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'RBI may take more steps to curb inflation'

December 30, 2010 17:24 IST

RBIThe Reserve Bank of India said on Thursday inflation is always concern and hinted at taking more steps to check it.

"Inflation is always a concern", RBI Deputy Governor K C Chakrabarty said.

Asked if the RBI is expected to take more measures to cool down inflation, he said: "RBI has already taken the measure.

"If the Reserve Bank feels the measure is not adequate, they will take more measures."

On pointing out that the RBI had earlier hinted at 'pause' vis-a-vis its measure regarding inflation, Chakrabarty said: "Pause does not mean halt. You need to distinguish between pause and halt. Pause is not a halt."

Speaking to reporters after inaugurating a 'Grameena Vikas Kendra' (branchless banking unit) of Corporation Bank at Mallohalli village in Bangalore Rural district, he also said he does not believe liquidity is a problem.

"It's not a big problem today," he said but added that 'there are some frictional, structural issues'.

"And I think everybody is meeting their obligation. When you say liquidity is a problem, RBI has already initiated the measure and as a result, the system is everyday settling all the thing. There is nothing like settlement is not taking place."

Speaking in the context of liquidity issue, he said banks should increase their deposits and give better returns and 'lend a little bit less' and added:

'If there are frictional issues, concerned people will look into it'.

On the statutory liquidity ratio, Chakrabarty said if one saw it from the general reform direction, SLR should come down.

"SLR will come down only when the government borrowing will come down. Overall trend is SLR should come down."

Asked if the RBI would probe banking fraud at Citibank's Gurgaon branch, he said: 'Definitely.'

Though Chakrabarty said nothing has come to his notice and he will not be able to say, he added that RBI looks from systemic point of view (with regard to such frauds).

A department within RBI would look into the fraud, he said.

On RBI's move to curb payment facilities within Iran, he said: "Iran is an international problem. We have to find out a solution. It's not India's problem; it's not Iran's problem," pointing to sanctions and 'many other issues'.

Chakrabarty said that the RBI, Indian and Iranian government and Iranian bank should sit together and find a solution regarding 'if we are doing business, how the transaction would take place.'

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