)
Reserve Bank of India (RBI) governor Raguram Rajan emphasised on strengthening the developmental efforts that the central bank will pursue in the coming months but added there are risk involved in all new endeavors.
In his new year message to all central bank employees, the governor assured that those risk will be contained but reminded inaction could turn out to be the greater risk.
“There are risks involved in all new endeavours. We of course need to contain the risks, but more importantly, we need to remember that the greatest risk lies in inaction in the face of need,” he wrote to his colleagues.
The developmental efforts of Rajan is based on five pillar, as he describes it, which are, strengthening the monetary policy framework, new banks and new type of banks in addition to subsidiary route for foreign banks for the purpose of better regulation, deepening of financial markets, access of finance to small borrowers, and better mechanism to deal with corporate stress.
RBI has already set up a committee under the chairmanship of Urjit Patel – the deputy governor in-charge of monetary policy, to review and strengthen the monetary policy framework.
The committee is expected to submit its report shortly. Regarding providing access to small and marginal borrowers a panel has been set by under Nachiket Mor, a board member of RBI. And recently, a discussion paper has been released to deal with corporate stress in which banks are mandated to identify such stress early.
Rajan who took charge of RBI in September from D Subbarao amid a currency crisis, has also appreciated his predecessors’ role in steering the country through the global financial crisis.
“I have been singularly fortunate to have taken over from Dr D Subbarao, whose exceptional leadership put RBI in the forefront of policy action in combating the global financial crisis and also brought along a new ethos of public service into the central bank. Subbarao took charge in early September 2008, days before the collapse of Wall Street investment bank Lehman Brothers which eventually led to a financial meltdown that affected several countries including India."
Rajan also highlighted the need for the ability to adopt change in a world which is becoming much more dynamic and to think out of the box. But there was a word of caution also.
“We need to think out of the box to keep pace with today’s environment. While making sure to preserve all that is good about our traditions. We do not want to change for change’s sake,” he said.
Finally, he assured fellow central bankers, that the code of ethics, namely ‘ethics@work’ that the RBI recently adopted for all employees, will go a long way in reinforcing existing values and inculcating a more ethical, self governing internal culture.
