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
RUPEE, CAPITAL INFLOWS
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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
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
(Compiled by Subhadip Sircar; Editing by Rafael Nam)