LD RBI TWO LST

Last month, the RBI governor had said that the reversal
of monetary accommodation cannot be effective unless there is
also a roll-back of Government borrowings.

Signalling its exit from the easy money policy, the
RBI last month hiked the cash component banks have to park
with it by 0.5 per cent to 5.75 per cent absorbing Rs 36,000
crore from the system.
Subbarao said the crisis has dented the credibility of
central banks worldwide and said that the case for central
bank independence is coming under increasing assault as a
result of crisis-led developments.
On capital flows, the governor said that capital flows
can also potentially impair the financial stability of the
economy.
Later, talking to reporters, Subbarao said the Reserve
Bank has adopted a calibrated approach towards the management
of cross-border fund-flows. PTI DU
RBT


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