Mumbai, Aug. 24: The government could come out with more measures to attract deposits from non-resident Indians (NRIs) to boost inflows into the country, finance minister P. Chidambaram told bankers here today.
Chidambaram was in the financial capital today where he met bankers and select foreign institutional investors (FIIs) to address their concerns regarding the current economic situation and find ways to further boost inflows into the country.
The finance minister has been trying to talk up the markets, particularly after the rupee slid to record lows recently.
Chidambaram was today accompanied by top officials from North Block that included economic affairs secretary Arvind Mayaram and financial services secretary Rajiv Takru.
The bankers who met him included SBI chairman Pratip Chaudhuri, ICICI Bank CEO Chanda Kochhar and HDFC managing director Aditya Puri.
Others present were Pramit Jhaveri, CEO-India of Citibank, Vijayalakshmi Iyer, chairperson of Bank of India, and R.K. Dubey, chairman and managing director of Canara Bank.
“The meeting was mainly to seek ideas and suggestions on what can be done about capital inflows. It was a very good and positive meeting,” Kochhar told reporters after the meeting.
The meeting saw bankers asking the government to look into the possibility of launching short-term NRI deposits.
Responding to queries on this subject after the meeting, Takru said while various measures to attract deposits was under consideration, the Centre may come up with a few within the next 10 days.
“Lot of good ideas came out. And I think you should see something coming up shortly, next 8-10 days,” he said.
Asked if banks were given any direction to hike NRE deposit rates and hold lending rates, Takru said, “We don’t force or even nudge banks to do anything like that. It’s up to banks to decide, based on the availability of funds.”
On the revival of projects, he said, “Within the next week, nine large stalled projects are coming up for final decision before the cabinet. These projects are in the power, coal and transport sectors.”
He also said in the last one month alone, as many as 27 large stalled infrastructure projects worth over Rs 1.1 trillion were cleared.
The meeting with the bankers was followed by another with FIIs and it saw the finance minister reiterating that there no need for undue pessimism in both the equity and forex markets. Foreign investors present at the meet are believed to have expressed their concerns about the country’s current account deficit (CAD), which is the difference between inflows and outflows of foreign currency apart from the fiscal deficit.
According to Arvind Mayaram, the finance minister conveyed the message that the “red line” with regard to both fiscal deficit and CAD at 4.8 per cent of the GDP and 3.7 per cent of the GDP will not be crossed.
The first quarter of this year has seen a pickup in exports and the overall economic situation will improve in the second half of this year with investments in the “real economy” set for a pick-up, Mayaram said.
He added that the impact of the structural reforms taken by the government will also be felt in the current year itself and though there could be some outflows because of global developments, it will be more than compensated by inflows.