The one-year OIS rate was bid at 6.71-6.73 per cent while the five-year OIS rate was bid at 6.84 per cent, traders said.
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On a possible successor to Rajan, the minister said it was still too early to speak on the subject and a proper process would be followed.
The Congress went on to say that the Foreign Direct Investment (FDI) reforms were a “panic reaction” with its spokesman Jairam Ramesh asserting it would not have come about had Raghuram Rajan not announced his decision on Saturday to exit RBI as Governor. By focusing on WPI, we could be deluded into thinking we control inflation, even though it stems largely from actions of central banks elsewhere.
“The small finance banks, which are a transformation of the earlier MFIs will have the mandate of lending to the small and medium enterprises”, he said.
“As soon as economic policy becomes painful, clever economists always suggest new unorthodox painless pathways”, Dr Rajan said, according to the speech emailed to journalists.
The focus will now shift to Rajan’s successor and analysts said they did not expect any long-term impact to markets as long as his replacement is seen as credible and somebody who can defend the RBI’s autonomy at a critical juncture in its history.
Dr Rajan, who famously predicted the 2008 global financial crisis, has been widely credited with bringing stability to India’s economy since taking over the reins of the RBI in September 2013.
This, he said, implied support for such policies beyond the governor in RBI and government.
Rajan expressed confidence that the government and the new RBI chief will internalise frameworks and institutions that have been set up and ensure low inflation in future.
Rajan has cut the main policy rate by 150 basis points since 2015 but has faced calls for more substantial easing.
Most of all, critics want to know why a man who tamed inflation, slowed the rupee’s decline and made a valiant effort to shake up India’s antiquated banks will be the first RBI governor in more than two decades to not have his first contract renewed.
Rajan also strongly defended the upcoming introduction of a monetary policy panel to set interest rates – a policy he has championed – saying “the rewards will be many”, including a more stable policy framework.
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“With the MPC, which is truly revolutionary, we are abandoning the ways of the past that benefited the few at the expense of the many”. In the letter to colleagues, the former International Monetary Fund chief economist said he believed the bank had delivered on objectives including taming inflation, stabilizing the rupee and tackling India’s mountain of bad loans.
