The RBI Governor also said that rural economy may see a pick up if monsoon improves and sowing is good.
“You may see rural demand coming back more strongly, and that would be a very tremedous bonus to the economy compared to we are,” Raghuram Rajan said at an industry event.
Raising questions on the true strength of Chinese economy, Rajan also said we shouldn’t be concerned if yuan depreciation holds at current levels, however he added that consequences of China devaluation on some export items have been seen.
The Chinese central bank surprised markets by devaluing the yuan by nearly 2 per cent on Aug 11.
On RBI’s in-principle approval to 11 payment banks, he said that these banks will serve as feeder into universal banks.
He also said that Reserve Bank of India plans to announce small finance bank licences next month.
He also raised questions on the true strength of Chinese economy and said India shouldn’t be concerned if yuan depreciation holds at current levels.
On the banking sector’s bad debt problems, Rajan said the NPAs covered under credit guarantee trust for medium and small enterprises were high.
Besides, small companies were facing liquidity problem due to non-payment of bills, including those by the government.
With agency inputs