Tuesday, February 3, 2015

A sensible credit policy from Dr Raghuram Rajan



The credit policy announced on 3rd February 2015 makes lot of sense this time as it sounds very positive on the major macro economic fundamentals of the economy  like improvements observed in  inflation, Current account deficit, forex reserves, etc. and offers some sensible measures to provide liquidity, maintain stability of the rupee, mobilize deposits on a long term basis to expand infrastructure credit without much of a mismatch in the Asset Liability management. However, RBI has also sounded skeptical on the Fiscal front and prefers to wait for the revised detailed data on economic Majors on the 9th of this month and the possible budget proposals to assess the soundness and stability of measures to sustain the economic growth on a long term basis to take a  liberal view of its own monetary policy. Its approach to dump credit defaulters also sounds sensible and banks should take full advantage to bring down the NPAs through conversion of debts into equity and inducting new management in sick companies.   

Dr. T.V. Gopalakrishnan

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