The central bank cut SLR to 23 per cent from 24 per cent.
Monetary policy typically acts with a lag, and price stability therefore has to be viewed in a medium term perspective, Subbarao said in a speech at the South Asian Association for Regional Cooperation Finance Governors' symposium at Kumarakom in Kerala.
RBI governor D Subbarao, in the second quarterly review of the monetary policy in October, had said there is need to increase provisioning against bad assets to not less than 70 per cent by September 2010.
Bankers and other stakeholders are now almost certain that the Reserve Bank of India (RBI) will increase the key policy rate, or the repo rate, by 25 basis points (bps) on Tuesday.
Former RBI Governor Subbarao blamed Chidambaram for undermining the autonomy of RBI and putting pressure on him to cut interest rates.
'One of the nice things about being a central bank governor is that the markets hang on every word you say'.
Recent financial crisis underscored the dangers of over-financialisation of the real economy.
The second post of deputy governor became vacant after V Leeladhar superannuated a few months ago. Punjab National Bank chairman and managing director K C Chakrabarty is to take over as deputy governor on Monday. Apart from monetary policy, Subbarao will also handle the department of economic analysis and policy, department of statistics and information management.
Former RBI governor admits to being a 'greenhorn' as he started his stint at the central bank.
Subbarao also asserted that the proposed financial sector reforms should be driven more by the sectoral regulator Reserve Bank of India than by a legislative panel.
RBI Governor Subbarao also said an increase in non-performing assets at lenders was a matter of concern, but added that banks were well capitalised, during a media briefing at the conclusion of the central bank's board meeting.
Remarks come at a time when he is under pressure from the govt to cut interest rates.
"He (RBI governor Duvvuri Subbarao) has explained the position. I think the governor's statement is very balanced, very appropriate as far as I could understand," Reddy said.
In the wake of ponzi schemes and chit fund scams, Reserve Bank Governor D Subbarao on Wednesday said there is a need to review the regulations governing these sectors and increase surveillance on such entities.
Following the meeting, Subbarao said the central bank will look into the latest inflation numbers before coming out with the monetary policy review.
Tension between the government, specially the finance ministry, and RBI is as old as the central bank itself.
Top bankers have hailed the contributions of the outgoing Reserve Bank Governor Duvuuri Subbarao saying he did his best during a tenure that was marked by difficult times for the economy.
Reserve Bank of India Governor D Subbarao on Wednesday contested the idea of "making banking boring" to bring back economic stability, mooted by Nobel laureate Paul Krugman in the wake of global financial meltdown.
It rose to 5.3 per cent of GDP in the second quarter.
Subbarao said he would be "ok" if a sovereign bond issue in foreign currency is done once just to test the waters, but cautioned against using the instrument regularly.
RBI is scheduled to announce the annual credit policy on May 3.
The criticism of the RBI governor's handling of inflation is fraught with an oversimplification of the current inflation dynamics.
In his book, former governor Subbarao says Chidambaram, Pranab were piqued by his tight rate policy.
The Producer Price Index will be better able to measure the average change over time in the sale prices of domestic goods and services, the Reserve Bank Governor said.
"Given the current economic context, and given the policy initiatives of the RBI, there is considerable scope for banks to reduce lending rates," said RBI Governor D Subbarao. He also pointed out that the several fiscal stimulus packages formulated by the government, together with monetary accommodation and counter-cyclical measures announced by the central bank, have started showing revival signs.
The bank is due to review the monetary policy on July 30.
The last time RBI allowed new private banks was in 2002, prior to which it allowed new players in the mid-90s.
Reserve Bank Governor D Subbarao on Friday met Prime Minister Manmohan Singh and is believed to have discussed the state of the economy and initiatives taken by the central bank to arrest the impact of the global financial meltdown on the Indian economy.
Subbarao was delivering the second Business Standard Lecture in New Delhi, immediately after releasing Business Standard India 2011, the fourth volume of the annual India series published by BS Books, a division of Business Standard Limited.
According to Subbarao, the pressure on the currency was inevitable.
Chidambaram has been magnanimous in endorsing my book, says the former RBI Governor D Subbarao.
Former Reserve Bank of India Governor Duvvuri Subbarao has said the central bank could lose control over money supply and inflation management if cryptocurrency is allowed in the country. Speaking at a webinar organised by the National Stock Exchange (NSE) and New York University (NYU) Stern School of Business, Rao also said India's case for issuing a central bank digital currency (CBDC) may not be strong as there are capital controls. "Crypto is backed by algorithms and there is fear that the central bank might lose control over money supply and inflation management.
Sanjay Malhotra takes charge as the 26th RBI governor at a time when headline retail inflation has shot up to 6.2%.
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Subbarao also said credible fiscal consolidation is a pre-condition for stabilising inflation and in securing non-inflationary growth.
Leaving it to Parliament the issue of amending laws to provide heavier penalty on banks indulging in such acts, RBI Governor D Subbarao also dismissed perceptions that the central bank was going soft on errant banks.
Reserve Bank of India Governor D Subbarao on Thursday appeared before Parliament's Public Accounts Committee (PAC) probing the 2G spectrum scam to explain his position during his term as the finance secretary.
Under his leadership, RBI kept the domestic markets, to a large extent, alienated from the international meltdown to avoid liquidity or solvency cascades.
'Das is friendly, but he finally does what he does. The quality of engagement is very good.'
The central bank can directly print money and finance the government, but it should avoid doing so unless there is absolutely no alternative, former RBI governor D Subbarao on Wednesday said while pointing out that India is 'nowhere' near such a scenario. In an interview with PTI, Subbarao suggested that to deal with the second wave of COVID-19 induced slowdown in the economy, the government can consider Covid bonds as an option to raise borrowing, not in addition to budgeted borrowing, but as a part of that.
Bringing their differences into open, outgoing RBI Governor D Subbarao took a dig at Finance Minister P Chidambaram for his comment once that he would "walk alone" to ensure growth in the face of tight money policy of the central bank.
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