A group of Indian central bank officials have issued a warning that the country’s central exchange could be “substantial” in its first few months after being rolled out in September.
Key points:The central bank said it is confident of a successful launchThe exchange will operate across the country and the first two months of operation will be freeThe exchange, which will operate on the northern shores of the country, will be launched on September 29, a month after it was launchedThe exchange is expected to raise $20 billion in the first six months of operationsThe central banking officials said it was not clear how the country would handle the transition period, especially in the event of a disruption in the exchange’s operation.
The announcement came after an official at the Reserve Bank of India (RBI) told a briefing in New Delhi that the central bank was confident of launching the exchange within a year.
The central bankers statement said the central exchange will be able to “continue its functioning without disruptions, without any disruption to its operations”.
The central banks team said the government had asked the RBI to “take a more proactive role in ensuring that the exchange is able to continue to operate at its full capacity and sustain its functioning”.
“We believe that it will not be a problem,” it added.RBI deputy governor Pradeep Kumar Sharma said the exchange would operate across all major Indian cities.
He said the Indian central government would monitor the progress of the exchange.
“We will be monitoring the progress and will also take appropriate measures to ensure that we have the necessary liquidity for the future,” Sharma said.
“This will be done on the basis of the advice of our experts.
I can assure you that we will ensure that this central bank is on a solid footing.”RBI governor Raghuram Rajan also reiterated the central bankers assessment that the Indian government would not allow a disruption to the exchange and that it would do all it could to maintain its stability.”
There is a risk that the disruption in a country like India, where there is such large infrastructure, that there will be disruption, that will be a significant risk,” Rajan said.
The RBS group, which runs the countrys largest bank, had been forecasting that the first-month operations of the north-sides exchange would be free.
The exchange aims to bring liquidity to the country by bringing in foreign exchange into the country.
India has been battling an over-capacity problem in the currency market for several years.
India’s central banks have struggled to manage the issue as the rupee has weakened sharply against the dollar since the beginning of the year.
India, which is the world’s third-largest economy, is now the second-biggest importer of foreign currency after China.
Rajan said the rupees exchange rate had not fallen below 60% in the past two years.