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Speaking to reporters in Chennai today, after RBI's Board meeting, Rajan said it was important to ensure funding for infrastructure projects and keeping them on track. He also said that the appointment of heads of state-run banks will be finished soon. The government is yet to appoint chief executives for five state-run banks.
On the rising NPAs of public sector banks, he said asset quality of banks is an ongoing issue and RBI is working with banks to ensure that they recognise problems early on NPAs.
Speaking about the Greece situation, Rajan said India's direct exposure to the country is "very, very limited, but we may see some indirect impact in terms of impact on foreign exchange rates.”
On the Indian economy, he said, it is started picking up and there were some signs of capital investments. "We continue to do spade work for sustainable growth. News on monsoon front has been good so far; policy stance contingent on data and we are watching that," Rajan said.
He hoped more foreign investors will turn towards India given the growth prospects, and given foreign exchange buffers are healthy.
Rajan also said, the central bank needed to be careful about relying on foreign investors to finance government or corporate bonds markets, though he was committed to a steady expansion of overseas money in the country's debt.
He clarified that he did not mention that the global economy is going to see any complete depression and his closed door speech did not mention any such thing.
On FII cap
Rajan said India would examine debt limits twice a year.
“We have broadly decided to look at limits twice a year and we just have to fix the date” of the appraisal. We are committed to a steady expansion in the absolute value of FII participation while ensuring we don’t go overboard and become overly reliant on FIIs for financing in government bond markets or corporate bond markets,” said Rajan.
The RBI Governor added that the government is in talks with Euroclear Bank SA and Clearstream Banking SA on a plan that would make it easier for foreigners to trade the bonds while keeping transactions within India.
“One of our worries was that if we allow the trading to go abroad, it would take away liquidity from domestic markets,” he said. “Recently, they came up with a proposal which would leave trading in the domestic markets, which looks quite reasonable.”
