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Monetary stability is RBI's prime role: Rajan
“This is not an easy time as economy faces challenges. Our actions will be at measured pace given the current market turmoil,” Raghuram Rajan said after he took charge as the new RBI Governor.
There is good reason to believe medium rung future of India is strong; gloom and doom is overdone, Rajan said. He said positive developments like good monsoon will help going forward.
Following are the highlights from the inaugural speech delivered by Raghuram Govind Rajan who took over as the 23rd Governor of the Reserve Bank.
* New bank licences by January 2014 or soon after
* Bimal Jalan to head the external committee to screen banking licence applicants
* RBI wants more regulatory and supervisory control over the domestic operations of foreign banks
* Banks need not require RBI nod to open new branches
* Hints at reducing the SLR in a calibrated way
* Mid-quarter review of monetary policy postponed by 2 days to Sept 20 as more time required to consider all developments
* To steadily liberalise markets, and lift restrictions on investment and position taking, together with Sebi
* Says primary role of RBI as maintaining monetary stability but generating growth is also important
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Monetary stability is RBI's prime role: Rajan
* Re-booking limit on cancelled forward exchange contracts for exporters will be enhanced to 50 per cent
* Importers will also be allowed a similar facility to the extent of 25 per cent
*To introduce cash settlement in 10-year interest rate future contracts to develop money and G-sec markets
*To examine introduction of interest rate futures on overnight interest rates
*Deputy governor Urijit Patel to head a panel to strengthen monetary policy framework; to submit report in three months
* Committee under Nachiket Mor to assess approach to financial inclusion
* There is a need to internationalise the rupee
* To encourage banks to clean up their balance sheets, and commit to a capital raising programme wherever necessary
* Need to accelerate the working of debt recovery tribunals and asset reconstruction companies
* Need to improve the efficiency of the loan recovery system
* Promoters do not have a divine right to stay in charge regardless of how badly they mismanage an enterprise
* Promoters do not have any right to use the banking system to recapitalise their failed ventures
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Monetary stability is RBI's prime role: Rajan
* Bad loan problem is not alarming yet
* To push for more rupee settlements
* To help banks bring in safe money to fund current account deficit.
* To offer a window to banks to swap fresh FCNR-B dollar funds at a fixed rate of 3.5 per cent
* Current overseas borrowing limit of 50 per cent of the unimpaired Tier I capital to be raised to 100 per cent
* Will issue inflation indexed savings certificates linked to the CPI new index to retail investors by end-November.
* Aim to make payments anywhere anytime a reality
* To set up a technical panel to study feasibility of using SMS-based fund transfer system that can run on any handset.
*To emphasise the use of the unique ID, Aadhaar, in building individual credit histories.