RBI concerned about volatility of rupee: Dy Guv

RBI concerned about volatility of rupee: Dy Guv

Negative effect on exporters

“We are not too much concerned about the rupee going up or going down. We are concerned about its volatility. The volatility has to be managed. It has to be managed by the market players,” Chakrabarty told reporters on the sidelines of a MSME knowledge conclave organised by ICICI Bank here.

The rupee has risen over 10 per cent against the dollar and is trading at below Rs 47 at present from Rs 52.17 in the first week of March, 2009.
Federation of Indian Export Organisation has already said the appreciation of the rupee would have a negative effect on exporters. “As the rupee rises, importers are very happy, while exporters are concerned. We are not too concerned about it. As a policy-maker, we can’t take any side,” Chakrabarty said.

However, the Deputy Governor said the rupee was more stable as compared to the yen and on a long-term, the apex bank was happy the way the rupee was moving.
Highlighting the importance of the MSME sector, Chakrabarty said if the country was to grow at 9 to 10 per cent rate on a sustained basis, the MSME sector had to perform.
“If at any point of time MSMEs have a bright future, I think that is today. Interest rates are at an all-time low,” he said, adding that inclusive growth was also not possible without taking into account the contribution of MSMEs.

ICICI Bank’s Managing Director and CEO Chanda Kochhar said the bank contributes 20 per cent of the total private sector lending to the MSME sector and said this had been growing and would continue to grow.

UCBs notified
RBI has directed urban cooperative banks (UCBs) to discontinue with their bilateral cheque clearing and processing activities which have no approval from the apex bank.
Any UCB failing to abide by the directive would attract penal action, RBI said in a notification.

In India, there are 1,139 clearing houses that facilitate multilateral net clearing and settlement of over four million cheques everyday.
As per the Payment and Settlement Systems Act, 2007, banks entering into bilateral clearing arrangements, for processing and clearing of cheques, require the apex bank’s authorisation for carrying out such transactions.