The Tribune, Chandigarh, India

	RBI allays fears of stagflation Says sensitive to growth but not at the cost of high inflation New Delhi, June 3 RBI Governor D Subbarao today allayed fears of stagflation in the economy and asserted that the central bank is sensitive to growth concerns but not at the cost of higher inflation. Maintaining that it is comfortable with 5 per cent inflation, he said, RBI takes into account the growth-inflation balance and that is why there has been easing of interest rate since January last year. Admitting that the high Current Account Deficit (CAD) level is a matter of concern, he said there was a need to boost exports and bring down dead-weight imports like gold. Subbarao said there was a need to bring inflation to 5 per cent saying the relationship between growth and inflation is non-linear. "There is a threshold level of inflation. If inflation is above that level, it is inimical to growth. If inflation is below that level it is possible that you can bargain for higher growth, tolerating a little higher inflation," he told PTI in an exclusive interview. He maintained that RBI's mandate is not just to target inflation like the Bank of England which does it at any cost. Asked about fears of stagflation (stagnation in growth coupled with high inflation) because of factors, including RBI's tight money policy, Subbarao said, "No, I believe not." "See stagflation is prolonged low growth and high inflation. But if we look at the numbers, we look at the trajectory of growth and inflation, you will find that our inflation has come down. "Out growth has also come down because of crisis and because of the post-crisis developments. We believe that India's potential growth rate has come down. Last number we put out on potential growth rate is 7 per cent." Asked about how much of the current level of CAD was a concern to RBI, the Governor said it was concern for a number of reasons, including the fact that the country can run a large CAD one year but it can’t do it year after year. Asked if he lost sleep over targeting inflation, while those in the government lost sleep over lower growth, Subbarao said, "Well, I wouldn't say that we are targeting inflation. "We are not an inflation targeting central bank. But when inflation is at double digit level, we believe we must bring it down." The Governor said there was a need to bring down inflation rate to "stable steady level" in order to secure medium term growth targets. — PTI Rupee hits over 11-month low at 56.76/$ Mumbai: Continuing its free fall for the fifth straight session, the rupee on Monday slumped by 26 paise to hit a new 11-month low of 56.76 on fag-end dollar buying and capital outflows from local equities. Forex dealers said bleeding domestic stocks and a weakening bond market firming up the dollar in turn, weighed upon the rupee. Foreign institutional investors pulled out Rs 86.66 crore from local stocks today, as per provisional BSE data. "The pressure on rupee was mainly built due to fag-end buying by some foreign banks and importers. Bond markets were seen slumping, which in turn pushed up the dollar and hit the local currency. "Capital outflows by FIIs, coupled with weakening stocks also marred the rupee sentiment," said Srinivasa Raghavan, executive VP, Dhanlaxmi Bank.
	RBI cautions public over depositing funds with NBFCs Shiv Kumar/TNS Mumbai, June 3 The RBI has warned investors about depositing funds with financial entities, including non-banking finance companies (NBFCs) that are not registered with the banking regulator. In an advisory issued here, the central bank has put out Frequently Asked Questions (FAQs) for investors in which details about different kind of financial entities and the rules governing them are being publicised. The central bank has warned investors that they should first check with it before investing funds with various institutions. A list of deposit taking NBFCs is available on the RBI’s website, www.rbi.org.in. The RBI's advisory also provides information for investors to complain about financial institutions which collect money without any authorisation or defaults on refunds to investors. On their part NBFCs have to prominently display the Certificate of Registration (CoR) issued by the RBI on its site, the central bank has stated. Investors have also been warned from falling for high rate of interest offered by institutions. The RBI said at present the maximum interest rate that an NBFC can pay to a depositor should not exceed 12.5 per cent per year. It added that the interest rates would be changed depending on the macro-economic environment and these are publicised on its website. Depositors have also been advised to insist on a proper receipt for every amount of deposit placed with the company, the RBI said. These receipts should be duly signed by an officer authorised by the company and should state the date of the deposit, the name of the depositor, the amount in words and figures, rate of interest payable, maturity date and amount. The RBI authorised only a few NBFCs to accept deposits and all incorporated entities must necessarily be authorised to collect deposits either under the Reserve Bank of India Act 1934 or under the Companies Act, 1956. However, the RBI said it doesn’t regulate chit fund activities or Collective Investment Schemes (CIS). The RBI further advised members of public to immediately register their complaints in case they notice any company accepting deposits in an unauthorised manner or not repaying the principal or interest with the local police or with the Economic Offences Wing of the state police, it said.
