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Jalan rules out change in interest rates

Reserve Bank of India Governor Bimal Jalan on Friday ruled out any change in the interest rate this fiscal and said the government borrowings were on target despite volatile market conditions and spiralling global oil prices.

"It (interest rate) will remain stable and has already softened," Jalan said, adding there was no possibility of any changes in the cash reserve ratio (CRR) of banks from the current 8.5 per cent in the next four months of this fiscal.

In the wake of robust revenue collections so far, government borrowing was on target and was expected to be around the budgeted Rs 1.17 trillion, he told reporters on the sidelines of the Asia Pacific Forex Congress.

Despite the expected $5.5 billion inflow from India Millennium Deposit, Jalan said "the markets are normal."

The Central bank was sterilising the proceeds from State Bank Of India's deposit scheme periodically and there would be no exess liquidity in the system, he indicated.

"Our objective is to keep market movements orderly and ensure that there is no liquidity problem or rumour or panic-induced volatility," he said.

On the effect of global oil price hike, he said, "Our markets are relatively thin and the declared policy of the RBI is to meet temporary demand-supply imbalances which arise from time to time."

In the current period, he said RBI has been meeting the oil import requirements of Indian Oil Corporation directly as also the debt service requirements because of extraordinary rise in oil prices.

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