RBI builds $5.3 billion war chest for rupee
Mumbai: The Reserve Bank of India has built a contingency reserve of around Rs.23,000 crore or $5.3 billion for countering any speculative attack on the rupee.

Meanwhile, the 1998-99 annual report of the Reserve Bank of India has estimated real gross domestic product to grow 6 - 6.5 per cent in the year 1999-2000. Industrial production is expected to grow 7 per cent.

The net income of the central bank was down 16 per cent to Rs.9,028 crore from 10,743 crore in the year ended 31 March 1999.

The Reserve Bank is worried about the high cost of small savings, provident fund and special deposit schemes, which grew 30.6 per cent in 1998-99, to touch Rs.43,588 crore.

The bank has emphasised the need for an upper limit on government borrowing since the accumulation of public debt and the rising interest costs are putting pressure on the economy. The government’s net borrowings have touched Rs.62,905 crore, overshooting the budget estimates by over 30 per cent. Gross borrowings touched Rs.93,953 crore, overshooting the target by more than 18 per cent. The ratio between gross and net borrowings has dropped from 1:0.84 in 1991-92 to 1:0.67 in 1998-99. This means that around 37 per cent of government’s fresh borrowing goes towards servicing past loans.

The central bank has also classified 249 banks as weak.
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CBDT asks commissioners to clear claims
New Delhi: The Central Board of Direct Taxes has asked chief commissioners to settle all refund claims as of 31 May 1999 by September 1999. Around Rs.860 crore have to be paid as interest on refund for the year 1996-97.
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Union Bank to raise debt
Mumbai: Union Bank of India will issue a seven-year tier-II subordinated debt, with a target of Rs.500 crore on book building basis. This is aimed at enhancing the capital adequacy ratio of the bank. The Rs.500 crore includes a Rs.200 crore green-shoe option.

The issue, which opens on 27 August 1999 will be lead arranged by DSP Merrill Lynch and JM Morgan Stanley. The bank is expecting the rate to be in the region of 12.3 to 12.6 per cent.

Union Bank has a capital adequacy ratio of 10.07 per cent, and is expected to touch 12 per cent by March 1999.
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