	Moody’s puts debt ratings of major banks under lens Mumbai, June 3 Global credit rating agency Moody's today said it has placed some debt ratings of 11 banks, including SBI, ICICI, HDFC Bank and Axis Bank, under review because of the updating of its methodology. The subordinated and junior subordinated debt ratings of these banks have been placed under review in the wake of the methodology update, said Moody's Investors Services. Other banks are Bank of Baroda, Bank of India, Canara Bank, IDBI Bank, Indian Overseas Bank, Syndicate Bank and Union Bank of India. "The review takes place in the context of a methodology update that has changed the way Moody's looks at the probability of support, which has led to several subdebt ratings in multiple banking systems being reviewed simultaneously," the rating agency said. The agency also noted debts of those banks were placed under review that had benefited from an uplift linked to Moody's prior assessment of systemic support in the country. However, the agency noted that the reviews of these banks' sub-debt ratings were not indication of any change in the affected banks' fundamental credit quality. "The reviews of the banks' subdebt ratings are not in any way related to any deterioration in the affected banks' fundamental credit quality," it said, but added that it needs to assess whether the government's likely behaviour in times of stress has changed compared to previous assumptions. Moody's also noted that its preliminary conclusion points to reasonable doubt over whether the status quo would survive test cases where governments provide significant financial support to banks, particularly in a systemic crisis that puts stress on the government's own balance sheet. — PTI
	Yellow fever: India imported 162 tonnes of gold in May New Delhi, June 3 Worried over high Current Account Deficit (CAD), the government is contemplating more steps to curb gold imports, which according to Finance Minister P Chidambaram stood at 162 tonnes during May. "For May, the import of gold was 162 tonnes," he told reporters after a meeting of the Financial Stability Development Council (FSDC) here. At its meeting today, the FSDC, headed by Chidambaram, also discussed the concerns on gold imports. "The Council noted with concern the significant increase in gold imports in recent months and deliberated on the issues involved in this regard," the Finance Ministry said in a statement after the meeting. Department of Economic Affairs Secretary Arvind Mayaram too hinted that the government could take more steps to reduce gold imports, which may include banning sale of the yellow metal by banks. "More steps will have to be taken to reduce gold imports. Export import policy on gold will have to be reviewed. May consider banning gold coin sale by banks," he said. The government and Reserve Bank have been taking steps to reduce gold import. High import has widened the current account deficit (CAD), which hit a record high of 6.7 per cent of GDP in October-December quarter of 2012-13. Last month, the RBI had imposed curbs on import of the yellow metal by banks. Besides, it has also put restrictions on banks and NBFCs for providing loans against gold coins as well as units of gold ETFs. — PTI
	NYSE Euronext plans to sell stake in MCX New Delhi, June 3 Global exchange giant NYSE Euronext is considering a fresh bid to sell its nearly 5 per cent stake in India's premier commodity bourse MCX, after an earlier attempt failed in March this year. NYSE Euronext, which runs leading bourses in the US and Europe, holds 4.79 per cent stake in Multi Commodity Exchange (MCX) and its stake is currently valued at over Rs 200 crore. According to the investment banking sources, NYSE Euronext will soon make a fresh attempt to sell its MCX stake, either in part or full, depending on the market conditions. The sale would most probably carried out through an open market transaction and would be part of NYSE Euronext's stated objective to monetise non-strategic assets across the world. It had bought about 5 per cent stake in MCX for about Rs 240 crore in June 2008. The exchange has said in an investor presentation earlier that its MCX stake sale was expected to be concluded in the first half of 2013. When contacted, an NYSE spokesperson did not offer any fresh comments and said the company management had addressed the query during its earnings call in February. NYSE Euronext is a leading global operator of financial markets and provider of innovative trading technologies. The company's exchanges in Europe and the US trade equities, futures, options, fixed-income and exchange-traded products. Earlier in March, NYSE had tried selling nearly 24.42 lakh shares of MCX, amounting to a 4.79 per cent stake, for about Rs 250 crore, but the sale was called off due to poor response from investors. — PTI
	Mercedes-Benz bets big on India growth story To invest Rs 250 crore to double production Kolkata, June 3 Luxury car maker Mercedes-Benz India is pinning hopes on India's growth story for which it is investing Rs 250 crore to double production capacity by the end of this year, an official of the company said. “According to our estimates, the luxury car market in India will be 4 per cent of the total passenger car segment by 2020,” Boris Fitz, Director (sales and network development), Mercedes-Benz India, said. By 2020, the passenger car segment volume would be nearly eight million units, he said. Fitz, while launching an A-Class compact car here today, said at present the luxury car segment was 2 per cent of the total passenger car segment in the country. He said Mercedes-Benz is bullish on India for which it is doubling capacity from 10,000 units per year at present to 20,000 units per year. The cost for expansion of production would be Rs 250 crore, he said. The company sold 7,138 units in 2012. Fitz said the company was aiming at double digit growth in 2013. He said while the growth in passenger car segment had been southwards, the growth in the luxury car segment has been just the opposite. This is mainly on account of buyers of luxury cars being insulated from the economic cycles. The company plans to launch a slew of products in 2013. — PTI
	Infy gains over 4%; market cap up Rs 6,107 crore Mumbai, June 3 Shares of Infosys ended the day over 4 per cent higher, adding Rs 6,107 crore to its market value, as the IT major recalled its founder N R Narayana Murthy and returned control of the company. After surging 9 per cent in intra-day trade, Infosys scrip finally ended the day at Rs 2,513.95, up 4.42 per cent from its previous close on the BSE. At the NSE, the stock moved up by 4 per cent to close at Rs 2,508.10. Defying weakness in the stock market, the bellwether scrip emerged as the top gainer on both the key indices - Sensex and Nifty. Following the rise in the share price, the market value of Infosys climbed Rs 6,107 crore to Rs 1,44,360 crore. — PTI
	RIL told to divert gas to AP New Delhi, June 3 The Oil Ministry has ordered Reliance Industries to divert a part of gas allocated to Rashtriya Chemicals and Fertilizers (RCF) to private power plants in Andhra Pradesh. The ministry has ordered that a part of 2.1 million standard cubic metres per day of KG-D6 gas allocated to RCF's Thal urea manufacturing plant be diverted to Hyderabad-based Bhagaynagar Gas Ltd (BGL) and power plants in Andhra Pradesh under a gas swapping arrangement. — PTI