RBI 2 LST

PTI - Subbarao did not subscribe to the view that the Reserve
Bank is using less of the reverse repo as an instrument.

"It (reverse repo) is an active variable and R.B.I. will
use it as a variable," he said adding presently, "we have
decided to leave it at six percent".

He said the monetary measures taken in recent times have
already begun reaping results, with call money rates now
coming close to reverse repo rate, while the yield on the
10-year G-Sec has also started coming down, from 8.3 percent
to 7.58 percent.

"These are signs of the liquidity situation easing," he
said.

On R.B.I.'s intervention in the spot or forward markets,
Subbarao said he cannot discuss it publicly but the apex bank
had a policy and intervened in the markets as and when
necessary.

The R.B.I. was "sensitive" to the dollar liquidity issue,
he said adding that the central bank has taken a number of
steps including easing of external commercial borrowing
(E.C.B.) norms, raising N.R.I. deposit rates and allowing
banks to borrow from their overseas subsidiaries and branches.

"If anything more needs to be done, we will do it," he
said.

Replying to a question on ways and means advances(W.M.A.)
limit, he said it was temporary and had no bearing on
government borrowing.

On credit growth, which has exceeded the projection of
20 percent at 29 percent, Subbarao said, "Our call was to
work with the 20 percent projection credit growth."

Up to October 10, however, it had exceeded projections
and stood at 29 percent.

"We are not chasing numbers for their own sake... We want
to make sure that credit growth goes to productive sectors
and... helps in economic growth." PTI S.U.D.