On the impact of structural measures announced on banks' balance sheet

It will have a good influence. Most of these things are planned to be introduced over a period of time. We have taken a three to four year perspective to implement the Narasimham Committee recommendations in terms of greater capital adequacy in order to strengthen the balance sheet of banks.

These (measures) will only have a positive impact and sufficient time is there for banks to plan and take measures in line with the committee recommendations and international standards.

On whether the timeframe for attaining the new cap-ad of 10 per cent will be maintained

The distance to travel is very small. Sufficient time has already been given, two and half years or so. And most banks are already at 8 per cent. Hardlyone bank is below 8 per cent. This is more in the nature of a supplementary measure and we don't expect to much of difficulty, but if any bank has a special problem, we will discuss it with them.

On the impact that risk weightage assigned to gilts will have on banks in financial terms

Sufficient time has been provided to banks. So depending on which year, how they (banks) want to spread it, banks will have to decide by which period they have implement this. So we have made no such assessment. The only assessment we have made that it is not in terms of the financial burden it entails as there is sufficient time. Most of things will have to be spread over atleast two balance sheets.

Percentage of government-guaranteed loan to total loan of the banking sector.

Deputy governor YV Reddy: There are three categories to look at. First you have the central and state government securities. The second aspect is regard to the loans where the centre has stood guarantor, and thirdly where someadvances have been given to public-sector units backed by a government guarantee. The last two are only a small part of the total portfolio.

Whether risk weightage assigned to securities will affect centre or state government borrowing.

No.

Point at which monetary policy will be tightened to reign in inflation

There are no hard and fast rules on this issue. This kind of debate has been going on in Europe, US and other developed markets. We have taken a conscious step not to tighten policy. This is the main thing, but we have said that we will be watching the situation very carefully whether there will be seasonal decline in prices. We hope the inflation rate will be under control, growth will pick and we will not have to do any of the unpleasant things.

Whether increase in money supply raises the spectre of speculation on the currency front

We don't see that attack just now, because measures were already taken in August. And since then we have been managing reasonablycomfortably. So we don't see any reason for any further measures now in either direction. In fact, there is also a case for spurring industrial growth, for providing support for industrial growth. Credit is available. If the inflation rate improves, may be we will go in the other direction.

Why banks are being given an opportunity to arbitrage with export refinance at 7 per cent and repos at 8 per cent

Export refinance is actually passing on (cost benefit) to exporters. There may be a case wherein a bank can do such a thing, but it is a temporary affair. But since we are also taking money from banks in many other ways, if banks take advantage of this for three to four months, I am not particularly disturbed.

Prevailing health of the banking sector given the non-performing assets

The NPA position has been improving. Provisioning has been improving. While we are concerned about NPAs, make no mistake about it, and so are bankers, There are both historical and others reasons for it. On theasset side, banks have no exposure to real estate or stock markets where prices fluctuate. Their open positions are very low with regard to foreign exchange. The domestic banking system is strong, but NPAs are a matter of concern, but the situation is improving.

Whether instances of evergreening have been noticed

I have made no mention of it (evergreening) at all. I am quoting the Narasimham Committee. We have said that these are committee recommendations to allow banks take certain decisions over a period of three to four years.

On whether NPAs are down in the first half of this fiscal

Deputy governor SP Talwar: We have no figures as yet, but the net NPAs are definitely coming down. First-half figures are yet to reach, only a few banks have announced their half-yearly results.

On incipient signs of growth and high credit offtake for two fortnights

Whatever information, we have given it to you. What we meant by the incipient signs of growth is that if you look at the balancesheet declarations, the picture is not all gloom. There are very many positive areas, like information technology. It is good even for the banking sector.

Whether a bailout of UTI by the centre is in consonance with stated national objective of reigning in fiscal deficit

I do not want to make any comment on the specific issue of UTI. As far as I can see, things are very stable. There will be no problem. It has been going around like this for a long time.

The fiscal deficit we are talking about is a broad macro-economic issue. It is not related to one segment. I am not talking about UTI at all. We are talking about government borrowings amounting to Rs 80,000 crore. So it is a question of our management of aggregate resources in way that the fiscal deficit comes down. Now this can happen on the revenue side, on cost-recovery side, minimisation of loss side or with the reorganisation of public-sector.

On whether he has succeeded in making the mid-term review a non-event

I do not know,that is for you decide. If I do not see any headlines tomorrow, I will have succeeded. (Laughter all around).