RBI not to intervene in foreign exchange market: Deputy governor

“In exchange rate policy, the rupee is a floating currency. It remains that the exchange rate is market determined and there is no intent to intervene with a particular exchange rate in mind,” RBI deputy governor Subir Gokarn said

Mumbai: The Reserve Bank of India (RBI) on Tuesday said it does not intend to interfere with the exchange rate and its monetary policy stance in the coming months would be determined by movement in inflation, reports PTI.

“In exchange rate policy, the rupee is a floating currency.

It remains that the exchange rate is market determined and there is no intent to intervene with a particular exchange rate in mind,” RBI deputy governor Subir Gokarn said here.

Mr Gokaran said the rupee, which is a partially convertible currency, has depreciated because of global conditions.

“...capital reallocation around the world has impacted many currencies, and we have stayed with our policy,” he said.

The rupee has depreciated against the US dollar by about 9% this year.

The rupee on Tuesday weakened by 37 paise to trade at Rs49.48 against the dollar as the US currency strengthened in the overseas markets.

On the possibility of halting the policy rate hike in its next policy review due on 16th December, he said it would depend upon inflation rate.

“We gave the guidance two weeks ago (in mid-year monetary policy)...Unless there is something dramatic that happens to change it, that guidance remains. So let us say, the guidance remains the same until further notice at this stage,” Mr Gokarn said.

RBI had since March 2010 raised key rates 13 times with a view to calm down the inflation which was still hovering near the double-digit mark.

The deputy governor further said that RBI’s projection on inflation has take into account international crude oil prices.

Since the time deregulation of petrol prices, “we assume that the pass through will be more or less full. The new element in this calculation (on inflation projection) is exchange rate movement”.

On the rate of price rise, he said the structural drivers of inflation are still strong and the RBI expects it to remain high through October and November.

Headline inflation stood at 9.72% in September.

The government is yet to announce the inflation data for October.

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Infotel Broadband acquires 38.5% stake in Extramarks Education

The investment by Mukesh Ambani-owned Infotel will enable Extramarks to pursue its aggressive growth plans in further developing services and deepening market penetration. The move that will help Reliance Industries strengthen its content pipeline as it looks to launch its broadband services soon

New Delhi: Mukesh Ambani-owned Infotel Broadband Services has acquired 38.5% stake in digital learning solutions firm Extramarks Education, a move that will help Reliance Industries (RIL) strengthen its content pipeline as it looks to launch its broadband services soon, reports PTI.

Infotel Broadband Services has acquired 38.5% stake in Extramarks Education and the investment has been made through an affiliate company Reliance Strategic Investments for an undisclosed amount.

According to sources, there will be no dilution of equity in Extramarks and RIL will infuse fresh capital.

The investment by Infotel will enable Extramarks to pursue its aggressive growth plans in further developing services and deepening market penetration.

The funds will be used for executing computer-aided learning projects and new technologies.

Extramarks’ digital distribution model provides students with education support and study help at affordable prices.

“The relationship with Reliance is the start of an exciting phase for Extramarks. Over the last two years, we have progressed on our journey of revolutionising the domestic education sector through technology enabled smart solutions and active participation in infrastructure development,” Extramarks chairman Atul Kulshreshta told PTI.

“The alliance with Reliance will accelerate the mass penetration of our offerings benefiting thousands of Indians who will have the advantage of quality education and study help at their doorstep,” he added.

Last year, Reliance Industries had acquired 95% stake in Infotel Broadband for Rs4,800 crore, making it a subsidiary of Reliance Industries.

Infotel Broadband is the only company which won broadband spectrum in all 22 circles in India, paying Rs12,848 crore for the spectrum.

Infotel is expected to launch its high-speed Internet services or broadband wireless access services (BWA) by the end of this year or early next year.

The acquisition of stake in Extramarks is expected to strengthen the Infotel’s content portfolio and help grow its business, especially in the education sector, which is focusing strongly on delivering content using information and communication technologies (ICT).

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Rising NPAs not posing threat to banking system: RBI

RBI deputy governor Subir Gokarn attributed the rise in NPAs to various domestic and international reasons. “There is an overall business cycle movement. There is overhang from the previous shock of 2008-09...” he added

Mumbai: Attributing rising bad loans to business cycle, the Reserve Bank of India (RBI) today said that non-performing assets (NPAs) are not posing any threat to the banking system, reports PTI.

“It (NPAs) is not reaching a point where it threatens the integral system. I don’t think we are at that point,” RBI deputy governor Subir Gokarn said here.

He attributed the rise in NPAs to various domestic and international reasons. “There is an overall business cycle movement. There is overhang from the previous shock of 2008-09...” he added.

Non-performing assets of state-owned banks have increased to 2.31% of their assets at the end of March 2011 from 2.27% in the year-ago period.

Amid concerns of rising NPAs in the banking sector, the country’s largest lender State Bank of India (SBI) had put in place a separate mechanism to contain them. SBI’s NPAs had reached a three-year high of 3.52% of loans in the quarter ended 30th June.

On RBI’s decision to deregulate the savings account interest rates, Mr Gokarn said the move would increase competition among banks for retaining customers.

Earlier, banks were mandated to give 4% interest rates on such deposits, but with the freeing of rates, several private sector lenders, like Yes Bank and Kotak Bank, have hiked rates to 6%.

“We did it at a time when banks are not grappling for deposits. The deposits are quite healthy. The gap between deposit growth and credit growth is quite narrow now,” Mr Gokarn added.

Referring to inflation, he said, the structural drivers of inflation are still strong and the RBI expects it to remain high through October and November.

The government is yet to announce the inflation data for October.

Headline inflation stood at 9.72% in September.

Besides, food inflation, which account for over 14% in the overall inflation basket, stood at a nine-month high of 12.21% at the end of 22nd October.

“The structural drivers of inflation are still very strong...The fact that food inflation will remain high despite good monsoon is something that will shape our view on growth inflation balance for sometime to come,” he said.

In its mid-year monetary policy, the RBI had said it could halt rise in key interest rates provided the inflation cools down.

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