RBI says no to full rupee convertibility

The Reserve Bank of India (RBI) today ruled out full rupee convertibility as of now and said the failure of Bharti-MTN deal cannot hasten it. Asked if complete capital account convertibility is possible, RBI Deputy Governor K C Chakrabarty told reporters here: "As of now, no." "Whether it's desirable or not, that we have to examine and whether we have capability", he said. On whether Bharti-MTN deal failure would quicken the process of complete convertibility, Chakrabarty said: "Nothing will quicken the capital account convertibility." While the rupee is fully convertible on the current account, it is not so in capital account. This means that control exists on converting rupee into other currencies when there is movement of capital from one country to India and vice versa. The Tarapore Committee as well as other experts have recommended full convertibility of the Rupee in a phased manner. Last week, the $23 billion Bharti-MTN deal was called off after regulatory hurdles in the way of dual listing could not be removed. One of the hurdles was that India does not have full rupee convertibility. Chakrabarty also indicated that RBI is considering plea of banks for a hike in a limit for bonds that can be held till maturity. Initially, he said the issue did not come under his purview but later, when asked if RBI favoured raising the Held-To-Maturity cap, added: "They (RBI) were considering it. My knowledge is that they were considering it." Asked if RBI proposed to revise its expectation on inflation, he said the policy statement would be released (by RBI Governor) on October 27. "We don't predict about inflation everyday. 27th October, it will be known."