Govt Discussing FDI Liberalization, Says FM.

The Centre is in the process of deepening policy reforms in the financial sector and discussions are underway to further liberalise the foreign direct investment (FDI) policy, Finance Minister Pranab Mukherjee said on Friday.

Mukherjee said RBI is in the process of issuing additional banking licences to private players. He said major steps are being taken to simplify and place the administrative procedures concerning taxation, trade and traffic and social transfers on electronic interface, free of discretion and bureaucratic delays.

The UPA government has been criticised for the slow pace of policy reforms. Analysts say the delay in policy reforms is hurting investments and this in turn could impact overall growth. The government is considering allowing foreign retail chains such as Wal Mart and Carrefour to set up stores besides increasing the FDI cap for defence production. The two moves have been held over for several months.

Admitting that the continued monetary tightening by RBI has restrained growth, FM said that the prospects for long-term growth remained buoyant and called for aiming at 9-9.5% growth in the 12th five year plan that kicks in from April 2012.

"Maintaining price stability is the main issue at the moment to tackle inflation," he said d. The RBI has raised rates 10 times in the past 15 months to rein in inflation.

Mukherjee expressed concern over the issue of asset quality of banks and said that it is important for banks to constantly monitor and bring down the non performing assets (NPA) or bad loans to previous levels.

He said it is important for Indian banks to adopt the best risk management practices to keep themselves abreast with global developments. The finance minister said consolidation of banking services, consistently meeting the capital adequacy requirements, leveraging advanced technology, and effectively managing human resources with a focus on pro-active leadership and skilling and re-skilling of human resources are emerging as major areas of concern for Indian banks that need to be addressed in right earnest.

Source : timesofindia.indiatimes.com