Rising food prices, Risk assessment major concerns before RBI

Mumbai, Sep 28 (UNI) The rising food prices, risk assessment and the expectations on Inflation continue to be major concerns before RBI, ahead of the upcoming mid-term monetary policy, its Deputy governor Dr Rakesh Mohan said today.

''We have been able to maintain financial stability. We do have to keep enhanced vigilance over the global financial conditions to maintain that record.'', he said while addressing an Indo-American Chamber of Commerce (IACC) seminar here.

The US subprime turmoil, which originated in a small spectrum of the industry in US (the credit market) has expanded to the other arenas, making it as a major challenge before the regulators worldwide, Dr Mohan said.

Last week, addressing another seminar here, Mohan had said the impact of US subprime turmoil could weigh heavily on the global markets, especially emerging markets like India.

Subsequently, Dr Mohan was also seen concerned over the risk assessment procedures being excercised in the country.

''Is it really possible for an (credit rating) agency to assess the risks embedded in the assets?. There is a need for better transmission of risk information between the lenders and borrowers to ensure credit quality of the assets.'', he added.

According to senior bankers, Mohan's comments assume significance in the wake of the ensuing monetary policy, due on October 30.

It is expected that the regulator will continue with its tightening measures in the policy including a hike in Cash Reserve Ratios (CRR) from the current 7.00 percent.

UNI