The Reserve Bank of India Deputy Governor Rakesh Mohan said that the proposal of turnover tax for bonds needs to be evaluated further.

Mohan, who was in Chennai to attend the apex bank's board meeting, told Business Standard that pre-Budget discussions were mostly on equity transactions and not much was discussed on the bond market. "l have to get back and check out the finer print of this move," he said.

On the government's thrust on the agricultural credit, he noted that there has not been much change. "RBI has been pushing the banks in this direction for a while now," he pointed out.

The target for agricultural credit has been 18 per cent, but it was not being achieved. The Budget has asked the banks to look upon agricultural credit as a profitable business.

Mohan pointed out that banks park Rs 65,000 crore (Rs 650 billion) under the liquidity adjustment facility programme to earn an interest rate of 4.5 per cent. This could be put to more productive use.

Asked if the thrust on agricultural credit will tell on the public sector banks, he said that the norm for SLR investment is at 25 per cent. However, public sector banks investments in SLR securities account to about 40 per cent, while new private sector banks invest only 27 per cent.

The Indian Banks' Association has been consulted on this thrust on this agriculture credit.

The continued benign interest regime, he said, is in line with the excess liquidity in the system grossing between Rs 60,000-70,000 crore (Rs 600-Rs 700 billion).

It is also a time when industrial production is showing good performance.

This should trigger credit off-take in a bigger way.

He does not see any change in the government's borrowing programmes, which has been set at Rs 90,000 crore (Rs 900 billion). "We are in the middle of the year. So I don't see this figure changing. But I will have to take a closer look when I get back," he added.

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