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Banking and Insurance (FIN301) Presented by: Rohit kumar(A13) Amit kumar sah(A22) Navjot gaur(A15) Sameer miya Ansari(A16)

Rbi governor

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Page 1: Rbi governor

Banking and Insurance (FIN301)

Presented by:

Rohit kumar(A13)Amit kumar sah(A22)Navjot gaur(A15)Sameer miya Ansari(A16)

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Whether the tenure of RBI Governor Dr. Rajan should be extended or not?

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Introduction

• He is an Indian Economist• Born on 3 Feb,1963,Bhopal,M.P• Served as 23rd governor of RBI• Graduated from IIT,Delhi and IIM,Ahemdabad• Completed his Phd from MIT sloan• He was a gold medalist at IIT and IIM• Chief economist at International Monetary Fund• Chief economic adviser to India’s Ministry of Finance.

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Cntd…….

• Started his career as an Assistant Professor at Chicago University.• He received a Phd for his thesis titled Essays on Banking• Currently serving as Vice Chairman of Bank for

International settlement (BIS).• He chaired the Indian Government’s Committee on

Financial Sector Reforms (2007-2008).• In 2011 he served as President of the American Finance

Association.• Dr.Rajan is also a member of several prestigious

organizations which include the ‘Group of Thirty’ and ‘American Academy of Arts and Sciences’

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Awards • Dr. Rajan was listed as one of the top 10 Economists of

the world in 2003.• He won the Fisher Black Prize awarded by the American

Finance Association.• Infosys Prize for the Economic Sciences, 2012• Global Indian of the Year Award, 2011..

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Responsibilities of RBI Governor

• Maintaining the financial stability in an economy.• Issuing licenses to open new private and foreign banks.• Prescribing interest rates on savings account and a minimum

lending rate.• Setting parameters within which the whole financial system

will function.• Maintenance of foreign exchange market in India.• To monitor the adequate supply of currency notes and coins.• Monitoring and facilitating flow of credit to rural, agricultural

and various small scale industries sectors.

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Why is he fit as Governor ?

• Raghuram Rajan is not only an economist but is also the youngest person who has been appointed as the chief economist at Indian Monetary Fund.

• He has a sound knowledge of the subject and being an economist has a firm grasp over the concept of macroeconomics, this knowledge is needed in the governor of RBI.

• With all his credentials and qualities, the man who claims to have predicted the economic crisis of 2008, Raghuram Rajan is the specialist that the economy of India needs!

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Achievements

• He is known for bringing the bleeding rupee back to strength.• He easily reduced the inflation to 6% from double digit

level,• In 2010, this economist authored ‘Fault Lines: How Hidden

Fractures Still Threaten the World Economy’. • The book was well received by audiences and critics alike

and was also named as the best business book of the year by Financial Times.

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Cntd…..

• His biggest achievement is that he successfully brought down retail inflation to 3.78% in July 2015 from 9.8% in September 2013 – the lowest since the 1990s.

• He promised eased curbs on foreign banking, following which Sensex rose by 333 points or 1.83% and the rupee rose 2.1% against the dollar.

• Under Rajan, the RBI adopted consumer price index (CPI) as the key indicator of inflation, which is the global norm, despite the government recommending otherwise.

• Under Rajan, two universal banks have been licensed and eleven payment banks have been given the nod.

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Rajan Predicted the 2008 Financial Crisis

• Rajan is one of the few economists who correctly warned central bankers about the 2008 financial crisis.• In 2005, Dr. Rajan correctly pointed out how structural

flaws in the economy would lead to a financial crisis. • He presented a paper entitled "Has Financial

Development Made the World Riskier?" at the annual Economic Policy Symposium of central bankers.

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Rates Chart

Rates 2013 2016

CRR 4.25% 4%

SLR 23% 21%

Bank rate 10.25% 7%

Repo rate 7.5% 6%

Rev repo 6.5% 6%

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Inflation control

Year Inflation{%}

2012 9.30

2013 10.92

2014 6.67

2015 5.88

2016 6.00

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Steps taken by Dr. Rajan to protect layman’s interests as customer

• Free credit report once a year:Every customer will have the right to know his/her credit score at least once in a calendar year free of cost.RBI has mandated credit information companies (CIC) to provide in electronic format full credit report to customers once a year.

• No penal interest on savings account:Banks can no longer fleece customers by charging them for not maintaining minimum balance.If a balance dips below the minimum stipulated amount, banks have to notify customers and give them a month to restore the balance.

• Measures to prevent frauds on cards transaction:To prevent card-related frauds, RBI has mandated banks to issue chip-based and PIN-enabled debit and credit cards.This is aimed at eliminating skimming risks and preventing misuse of stolen cards.

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ET Survey

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Initiatives

• Attracted foreign deposits.• Control of exchange rate.• Inflation control.• Establishment of new banks.• Change to MCLR to bring transparency.

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News Updates

• Infosys CEO Vishal Sikka:Raghuram Rajan did 'extraordinary job' as RBI chief.

• Raghuram Rajan returns to academia; to teach international corporate finance.

• ETMarkets.com readers' survey: India wants Rajan 2.0 for the RBI

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• RBI issued the last full-service bank license to Yes Bank• within a year, 11 payment banks and subsequently 10 small

finance banks are estalished

Establishment of new banks

Establishment of new banks

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• The Reserve Bank of India (RBI) has decided to grant approval to the following 10 applicants to set up small finance banks under the “Guidelines for Licensing of Small Finance Banks in the private sectors” issued on November 27, 2014.

Names of selected applicants• Au Financiers (India) Ltd., Jaipur• Capital Local Area Bank Ltd., Jalandhar• Disha Microfin Private Ltd., Ahmedabad• Equitas Holdings P Limited, Chennai• ESAF Microfinance and Investments Private Ltd., Chennai• Janalakshmi Financial Services Private Limited, Bengaluru• RGVN (North East) Microfinance Limited, Guwahati• Suryoday Micro Finance Private Ltd., Navi Mumbai• Ujjivan Financial Services Private Ltd., Bengaluru• Utkarsh Micro Finance Private Ltd., Varanasi

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Change to MCLR to bring transparency

• MCLR stands for Marginal Cost of Funds based Lending Rate, a new system for of lending rate at which banks will now lend to new borrowers at their on rate fixing with considering CRR.

• So a formal solution like the MCLR brings greater clarity and, in the long run, creates a more transparent rate regime for consumers.

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Accommodative stance on the monetary policy

• Inflation• Liquidity• Growth Target• Oil Prices• FCNRs

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Conclusion

Raghuram Rajan had done a lot