can be used to meet only capital expenditures. the progress of targeted fiscal consolidation has been satisfactory so far and gfd / gdp and rd / gdp ratios are budgeted to reduce to 3. 3 per cent and 1. 5 per cent, respectively, in 2007 - 08. the objective is to meet the targets under the fiscal responsibility act by 2008 - 09. the average current account deficit since 1950 - 51 has been around one per cent of the gdp. during this period, except for 11 years when there was marginal surplus in the current account, we had modest deficit during the rest of the years. in the aftermath of the balance of payment crisis in the early 1990s, several stabilisation and structural reform measures were undertaken. external sector indicators show considerable level of sustainability attained in the last decade. sustained growth in export of services and remittances has continued to provide buoyancy to the surplus in the invisible account, which has enabled financing a large part of trade deficit. the capital flows have been buoyant leading to sustained rise in foreign exchange reserves. the merchandise trade deficit is currently close to 7. 0 per cent of gdp ; however, the current account deficit is under 1. 5 per cent of gdp, mainly due to receipts from services and the steady support from remittances from indians working abroad prospects for the indian economy in terms of immediate prospects, overall, we expect the real gdp growth in 2007 - 08 to be around 8. 5 per cent, assuming no further escalation in international crude prices and barring domestic or external shocks. for the year 2007 - 08, the reserve bank's policy endeavour would be to contain inflation close to 5. 0 per cent. in the medium term, in recognition of india ’ s evolving integration with the global economy and societal preferences, the resolve, going forward, is to condition policy and expectations for inflation in the range of 4. 0 - 4. 5 per cent. the acceleration of growth in the real sector has been reflected in the upward shift in the growth trajectory of credit extended by commercial banks, which in the past three years has been unprecedented in the history of the indian economy. there has been some sign of deceleration in the recent period. in consonance with the rising capital flows, the reserve money growth has been higher in the recent period averaging 17. 8 per cent during 2003 - 07. the rate of growth of reserve money was 23. 0 per cent as on june 22, 2007 on

. this is ensured by putting in place a risk graded cdd procedure, say : low risk, medium risk and high risk and appropriate cdd level accordingly. is risk categorisation a one - time affair? no. it will be an ongoing affair and banks should have a system of periodical review of risk categorization of accounts once in six months. they have to apply enhanced due diligence measures in case of risk upgradation, which depends on customer transactions / change in profile. banks were required to complete the process of risk categorization and compiling / updating profiles of all of their existing customers by end - march 2013. periodic updation of customer identification data – 2 & 10 years for high and low risk respectively has also been prescribed. bis central bankers ’ speeches who are the low risk customers? typical examples are the salaried employees ; accounts with small balance and low turnover ; govt. deptts. & govt. owned companies ; regulatory and statutory bodies, etc. who will be the high risk customers? they are such as the nonresident customers ; hnis ; trusts, charities, ngos and organizations receiving donations ; companies having close family shareholding or beneficial ownership, firms with “ sleeping partners ” ; politically exposed persons ; non face - to - face customers, jewellers / dealers in gold bullion and those with dubious reputation as per public information available, etc. can a bank refuse to open an account or decide to close an existing account? yes. when the bank is unable to apply appropriate customer due diligence measures, i. e., bank is unable to verify the identity and / or obtain documents required as per the risk categorisation due to non - cooperation of the customer or non - reliability of the data / information furnished to the bank. decision to close an account at high level after due notice to the customer. monitoring of transactions banks are required to closely examine the transactions in order to ensure that they are consistent with their knowledge of the client, his business and risk profile and where necessary, the source of funds. banks are also required to prescribe threshold limits for a particular category of accounts and pay particular attention to the transactions which exceed these limits. banks have to particularly guard against the money mules – the innocent recruits or persons with fake documents. suspicious transactions transactions falling outside the regular, normal and reasonable pattern of activity of the customer will be regarded as suspicious transactions. unusually large transactions and all unusual patterns which have no