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Greece issue not greasy for India: RBI governor

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Chennai: India’s exposure to cash-strapped Greece was very limited and the central government was in talks with the central bank on providing additional capital to public sector banks, a top Reserve Bank of India (RBI) official said on Thursday.

RBI Governor Raghuram Rajan said capital investments in the Indian economy were picking up while reforms were needed for stronger growth.

Speaking to reporters after attending RBI’s board meeting here, Rajan said the country has very limited exposure to Greece that was facing a crisis after defaulting on payments to the International Monetary Fund and would not be impacted much directly. However, the develop ments may have a slight indirect effect, he conceded.

He said the Greece issue may impact the exchange rates. Untoward developments in that country could also place at risk global investments, he warned.

Rajan said global investors after analysis would find the India story to be very good. India’s macro policies were good while the growth prospects and foreign exchange reserves were healthy, he pointed out.

Rajan said India was attractive for foreign investors given the opportunities while the global economy is on the road to recovery.

According to Rajan, the Indian economy was picking up as there were signs of capital investment picking up while the government has to address some issues to put on track the stalled infrastructure projects.

However, he cautioned against relying on foreign investors to fund government or corporate banks market.

Queried about inflation, the RBI governor said it was being watched as well as the progress of the monsoon.

On the issue of non-performing assets of banks, Rajan said RBI was working with the banks so that they recognise the issue early.

He said additional capital infusion by the government into public sector banks will also provide the necessary buffer for the latter.

Rajan said the process of appointing new heads for public sector banks will be completed soon.

According to him, exports was an area of relative weakness which was true across different Asian economies.

Rajan also announced that RBI will put in place a regulatory framework to allow a new kind of Non-Banking Finance Company (NBFC), which could act as an account aggregator to enable the common man to see all his accounts across financial institutions in a common format.

The idea of such an NBFC had emanated from the Financial Stability and Development Council (FSDC).

RBI deputy governor S.S. Mundra said the central bank proposes to recommence the Financial Inclusion Advisory Committee (FIAC) to take the financial inclusion agenda forward.

Mundra said the work on financial inclusion was far from complete and a road map needed to be laid out to take the agenda forward, as Prime Minister Narendra Modi indicated at RBI’s 80th Anniversary celebrations.

This has also assumed critical importance following the massive efforts made for opening of bank accounts under the Prime Minister’s Jan Dhan Yojana with focus on Jan Dhan accounts, Aadhar identity and Mobile phones.

According to Mundra, RBI would request all financial sector regulators as also the government, self-regulatory organisations, research organisations, Unique Identification Authority of India (UIDAI), National Payments Corporation of India (NPCI) and such other stake holders for nomination to FIAC.

He said that as an input to the FIAC, RBI will set up an internal group with the concerned departments to prepare a blue print for financial inclusion for the next five to 10 years identifying ways to integrate resources available with all financial institutions in achieving the goals for financial inclusion.

Harun R. Khan, another RBI deputy governor, highlighted the measures being taken to move towards less-cash less-paper-based payment system, with focus on creating more acceptance infrastructure for the huge number of plastic cards issued by banks and upscaling mobile banking.

The RBI’s board meeting also discussed the draft Annual Report for 2014-15.

The Annual Report of RBI gives an account of what was planned in the past year, what was achieved and what was not, as also what the central bank proposed to do in the coming year.

(IANS)

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Raghuram Rajan: The Man Who Revolutionized The Indian Banking System

During his academic days, he won the Director's Gold Medal in IIT Delhi and was a Gold medalist at IIM Ahmedabad.

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Raghuram Rajan was born on 3 February 1963, in Bhopal, Madhya Pradesh. Wikimedia Commons
Raghuram Rajan was born on 3 February 1963, in Bhopal, Madhya Pradesh. Wikimedia Commons
  • On September 5, 2013, Rajan took charge of Governor of India’s central banking institution
  • Raghuram Rajan graduated in electrical engineering from IIT Delhi
  • Under Raghuram Rajan, the RBI licensed two universal banks and approved eleven payments banks

Raghuram Rajan is one of the technically financial people to grace the Indian economy and banking sector. He came at the time when the Indian economy was in the worst crisis ever faced in last decades. Through his meticulous planning, he banked on reforming and stabilizing the financial situation in the nation. On September 5, 2013, Rajan took charge of Governor of India’s central banking institution, succeeding Duvvuri Subbarao.

