In its first bi-monthly policy, the RBI, in order to enhance hedging facilities for foreign investors in debt instruments, proposed to allow them to hedge the coupon receipts falling due during the next 12 months.
The report said that "we believe, institutions are more important than individuals" and ultimately what is important is the credibility and the independence of any institution and nothing else.
India's consumer price inflation dropped to 5.4 per cent in June
RBI Governor Raghuram Rajan in his maiden policy review, however, eased liquidity though a reduction in the marginal standing facility rate, at which banks borrow from the central bank, by 0.75 per cent to 9.5 per cent.
The government's critics say that the Prime Minister failed to rein in vicious and unprecedented personal attacks on the central bank chief by the likes of Rajya Sabha MP Subramanian Swamy.
New Delhi was reluctant to spook investors by clipping the bank's wings
Rajan had cautioned against any deviation from the fiscal discipline path.
India's foreign exchange reserves surged $5.04 billion in the week ending March 28, its biggest weekly rise in four months, as the central bank started to buy dollars regularly in an effort to build up its defences against any potential global turmoil.
RBI Governor Raghuram Rajan on Friday pitched for incentivisation of domestic savings to boost investments in the country.
The stress in the banking sector, which mirrors the stress in the corporate sector, has to be dealt with in order to revive credit growth.
The central bank and Indian government has reached a "broad consensus" on the composition of a rate-setting panel.
Perhaps because the Modi government had some differences of opinion with two of the economist governors (one of whom was appointed by the Manmohan Singh government), there is a view that its political leadership prefers a civil servant to head the RBI, notes A K Bhattacharya.
According to report by Dun and Bradstreet, central bank expected to maintain status quo on policy rate.
Bharatiya Janata Party leader Subramanian Swamy on Sunday once again attacked Raghuram Rajan on the monetary policy, over a month after Prime Minister Narendra Modi had disapproved of his criticism of the Reserve Bank of India chief.
Jaitley said manufacturing sector will continue to face challenges unless it transitions itself while keeping the quality and price in mind.
The Indian economy recovered from the Covid-induced downturn during 2022 and is poised for further improvement in the coming quarters though downside risks emanating from geopolitical tensions, strengthening dollar and elevated inflation will continue. The positive trajectory in the growth trend and improved fundamentals will help the nation in neutralising the impact of global headwinds which are expected to have a bearing on the country's exports in the months to come. The challenges before the government and the Reserve Bank in the new year would be to arrest inflation, check declining value of rupee against US dollar and promote private investment and growth, with a view to ensure that the country remains one the fastest growing major economies of the world.
The inflation target of the RBI would be reviewed once every five years.
India imposes restrictions on how much money its citizens and companies can invest abroad
RBI Governor Raghuram Rajan on Friday said keeping inflation low is the key task for sustainable economic growth of the country.
Cyber thieves have been using RBI logos to send out mails to cheat customers
RBI is expected to discuss about the impact of GST in its monetary policy.
In the latter half of the year, there would be some economic recovery and return to normal business conditions.
RBI governor Raghuram Rajan said, banks may be soon allowed to increase stake above the current cap of 10 per cent in companies undergoing debt restructuring.
"I think, this is something that all Indians should be concerned about because strength of our institutions is really important for our growth, sustainable growth and equity in the economy," said Rajan.
He also said that he stands by Modi as he admires his spine but took a dig at journalists planting "deliberately false stories" to provoke him.
These cash shortages increase banks' funding costs, making it harder for them to lower lending rates
'Rajan's exit will have a great impact on the economy.'
For 2015-16, IMF pegged India's growth rate at 7.5 per cent.
The friction with the political class is not only about interest rates and monetary policy. While the government often spoke freely about its discomfiture, the RBI had to be careful even in its response to the government as any loose statement would affect the markets.
The former Union minister alleged that the government is "intolerant to the slightest criticism".
Rajan, Swamy alleged, is a member of US dominated Group of 30.
With the economy growing at its slowest rate in a decade, India's banking system is facing rising levels of stressed loans, with $100 billion, or about 10 percent of the total, categorised as bad or restructured.
Arun Jaitley had proposed to set up a Public Debt and Management Agency.
The payments banks are intended to house transactional accounts for individuals, focusing on payments and remittances.
Rajan's total 'monthly emoluments' stands at Rs 198,700
He said the short term macroeconomic priorities of the RBI continue to focus on bringing down inflation towards the government-set target of 4 per cent
Jaitley said if interest rates were lowered, the economy could grow faster than 7-7.5 per cent.
The discussion paper is released at a time when the central bank is sifting through 26 applications seeking an entry into the fray.
Increased demand for the dollar weighed on the local currency.
Despite no change in interest rates, India's largest lender, State Bank of India, last week became among the latest to lower deposit rates, often a precursor to lower lending rates, something some banks have already done for certain consumer loans.
© 2026 Rediff.com - Investor Information - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances