RBI for handling govt debt
Calcutta: The Reserve Bank of India feels that it should not distance itself from the government’s debt management, especially when the government itself has a large borrowing programme. The central bank is going to review the issue after a Fiscal Responsibility Act comes in place. Earlier, an informal group set up by the RBI felt that in the interests of price stability, all issuance and debt management-related activities must be assigned to a separate institution, and the RBI should retain only core activities related to monetary policy operations, like open market operations, market making, and regulation of government securities.

RBI’s deputy governor Y.V. Reddy told a seminar that while the separation of the two functions may put pressure on the government to reduce its borrowing requirements, it may be better for RBI to coordinate the two functions for the present. At the same time, attempts must be vigorously pursued to reduce the government’s borrowings to a more sustainable level and to develop the government securities market further.
Back to News Review index page  

Bank of Baroda to appoint consultant
Mumbai: Bank of Baroda will appoint a consultant for its insurance business venture. The bank’s board has already cleared the proposal. The consultant will undertake a study of the insurance sector and point out the segment suitable for the bank – life or general.

This takes the number of public sector banks planning to enter insurance to three. The State Bank of India, and Bank of India had announced their intentions earlier.
Back to News Review index page