INSIDE THIS ISSUE
   
   
   
  01 MAIN
   
   
  02 TRADE & ECONOMY
   
   
  03 INVESTMENT UPDATE
   
   
  04 NEWSMAKERS
   
   
  05 INFOTECH
   
   
  06 CULTURE
   
   
  07 TRAVEL
   
   
  08 CALENDAR
   

   
  HIGHLIGHTS
   
 

Minister Kamal Nath says Trade Inequalities Unacceptable
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  Bharatanatyam
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  Tamil Nadu: Your Gateway to South India
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  04. NEWSMAKERS
   
 
  India signs International Convention
for the Suppression of Acts of Nuclear Terrorism 		 
     
  India has signed an international convention for the suppression of Acts of Nuclear Terrorism. This Convention, initially proposed by the Russian Federation, was adopted by the UN General Assembly (UNGA) on 13/4/05 by a consensus resolution and was opened for signature at the UN Headquarters from 14th September 2005.  
             
  The Convention is the first anti-terrorism convention adopted since the terrorist attacks of September 11, 2001. The Convention requires States to make punishable as serious offence under their domestic law, terrorist acts involving the use of nuclear materials. States are also required to cooperate in the prevention, investigation and prosecution of these offences through information sharing, extradition and mutual legal assistance.

India is already a Party to the other 12 international terrorism conventions and protocols and attaches high priority to the formulation of
  international legal instruments to combat terrorism. Terrorism presents the most serious threat to peace and security. India has always emphasized that the international community must adopt an approach of zero-tolerance for terrorism anywhere and be ready to undertake all necessary measures to bring to justice the perpetrators, organizers, sponsors of these and other terrorist acts and those who incite terrorists to commit them.

This Convention is an important step forward in multilateral efforts to strengthen the international legal framework against terrorism and sends an undeniably clear signal 		  that the international community will not tolerate those that threaten or commit terrorist acts involving radioactive material or nuclear devices. India shares the objective of the International Convention for the Suppression of Acts of Nuclear Terrorism, which demonstrates the resolve of the international community to deny terrorists access to nuclear materials and enhances international cooperation between states in devising and adopting practical measures for prevention of acts of nuclear terrorism and for the prosecution and punishment of their perpetrators.  
             
     
  Special Committee of Non Aligned Movement on Economic and Social Issues Set up  
     
 
A Special Committee to deliberate on how to bring the focus of the Non Aligned Movement (NAM) on economic and social issues relevant to the developing countries as well as South-South Cooperation has been set up. The Committee is likely to submit its report to the government before end August 2006. As one of the founder members, India continues to be actively involved in   NAM, which provides a valuable forum for developing countries to articulate their views on a wide range of issues in a collective manner, and to find ways and means to further strengthen their cooperation.

The NAM is the largest grouping of developing countries outside the United Nations. With rapid changes in		   the international environment, there has been a growing realization among the member countries of the NAM to revitalize the Movement, making it a more effective voice of the developing countries. In this context, it is important to strengthen economic cooperation within NAM and also to pursue interests of its member countries by agreeing on common positions in the global arena.

 
     

     
  RBI Releases First Quarter Review of Annual Policy 2006-2007
  
             
 

» continued from page 03

• The Reserve Bank will continue to ensure that appropriate liquidity is maintained in the system so that all legitimate requirements of credit are met, particularly for productive purposes, consistent with the objective of price and financial stability. Towards this end, the Reserve Bank will continue with its policy of active demand management of liquidity through open market operations (OMO) including MSS,

LAF and cash reserve ratio (CRR), and using all the policy instruments at its disposal flexibly, as and when the situation warrants.

• Barring the emergence of any adverse and unexpected developments in various sectors of the economy and keeping in view the current assessment of the economy including the outlook for inflation, the overall stance of monetary policy in the period ahead will be:

• To ensure a monetary and interest rate environment that enables continuation of the growth momentum while emphasising price stability with a view to anchoring inflation expectations.

• To reinforce the focus on credit quality and financial market conditions to support export and investment demand in the economy for maintaining macroeconomic and, in particular, financial stability.

• To consider measures as appropriate to the evolving global and domestic circumstances impinging on inflation expectations and the growth momentum.

 

Monetary Measures
• Bank Rate kept unchanged at 6.0 per cent.

• Reverse Repo Rate and Repo Rate, each raised by 25 basis points to 6.00 per cent and 7.00 per cent, respectively.

• CRR kept unchanged at 5.0 per cent.

The Mid-term Review of the Annual Policy Statement will be undertaken on October 31, 2006 instead of October 17, 2006 and the Third Quarter Review on January 30, 2007 instead of January 23, 2007 as indicated in the Annual Policy Statement of April 2006.

RBI allows banks to issue capital instruments in foreign currency
With a view to providing banks in India with additional options for raising capital funds, to meet both the increasing business requirements as well as the Basel II requirements within the existing legal framework, the Reserve Bank of India had allowed banks to augment their capital funds by issue of, among others, Innovative Perpetual Debt Instruments (IPDI) eligible for inclusion as Tier 1 capital and Debt Capital Instruments qualifying for Upper Tier II capital (Upper Tier II Instruments).
2. In terms of the guidelines issued in this regard on January 25, 2006 banks are allowed to issue these instruments in Indian Rupees and were required to obtain prior approval of the Reserve Bank of India, on a case-by-case basis, for issue in foreign currency. These guidelines have been reviewed and it has been decided to make the following changes:

   i. Banks may augment their capital funds through the issue of IPDI in foreign currency up to 49% of the eligible amount (i.e., 15% of Tier 1 capital) without seeking the prior approval of the Reserve Bank of India subject to compliance with certain specified conditions.

ii. Banks may augment their capital funds through the issue of Upper Tier

II Instruments in foreign currency up to 25% of their unimpaired Tier I capital without seeking the prior approval of the Reserve Bank of India, subject to compliance with certain specified conditions.

iii. Capital funds raised through the issue of these two instruments in foreign currency will be in addition to the existing limit for foreign currency borrowings by Authorised Dealers.

iv. The total amount raised by a bank through IPDIs shall not be reckoned as liability for calculation of net demand and time liabilities for the purpose of reserve requirements and, as such, will not attract CRR/SLR.

v. Investment by FIIs in IPDI and Upper Tier II Instruments raised in Indian Rupees shall be outside the limit (currently USD 1.5 billion) for investment in corporate debt instruments. However, investment by FIIs in Upper Tier II instruments will be subject to a separate ceiling of USD 500 million.

Detailed guidelines are available on the RBI website (www.rbi.org.in). 		 
             


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