposit rate had been considered and discussed with stakeholders.

There were many conflicting views and no "ideal view" emerged. The opinion of the Indian Banks' Association's (IBA) had been sought but that only added to the confusion, he observed.

Asked whether the situation arising from incomplete pass-through of the permanent element in the rise in global oil prices could be managed merely through the RBI's policy instruments, Dr Reddy said it warranted action on many other "extremely important issues'' (outside the RBI's control) like demand-price balance, shoring up oil companies' balance sheets and containing the fiscal deficit. However, the RBI could not be expected not to do its part to deal with the situation merely on the ground that "wider issues" were involved, he added.

Printer friendly page  
Send this article to Friends by E-Mail