Zee Media Bureau
New Delhi/Mumbai: Reserve Bank Governor Raghuram Rajan on Tuesday said that the central bank will soon bring a set of bank license by August this year.
Addressing a press conference in RBI headquarters after announcing RBI bi-monthly credit policy review in Mumbai, Rajan said, "I hope to announce at least one set of bank license by August end."
With inflation and fiscal deficit under control, the Reserve Bank of India on cut its policy rate by 0.25 percent, paving way for cheaper home and auto loans as also lower cost of funds for corporate borrowers.
Rajan, who had focused on quelling inflation since taking office in September 2013, lowered the benchmark repo rate to 7.25 percent from 7.50 percent.
As a result the reverse repo rate, the rate at which the central bank drains excess liquidity from the banking system, also moved down by 25 basis points to 6.25 percent.
The RBI, however, has decided to keep the cash reserve ratio (CRR), the portion of deposits which the banks are required to have in cash with the central bank, unchanged at 4.0 percent.
Highlights from the press conference
-There have been signs that number of stressed projects are coming down. However, things will take time.
- Economy is still in slow recovery.
- Growth in the last quarter doesn't look as strong as before.
- Food management can help in reducing the inflation and I think the government is looking at all these.
- We have accounted for an increase in food inflation in our forecast.
- We will intervene when we find that the rupee departs from its significant movement.
- Broadly markets find the rate, they will find the appropriate rate for the rupee.
- We will have revised rate benchmark very soon.
- Ideally we want to migrate to a situation where the benchmark of loan rates are market based rates.
-Banks are aware of asset qualities issues. We must address this soon.
-Will not move far away from disinflationary path.
- Banks should pass through sequence of rate cuts.
- There are considerable number of uncertainties. There is some upside checks on oil prices.
- Government action is very important. If monsoon is better than expected then there will be more room for rate cut.
- If there is room then the policy in future will be data contingent, says Rajan.
- RBI has done thinking whatever is appropriate. Rate cut will ease supply-side bottlenecks.
- Government is acting on its own to reduce bottlenecks and create a new pathway to growth.
- Rajan starts taking questions.
- I hope to announce at least one set of bank license by August end.
- The policy today is neither conservative nor very liberal, Raghuram Rajan.
