Inflation above comfort level, industrial production concern too: RBI

“We had 12 rounds of rate revisions since March 2010 to control inflation. But inflation is still above comfort level. Though it has affected the production adversely,” RBI governor D Subbarao told reporters after the RBI’s Central Board meeting in Jaipur

Jaipur: Admitting that a series of rate hike has affected the industrial activities, the Reserve Bank of India (RBI) on Thursday said inflation continues to remain above comfort level, reports PTI.

“We had 12 rounds of rate revisions since March 2010 to control inflation. But inflation is still above comfort level. Though it has affected the production adversely,” RBI governor D Subbarao told reporters after the RBI’s Central Board meet here.

RBI has increased interest rate by 350 basis points since March, 2010 in its bid to tame inflation. The central bank is due to review the monetary policy on 25th October.

“We have to weigh growth, inflation and factors affecting the economy of our country,” Mr Subbarao said.

Headline inflation was 9.78% in August, which is much above the comfort level of the RBI of 5%-6%.

Pace of industrial output in the country has remained subdued in July and August, which may impact the country’s GDP growth of the second quarter.

Industry has been asking the central bank to pause rate hikes saying high cost of credit was affecting economic activities.

On depreciation of rupee against dollar, Mr Subbarao said weakening of the Indian currency was making imports costlier.

“Recently the global prices of crude have come down, but due to depreciation rupee price of crude oil on net basis has gone up by 3%,” the Governor said. India imports about 80% of its crude oil requirements.

Oil imports during April-August this fiscal were valued at $52.251 billion, 27.09% higher than $41.114 billion in the corresponding period last year.

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HPCL suspends jet fuel sales to Kingfisher Airlines

“Kingfisher is on cash-and-carry. We had payments from the airline (to cover for aviation turbine fuel sales) till this morning. They did not make any payments, thereafter, so supplies have been cut at all major airports,” an HPCL official said

New Delhi: State-owned oil marketing company Hindustan Petroleum Corporation (HPCL) on Thursday suspended jet fuel sales to Kingfisher Airlines after the private airline failed to pay up for its fuel purchases, reports PTI.

“Kingfisher is on cash-and-carry. We had payments from the airline (to cover for aviation turbine fuel sales) till this morning. They did not make any payments, thereafter, so supplies have been cut at all major airports,” said a company official.

HPCL sells some Rs7-Rs8 crore worth of jet fuel or ATF to Vijay Mallya-owned airline. Kingfisher, which had run an outstanding debt of Rs634 crore, was last year put on cash and carry. It pays cheque for day's purchase of ATF after which HPCL refuels its aircrafts.

But the airline had not paid anything for purchases made on Thursday and those to be made on Friday.

“Kingfisher’s outstanding (debt) is covered by a bank guarantee of Rs550 crore and a corporate guarantee of Rs200 crore. But they have to pay to buy fuel which they haven’t and so further supply was cut,” the official said.

No immediate comment was available from Kingfisher.

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RBI announces standard rating symbols for banks

The change in rating symbols and definitions, however, does not effect, in any manner, the rating methodology followed by the credit rating agencies (CRAs) for rating such instruments and will have no bearing on the existing ratings assigned by the CRAs under the Basel-II framework, the RBI said in a statement

Mumbai: The Reserve Bank of India (RBI) on Thursday announced uniform and standard rating symbols to be used for indicating financial health of a bank, reports PTI.

The change in rating symbols and definitions, however, does not effect, in any manner, the rating methodology followed by the credit rating agencies (CRAs) for rating such instruments and will have no bearing on the existing ratings assigned by the CRAs under the Basel-II framework, the RBI said in a statement.

Under the revised standardised system, there is no change in the long term rating symbols except that they will henceforth display the rating agency’s name as a prefix, it said.

“In case of short term ratings, a rating scale denoted by ‘A’ on a scale of ‘1’ to ‘4’ (i.e. A1, A2, A3 and A4) and ‘D’ has been prescribed,” it said.

Four domestic CRAs namely CARE, CRISIL, FITCH India and ICRA have been accredited for the purpose of risk weighting the banks’ claims for capital adequacy purposes.

The long term and short term ratings issued by the chosen domestic credit rating agencies have been mapped to the appropriate risk weights applicable as per the standardised approach under the Basel II framework.

In June this year, capital market regulator Securities and Exchange Board of India (SEBI) had asked CRAs to adopt standard symbols and definitions to help investors to understand better the financial health of firms.

The four accredited CRAs, which are registered with SEBI, have therefore revised their rating symbols of long term and short term debt instruments.

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