Thursday, September 4, 2014

Governor has done Credit to RBI

The editorial is well balanced. Rajan has done credit to RBI by sticking on to  the dearer Monetary poloicy despite the expectations and pressures from market to soft pedal because of the change in the Government and improved confidence in the Governance Standards for a performing economy. His stance on interest rates and forex policies has really earned him the kudos as inflation has started showing declining trend and the Rupee has somewhat stabilised, though both are not as comfortable as one desires.All said, the governor has erred on maintaining banking stability and the proposal to issue licenses for small  and payment banks which can further destabilise the banking. NPAs are due to non performance of RBI and Banks Managements is a fact which cannot be easily brushed aside.Though the Government interference  in banks' functioning may be a cause for enhanced NPAs but still the RBI could have taken strong measures to discipline the Banks' Boards and bad borrowers. Besides the approach to restructure the RBI chosen by him is not on desirable lines in the background of its losing functional autonomy and fast declining operations and staff resources.

Dr.T.V.Gopalakrishnan

(This comment is given in response to the editorial in Business standard,)

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