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7/27/2019 10 Things About RBI
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10 things about RBI's new governor RaghuramRajan
BySimplus Information Services| Yahoo Finance India Wed 4 Sep, 2013 12:12 PM IST
RELATED CONTENT
View Photo
Raghuram Rajan, newly appointed governor of Reserve Bank of India (RBI), arrives for a news conference at the bank's
headquarters in Mumbai September 4, 2013. REUTERS/Danish Siddiqui
India's then chief economic adviser Raghuram Rajan
stands outside his room at the finance ministry in New Delhi Raghuram Rajan, the new RBI governor, has a
formidable task ahead of him. He has to manage a free-falling rupee, which is alarmingly inchingtowards 70-levels. Inflation that threatens to cross 5%-levels and answer calls for interest rate cuts to
fuel growth which fell to 4.4% in the first quarter of this fiscal.
And all this in the backdrop ofthe US Federal Reserves plans to cut down its stimulus programme
which is creating ripples around financial markets across the world.
But before we go into how he will sort out the problems, here are few things to note about Raghuram
Rajan
1) Raghuram Rajan is an alumnus of the Indian Institute of Technology (IIT), Delhi, and Indian
Institute of Management (IIM), Ahmedabad.
2) Rajan has a background in economics. He received his PhD from the Massachusetts Institute of
http://in.finance.yahoo.com/blogs/author/simplus-information-services/http://in.finance.yahoo.com/blogs/author/simplus-information-services/http://in.finance.yahoo.com/blogs/author/simplus-information-services/http://in.finance.yahoo.com/photos/raghuram-rajan-newly-appointed-governor-photo-171700492.htmlhttp://in.finance.yahoo.com/photos/raghuram-rajan-newly-appointed-governor-photo-171700492.htmlhttp://in.finance.yahoo.com/news/provider-yahoo-finance-india/http://in.finance.yahoo.com/news/provider-yahoo-finance-india/http://in.finance.yahoo.com/news/provider-yahoo-finance-india/http://in.finance.yahoo.com/photos/raghuram-rajan-newly-appointed-governor-photo-171700492.htmlhttp://in.finance.yahoo.com/blogs/author/simplus-information-services/7/27/2019 10 Things About RBI
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Technology after a thesis on the banking sector.
3) He went on to join the Booth School of Business at the University of Chicago as a professor. His
work in Chicago earned him the prestigious Fischer Black Prize for being one of the best academic
under 40 in the field of financial economics.
4) In 2003, he served as the Economic Counsellor and Director of Research at the International
Monetary Fund (IMF). He is the youngest to become the chief economist at the IMF. He is also a
visiting professor for the Federal Reserve Board and the World Bank.
5) Rajan has written two books Fault Lines: How Hidden Fractures Still Threaten the World
Economy, and Saving Capitalism, which he co-authored with his fellow professor at Chicago
University Luigi Zingales.
6) Once trashed, Rajan is today credited world over for predicting the 2008 financial crisis early in
2005.
7) In 2012, he was appointed as the Chief Economic Adviser to the Finance Ministry.
8) He has also served as the honorary economic adviser to Prime Minister Manmohan Singh in
2008.
9) During the same year, he headed a committee on reforms in the financial sector. In the report
submitted to the Planning Commission, he called for the RBI to focus on one target alone inflation,
and warned that by trying to manage the exchange rate and growth too, the central bank risked not
undertaking either of the tasks successfully.
10) At the age of 50, Rajan will be one of the youngest RBI governors. Dr Manmohan Singh was just
10 days short of 50 when he became the RBI governor in 1982.
Also Read:
Debate: Will Raghuram Rajan turn the tide?