Raghuram Rajan was born on 3 February 1963, in Bhopal, Madhya Pradesh in a Tamil family. His father was a senior officer in the Intelligence Bureau department. He is married to Radhika, a classmate from IIM and has two children.

Also Read: Was ‘The First Women President Of India’ A Well Deserved One?

Raghuram Rajan graduated in electrical engineering from IIT Delhi and then he joined Tata Administrative Services as a management trainee. However, he soon left this to pursue a doctoral program in management at the MIT Sloan School of Management. After that, he acquired a Post Graduate Diploma in Business Administration from IIM, Ahmedabad in 1987 and later Raghuram Rajan did his PhD from the Massachusetts Institute of Technology.

Raghuram Rajan was appointed as the Vice-Chairman of Bank for International Settlements (BIS) on 9th November 2015.  Wikimedia Commons
Raghuram Rajan was appointed as the Vice-Chairman of Bank for International Settlements (BIS) on 9th November 2015. Wikimedia Commons

During his academic days, he won the Director’s Gold Medal in IIT Delhi and was a Gold medalist at IIM Ahmedabad. Even after being so bright, he admitted of having poor command over the Hindi language.

Take a look at some of the aspects related to the life of one of the genius economist of India: 

  1. After Raghuram Rajan joined as the Governor of the RBI, the rupee rose 2.1 percent against the US dollar. Before that, the rupee had weakened sharply against the dollar, hitting almost Rs 69 to a single dollar.
  2. To bring down the inflation, the RBI under Rajan adopted the Consumer Price Index (CPI) despite the Central Government’s disapproval. Consequently, the CPI dropped from 9.52 percent in August 2013 to 5.24percent in April 2016, accompanied by the required drop in global commodity prices.
  3. Under Raghuram Rajan, the RBI licensed two universal banks and approved eleven payments banks. It was done to extend the country’s banking services to the two-thirds of the population, who were until then still deprived of basic banking facilities.
  4. Raghuram Rajan has the privilege to be appointed as the youngest-ever Economic Counselor and Director of Research (chief economist) at the International Monetary Fund (IMF) from October 2003 to December 2006.
  5. During his stay at IIT Delhi, Raghuram Rajan was the head of the student’s council.
  6. Raghuram Rajan was ranked by his fellow mates as the economist with ‘the most important ideas for a post-crisis world’ in a 2011 poll in The Economist.
  7. Raghuram Rajan has the distinction of being featured on Foreign Policy magazine’s Top 100 Global Thinkers list in 2010 and 2012.
  8. Raghuram Rajan has also served as a professor in the University of Chicago’s Booth School of Business in the economics faculty. Before leaving the position due to public service commitments, he was awarded the accolade in 2007 which he held till 2013.
  9. Raghuram Rajan was appointed as the Vice-Chairman of Bank for International Settlements (BIS) on 9th November 2015. The bank was established as an international company by shares of the central banks of different countries. The bank provides banking facilities to the central bank and is also regarded as the key bank of the central banks.
  10. Raghuram Rajan authored a very popular book, ‘Fault Lines: How Hidden Fractures Still Threaten the World Economy,’ was awarded the Best Business Book of the Year in 2010 by Financial Times-Goldman Sachs. This book argued that serious flaws in the economy are to blame for the current economic crisis.

    After Raghuram Rajan joined as the Governor of the RBI, the rupee rose 2.1 percent against the US dollar. Wikimedia Commons
    After Raghuram Rajan joined as the Governor of the RBI, the rupee rose 2.1 percent against the US dollar. Wikimedia Commons
  11. Raghuram Rajan was awarded the inaugural Fischer Black Prize by the American Finance Association in January 2003. The award is given to the financial economist under the age of 40 who has made the significant contribution to the sector and is given in every two years.
  12. In 2005, Raghuram Rajan presented a theory outlining the looming financial dangers and risks associated with the current system and he got a very negative response for it. But when an actual global economic crisis occurred in 2008, his analytical skills came true.
  13. During Raghuram Rajan’s term as the RBI(Reserve Bank of India) governor, the RBI sold the longest ever government bonds with a 40-year maturity.
  14. In September 2003, Raghuram Rajan became the youngest ever to be appointed as the Economic Counselor and Director of Research (Chief Economist) of the International Monetary Fund.
  15. Raghuram Rajan has served at the University of Chicago’s Booth School of Business as the Eric J. Gleacher Distinguished Service Professor.