Finance Minister P Chidambaram on Saturday held a closed-door meeting in Mumbai with top bankers to take stock of the situation in the wake of rupee volatility and ways to shore up foreign capital to bridge the widening current account gap.
The minister,who will also be meeting foreign institutional investors whose money is key to funding CAD in the afternoon,did not speak to reporters.
Chidambaram was accompanied by his top officials,including economic affairs secretary Arvind Mayaram and financial services secretary Rajiv Takru,while the bankers who met the minister included SBI’s Pratip Chaudhuri,ICICI Bank’s Chanda Kochhar,HDFC Bank’s Aditya Puri,Pramit Jhaveri of Citigroup India,Vijayalakshmi Iyer of Bank of India,Canara Bank chief RK Dubey and StanChart India’s Anurag Adlakha among others.
The meeting assumes importance as it comes against the backdrop of continuing flight of capital,especially after RBI put restrictions of capital withdrawal by corporates and individuals last week,which triggered concern among overseas investors that the government was on the verge of a throwback to the early 199 crisis,when stiff capital control was imposed due to the balance of payment crisis.
The FIIs,who pulled out over USD 12 billion since May 22 after the US Fed hinted at scaling down bond buyback sooner than expected,has had a debilitating impact on the rupee,which had plumbed to a low of 65.56 to the dollar on Thursday.
The current plight of the rupee,which is the most bruised currency in entire Asia losing nearly 20 per cent since beginning of the fiscal,has mostly attributed to the high current account deficit,which stood at 4.8 per cent last fiscal and is likely to be higher in Q1 as well.
“The meeting was mainly to seek ideas and suggestions on what can be done about capital inflows. It was a very good and positive meeting,” Kochhar told reporters after the meeting.