Raghuram Rajan says economy can overcome challenges
Indian economy is at a turning point: Raghuram Rajan
http://debate--will-raghuram-rajan-turn-the-tide--045409149/http://debate--will-raghuram-rajan-turn-the-tide--045409149/http://raghuram-rajan-says-economy-overcome-082303515/http://raghuram-rajan-says-economy-overcome-082303515/http://in.finance.yahoo.com/news/indian-economy-turning-point-raghuram-111204821.htmlhttp://in.finance.yahoo.com/news/indian-economy-turning-point-raghuram-111204821.htmlhttp://in.finance.yahoo.com/news/indian-economy-turning-point-raghuram-111204821.htmlhttp://raghuram-rajan-says-economy-overcome-082303515/http://debate--will-raghuram-rajan-turn-the-tide--045409149/7/27/2019 10 Things About RBI
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RBI governor Rajan's new proposals
Reuters Wed 4 Sep, 2013 7:34 PM IST
RELATED CONTENT
View Photo
Raghuram Rajan, newly appointed governor of Reserve Bank of India (RBI), listens to a question during a news conference
at the bank's headquarters in Mumbai September 4, 2013. REUTERS/Danish Siddiqui
MUMBAI (Reuters) - Reserve Bank of India Governor, Raghuram Rajan, on Wednesday announced
a slew of proposals in his first day of office.
Below are some highlights of the proposed action.
MONETARY POLICY
Postpones first monetary policy statement as Governor to September 20 from September 16
To set up a panel on how to strengthen monetary policy framework, which will submit report in three
months.
Complete coverage: Raghuram Rajan takes over as new RBI Head
Rajan at RBI: What to expect?
New RBI chief Rajan raises hopes with action plan
RUPEE, CAPITAL INFLOWS
To allow exporters to re-book cancelled forward currency contracts up to 50 pct of the value of
cancelled contracts and up to 25 percent for importers
Will push for more trade settlements in rupees, open up financial markets for those who receive
rupees to invest back in
Will offer a special window for swapping foreign currency non-resident (FCNR) deposits with a
minimum tenor three of years and more, at a fixed rate of 3.5 percent per year
Will raise overseas borrowing limit of 50 percent of unimpaired Tier I capital to 100 per cent for
banks
http://in.finance.yahoo.com/photos/raghuram-rajan-newly-appointed-governor-photo-140435024.htmlhttp://in.finance.yahoo.com/photos/raghuram-rajan-newly-appointed-governor-photo-140435024.htmlhttp://in.finance.yahoo.com/news/raghuramrajan/http://in.finance.yahoo.com/news/raghuramrajan/http://in.finance.yahoo.com/news/rajan-at-rbi--what-to-expect--042256057.htmlhttp://in.finance.yahoo.com/news/rajan-at-rbi--what-to-expect--042256057.htmlhttp://in.finance.yahoo.com/news/rbi-governor-rajan-says-economy-123021874.htmlhttp://in.finance.yahoo.com/news/rbi-governor-rajan-says-economy-123021874.htmlhttp://in.reuters.com/http://in.finance.yahoo.com/news/rbi-governor-rajan-says-economy-123021874.htmlhttp://in.finance.yahoo.com/news/rajan-at-rbi--what-to-expect--042256057.htmlhttp://in.finance.yahoo.com/news/raghuramrajan/http://in.finance.yahoo.com/photos/raghuram-rajan-newly-appointed-governor-photo-140435024.html7/27/2019 10 Things About RBI
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Borrowings mobilized under this provision can be swapped with RBI at a concessional rate of 100
basis points below the ongoing swap rate prevailing in the market
Above schemes will be open till November 30, 2013
DEBT / BROADER MARKETS
Will introduce cash-settled 10-year interest rate future contracts
Will examine introduction of interest rate futures on overnight interest rates
Will steadily but surely liberalise markets, restrictions on investments and position-taking
To issue inflation-indexed savings certificates tied to CPI to retail investors by end November
Need to reduce requirement for banks to invest in government securities in a calibrated way
BANKING SYSTEM
To set up external committee to screen bank license applicants
Hopes to announce licenses within, or soon after, January 2014
Will push foreign banks to set up wholly-owned subsidiaries
Will look at continuous or on-tap bank licensing system for applicants
Will issue guidelines to free rules on setting up bank branches for domestic commercial banks
To look at rising non-performing assets and restructuring/recovery process
Need to accelerate the working of debt recovery tribunals and asset resconstruction companies
Proposes to collect credit data, examine large common exposures among banks
Will encourage banks to clean up their balance sheets.
Will encourage banks to commit to raising capital when necessary
Bad loan problem is not alarming yet, but will fester if unaddressed
To set up committee that will access every aspect to financial inclusion