RBI’s priority is to clean up banks, their non-performing assets: RBI Governor

Tuesday, Dec 8, 2015,10:06 IST By metrovaartha A A A

Washington | Optimistic about the passage of long pending GST bill in the Indian Parliament, Reserve Bank of India Governor Raghuram Rajan has told American investors that priority of the RBI is to clean up banks and their non-performing assets.

In an interaction with American financial institutional investors in New York last week at an event organized by US India Business Council, Rajan said his intention is to give banks more powers to allow for greater recovery of money and give relevant stakeholders an active role in the resolution process.

Rajan said RBI’s continued focus on fiscal consolidation and inflation will mean that they will reach their targeted goals, according to a USIBC media statement.

During the interaction, Rajan said he is optimistic about the passage of GST and the opportunities for compromise that will help realize the goals of the GST – a unified tax market, improvement in tax collection and broadening the tax base. Led by USIBC chairman and president and CEO of MasterCard, Ajay Banga, the discussion focused on issues such as inflation and fiscal deficit management, recent rate cuts and monetary policy, deepening capital markets, modernizing India’s capital markets to mobilize investment in Indian infrastructure and world-class companies. Industry’s desire for reforms also included further development of a corporate debt market, improved infrastructure trusts and debt fund structures, long-term rupee-denominated government securities, and an updated external commercial borrowing regime.

USIBC applauded the Indian government for its recent reform introduced in private sector banking that permits the total foreign holding in private banks to have a composite cap of 74 per cent and eliminates existing sub-limits for FDI and FII capital (which were at 49 per cent). Banks and investors will have greater flexibility to raise capital and to meet the stringent capital adequacy norms. This reform is a critical step in supporting credit growth in the financial markets and the Indian economy, USIBC said. As global commercial institutions and investors, we remain profoundly committed to India as we continue to provide a variety of long-term resources including capital, technology and know-how, which will help advance the Prime Minister’s goals of financial stability, economic growth, digital access, and financial inclusion, Banga said.

USIBC president Mukesh Aghi said the Indian financial markets are an important driver for the country’s economic growth. There needs to be a level playing field for global participants in India’s financial markets with clear, nationality-neutral regulations across all asset classes, he said.