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It said RBI may permit banks to extend FCNR deposit facilities in euro and/or deutsche mark till December 31, 2001 and thereafter, banks could offer only deposits denominated in euro.

Itsaid Indian banks will have opportunities for diversifying their borrowing sources by tapping the vast liquid and diversified financial market.

Banks will have to look into consolidation of their existing nostro accounts in each foreign currency of the euro zone countries to one or more euro accounts. Indian banks technically would need only one euro account anywhere in the European Monetary Union EMU for payments in all EMU countries, it suggested.

At the end of 1997, the market value of bonds, equities and bank assets issued in European Union countries was more than US 27 trillion, roughly the same magnitude as world GDP. Euroland, therefore, has the potential of becoming the largest financial market in the world, the group felt.

Regarding quotation of euro in Indian foreign exchange market, it said Fedai may have to formally adopt the method of quotation of merchant and interbank rates for euro and advise its members accordingly.

Banks in India will be able to offer spot and forward exchangecontracts in euro as in the case of national currencies, the working group said.

In the past, India received almoost half of what South Asia received by way of official capital inflows from the EU countries. The 90s saw a significant improvement in the flow of official loans and grants from the EU countries.

However, it is likely that official loans from the EU countries may suffer a reversal in view of their own long-term adjustment needs like moving over to zero-budgt deficits, reducing labour-market rigidities and increasing demand for public spending in social sectors within the EU, the group felt.

In 1994-95, EU countries accounted for 35 per cent of bilateral assistance to India under external assistance programme.

The report said the effect of euro on the external debt hinges on the possibility of a strong/weak euro vis-a-vis the dollar. Around 13 per cent of our external debt is denominated in the EU currencies.

The group said the progressive use of euro by local businesses will requireassessment of the strategic, operational and information technology issues. Switching to euro represents an investment in time and resources, butit will provide a simple and convenient way of conducting business in Europe.

Ioc ties up with petronas for marketing lpg

NEW DELHI, Dec 4: State-owned indian oil corporarion ioc has tied up with petronas of malaysia for the import and marketing of liquified petroleum gas lpg in the country, a top company official said here today.

quot;We incorporated the joint venture with petronas for lpg operations today,quot; ioc director subir raha told pti. The project received cabinet clearance in august this year.

The 50:50 joint venture will set up a 600,000 tonnes per annum lpg import terminal at haldia in west bengal. The total project cost is estimated at rs 200 crore.

The joint venture would supply lpg to industrial, domestic as well as the automotive sector of the eastern region of the country.

The refrigerated lpg import and storage facilities at haldiais one among the various projects which would be undertaken by ioc and petronas.

Petronas president and chief executive officer mohammad hassan marican said here yesterday that the two companies had signed a memorandum of collaboration to take up several projects of mutual benefit. Another of these projects is a refinery at nagapattinam in tamil nadu, he said.

The largest indian oil company is in talks with petronas also for taking up upstream ventures in the country, as the new exploration and licencing policy is keenly awaited by the various segments of the oil and gas industry.