Capital inflows: RBI Act may be amended
Mumbai: The Reserve Bank of India (RBI) is planning to issue special securities to mop up the rupee liquidity from the market resulting from the sterilisation of the forex deluge. An internal RBI group is examining the issue and may suggest amending the RBI Act to enable the central bank to issue securities on its book. The RBI Act 1934 does not permit the central bank to issue securities on its own.

The principal instrument for managing capital inflows in the country has been sterilisation. But as the recently issued RBI Annual Report for 2002-03 indicated, the RBI's management is also mooting other ideas to tackle this 'problem of plenty'.
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RIB redemption may help solve dollar shortage issue
Mumbai: The forex market is planning a dollar shortage in the cash market between September end and middle of October in the wake of Resurgent India Bond (RIB) redemptions. According to forex dealers, the forward premium to be paid for booking dollars during the end of September has gone up to 3.4 per cent. On the contrary, forward premiums on all other maturities from one month to one year are ranging between 1.90 per cent and 1.23 per cent respectively in that order.

Dealers were quoted as saying that while the demand for forward dollars is increasing with the rising premium, demand for forward dollars of other maturities is virtually stagnant. The demand for booking September-end dollar is emerging from corporate as well as banks. Dealers explained that the dollar demand during the period has risen on account of the redemption of the bonds.
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ATM outsourcing become effective
Mumbai: Banks are eyeing alternatives to owning and operating their own ATMs. The India Switch Company (ISC), an independent payment systems provider, is planning to tap into this outsourcing opportunity by establishing 1,500 ATMs over the next three years for the recently formed 'CashTree' ATM networking sharing alliance of five public sector banks - Bank of India, Union Bank of India, Indian Bank, United Bank of India and Syndicate Bank.

In its capacity as service provider for enabling transaction switching among banks, ISC had signed a service level agreement in July with the five banks for establishing interconnectivity with their ATM switches. Mani Mamallan, chief operating officer, ISC, said a capital expenditure of about Rs 100 crore is envisaged for setting up the 1500 ATMs for 'CashTree'.
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