Rajan unveils ‘five pillars’ to strengthen banking system

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Raghuram Rajan, RBI Governor (centre) flanked by Deputy Governors, Urjit R Patel and KC Chakrabarty (on his right) and Anand Sinha and HR Khan (on his left) at the RBI headquarters in Mumbai on Tuesday. 	Ganesh Shirsekar Raghuram Rajan, RBI Governor (centre) flanked by Deputy Governors, Urjit R Patel and KC Chakrabarty (on his right) and Anand Sinha and HR Khan (on his left) at the RBI headquarters in Mumbai on Tuesday. Ganesh Shirsekar
SummaryFinancial inclusion plan to be formed by Nachiket Mor Committee.

Reserve Bank of India Governor Raghuram Rajan on Tuesday unveiled his five-point plan to overhaul the RBI’s developmental measures over the next few quarters.

The first of the “five pillars” of the plan is clarifying and strengthening the monetary policy framework.

“Action on the monetary policy framework will follow the submission of the Urjit Patel Committee report. A number of measures to strengthen bank structures and financial markets have already been announced, and more will follow as they are worked out. The strategy to expand financial inclusion will be formed by the Nachiket Mor Committee report, though significant efforts to explore the use of technology are already under way,” Rajan said.

The second pillar is strengthening banking structure through new entry, branch expansion, encouraging new varieties of banks, and moving foreign banks into better regulated organisational forms.

The third pillar is broadening and deepening of financial markets and increasing their liquidity and resilience so that they can help absorb the risks entailed in financing India’s growth.

Expanding access to finance to SMEs, the unorganised sector, the poor and remote areas will be another pillar. The fifth pillar is to improve the system’s ability to deal with corporate and financial institution distress by strengthening real and financial restructuring.

Citizenship query piques Rajan

Mumbai: Raghuram Rajan was taken aback when asked whether issues regarding his nationality were settled.

At the post-policy media interaction, a piqued Rajan said: “I will answer this question once and only once.”

“I am an Indian citizen. I always held an Indian passport. I have never applied for the citizenship of another country.”

Senior BJP leader Murli Manohar Joshi had given a notice of calling attention in Parliament asking how a foreigner could be appointed as the central banker.

Admitting that he holds a US Green Card, Rajan said: “The Green Card does not require you to take pledge of allegiance anywhere...it simply is a work permit which you need to have to work in another country.” pti

Q2 Monetary Policy Review: The Highlights

* A high-level panel chaired by former RBI Governor Bimal Jalan entrusted to scrutinise applications for new bank licences will hold its first meeting on November 1.

* Banks allowed to pay interest on savings deposits and term deposits at intervals shorter than quarterly ones.

* Special window for commercial banks to meet cash requirements of mutual funds closed with immediate effect.

* Inflation-Indexed National Saving Securities will be launched for retail investors in November/December

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