Convertibility within striking distance: FM

India is close to achieving its goal to attain full capital account convertibility as suggested by the Tarapore Committee, according to Finance Minister P Chidambaram.

India is close to achieving its goal to attain full capital account convertibility as suggested by the Tarapore Committee, according to Finance Minister P Chidambaram.

8216;8216;We are within striking distance of the idea floated by Tarapore Committee8217;8217;, Chidambaram said addressing the inaugural function of Synd Bank Services Ltd, a wholly-owned BPO of Syndicate Bank, on Friday.

However, the Finance Minister expressed his concerns over the opposition from the Reserve Bank of India RBI employees on the capital account convertibility issue. 8220;Why should some RBI employees oppose the idea8230;I would suggest my RBI friends to embrace and examine capital account convertibility8221;, Chidambaram said. The FM further said that there is no pressure on the liquidity, hinting that the situation may ease in near term. 8216;8216;We had spoken to the banks yesterday on liquidity issue and it is not a concern now8217;8217;, he said. Liquidity in the Indian banking system has tightened in recent weeks leaving banks struggling to meet the credit demand.

The Finance Minster also ruled out any concern over the rising inflation level. Rise in fuel and manufactured product prices have pushed the wholesale price index for the week ended March 11 to 4.28 from 4.02 in the previous week, recent government data showed. As this was above the consensus estimate8212;3.9 to 3.94 range8212;the data dampened bond market on Friday. The RBI forecast inflation between 5 and 5.5 for the current fiscal year.

Chidambaram stressed that improve in technology by the banking sector has speeded up the foreign remittance flow in the country, which is now 30 billion a year, and form a permanent part of India8217;s capital flow. He said that the banks have been performing admirably over the past few years through nationalisation and liberalistation of the banking sector. 8220;In the last two years public sector banks have grown admirably and banks have responded splendidly to government8217;s suggestions8221;.

During the first nine months of the current fiscal, he said that educational loans have been provided to 1,76,000 students and 3,25,000 self-help group has been linked with credit. Till February, advances in the agricultural sector crossed Rs 1,42,000 crore and further boost will be provided to this sector when banks will offer loan at 7 interest up to a limit of Rs 3 lakh from the next fiscal. 8220;The goal is to bring more and more people in the banking system8221; he added.