This was in response to Bhattacharya’s comment that the economy was starting to recover and capital goods suppliers were seeing an uptick in demand.
Advertisement
The governor was replying to real estate companies, lobbies and others associated with the sector who demand interest rate cuts at a drop of a hat. “That’s a worrisome trend”, he said.
“We will have to wait and watch the situation”, he added.
India’s rupee has fallen against the dollar in recent weeks, but appeared relatively stable compared to other currencies.
The outlook on emerging Asian currencies in the past two weeks also deteriorated to its worst in years, as bearish bets on the Chinese yuan hit their largest in more than five years after the surprise devaluation, a Reuters poll showed on Thursday. Its government had also in July announced a series of measures to help arrest a rapid stock market fall. “What if they go for poaching rates, then numerous commercial banks could lose a portion of the deposits which are relatively lower priced so that will take away the ability to transmit rates and give further loans at lower rates”, Bhattacharya said in a conversation with the RBI Governor at the SBI Banking & Economic Conclave. “Transmission will never be a one is to one correlation with monetary policy rates”, she said. We were waiting for developments on the inflation front, outcome of the monsoon and external factors.
It should be noted that in India, Bitcoin remains the most known of all the cryptocurrencies, but the market of digital currency still is in the nascent stages.
The RBI had also cuts it’s growth projection in the June policy statement to 7.6 percent, and maintained it in the August month review. Economists now expect the bank to cut rates at its next meeting on September 29.
The Reserve Bank on Wednesday granted “in-principle” approval to 11 entities, including Department of Post, Reliance Industries, Aditya Birla Nuvo, Vodafone and Airtel, to set up payments banks and proposed such licences “on tap” in future. These banks can provide basic banking services like accepting deposits and lending to the unbanked sections including small farmers, micro business enterprises, micro and small industries and unorganised sector entities.
Advertisement
Rajan said that he doesn’t see payments banks transforming into universal banks. Apart from the declaration, the top bank of the country also calmed down the anguish that these organizations would pose any threat to the existing banks.
