New Delhi: Reserve Bank of India RBI) Governor Bimal Jalan on March 10 said there will be no problems in meeting the oil bill in the event of a war in Iraq but admitted that it could affect inflation "temporarily".

"There will be no problem in meeting the oil bill as foreign exchange reserves are comfortable," Jalan said, adding, "we can handle the situation."

India's forex reserves are at over $ 72 billion even after the prepayment of $ 3 billion worth of high cost loans to World Bank and Asian Development Bank.

Jalan, however, said the inflation rate may be affected temporarily depending upon how long the war-like situation lasts. Inflation rate, based on the wholesale price index, was at 4.91 per cent for week ended February 22.

Regarding bank rates, Jalan told reporters that there would be no change this fiscal.

RBI had reduced bank rate to 6.25 per cent in the October busy season credit policy last year. The slack season credit policy would come up only next month.

PTI