Continued $ supply to bring comfort level in Re: PNB

Here is a verbatim transcript of the exclusive interview with Arun Kaul on CNBC-TV18. Also watch the accompanying video. 

Q: What is your sense currently? Do you sense that meeting that the Finance Minister (FM) has been having - PSU banks yesterday and today with the private sector banks - has given some semblance of confidence to liquidity in the system and lending going forward and do you sense that the call rates will hold and short-term liquidity will not be under pressure right now?

A: Right now liquidity is pretty comfortable. Call rate is hovering at 7-7.5%. If you see, the banks' borrowing from RBI under the repo route, it is not very large borrowing. In the first auction only Rs 1,850 crore has been borrowed, and let us not forget about four days back banks were borrowing very large amounts, something like Rs 60,000-70,000 crore.

Definitely liquidity has improved substantially and the call rates have calmed down. We expect this comfortable liquidity to continue.

So far as the interest rates are concerned, we have clearly seen the short-term interest rates coming down. Banks have taken steps to realign their interest rate structure in the market, and we have seen banks reducing their PLRs and some banks indicating that their deposit rate may also go down.

Definitely banks are picking up signals from the RBI policy and also they are reacting to the prevailing liquidity conditions in the market.

Q: Can you give us a quick word on the rupee currently and what the levels you are pegging out on the rupee?

A: In the last two-three days, the rupee has seen a strong supply in the market primarily from the corporate sector. That is why the rupee has gained as well, Rs 3 in three days, which also reflects a comfortable situation because of the liquidity concerns.