No rift with Rajan: Chakrabarty after quitting
22 March 2014 10:55 PM GMT
The 62-year old career banker, who had opted to quit RBI ahead of the scheduled date of June 15, 2014, said he had already informed RBI Governor Raghuram Rajan about his retirement plans and would remain in office till April 25.
‘I think I should have the discretion of deciding my own retirement date. Absolutely there is no problem, this was communicated to Governor well in advance. It was my personal decision,’ he told reporters here. On whether there was any difference with Rajan over policy matters, the outspoken Chakrabarty said, ‘There is no such problem... I am taking early relieve. I am not running away.’ As regards future plans, he said he will think about it after April 25. ‘At present there is no plan.’
Asked if he was going to meet Finance Minister P Chidambaram, he said that he reports to the RBI Governor and has conveyed to him the decision to leave the RBI. ‘I think he (Rajan) must have done that thing (to the Finance Minister),’ he said.
After Chakrabarty’s exit there will be two vacancies for Deputy Governors in the central bank. The Government is yet to find a replacement for Anand Sinha who retired in January.
The RBI has four deputy governors — two from within the organisation, one economist and one banker. Chakrabarty, who was appointed as RBI Deputy Governor in 2009, is considered frank with his views.
He was the senior most among the four deputy governors. Known for his strong views on the efficacy of cash reserve ratio (CRR) as a tool for monetary management, he reportedly had difference of opinion on the issue with the then SBI Chairman Pratip Chaudhuri in 2012 who wanted its abolition.
He was appointed RBI Deputy Governor for a three-year term on June 15, 2009 and was subsequently given a two-year extension. His extended term was to end on June 15, 2014.
Meanwhile, RBI Governor Raghuram Rajan thanked Chakrabarty for his services to the central bank on Friday, saying an exercises has been initiated to find his successor. ‘The Reserve Bank is very grateful for his many years of excellent work in very difficult times,’ the central bank governor said in a statement.
‘His experience as a banker has given him the ability to diagnose weaknesses in the system, and made him a forceful advocate for change. I personally have benefited enormously from his advice,’ Rajan added in the statement. Chakrabarty always speaks his mind, and has been a very valuable guide for successive governors, the Reserve Bank of India Governor said.
Reserve Bank okays 74% Foreign investment in Federal Bank
Mumbai: With the increase in foreign investment limit in Federal Bank to 74 per cent, foreign investors will be allowed to purchase stake in the private bank, the Reserve Bank of India (RBI) said on Friday. Federal Bank has been removed from the ban list and the restrictions placed on the purchase of shares have been withdrawn with immediate effect, the apex bank said.
‘Equity shares of Federal Bank Ltd, can now be purchased through primary market and stock exchanges,’ the Reserve Bank of India said in a notification. The restrictions were removed as government approved increasing foreign investment in Federal Bank from 49 per cent to 74 per cent for its paid up equity share capital. ‘... the aggregate shareholding through Foreign Institutional Investors (FIIs)/Non-Resident Indians (NRIs)/Persons of Indian Origin (PIOs)/Foreign Direct Investment (FDI)...in Federal Bank has gone below the prescribed threshold ban limit stipulated under the extant FDI policy,’ the Reserve Bank of India added.
FIIs, NRIs and PIOs (Persons of Indian Origins) can invest in primary and secondary capital markets in India through PIS. However, RBI monitors the ceilings on FII/NRI/PIO investments in Indian companies on a daily basis. To effectively monitor the limit, RBI has fixed cut-off points two percentage points lower than the actual ceiling. Shares of Federal Bank on Friday closed at Rs 85.95 apiece on the BSE, up 2.26 per cent from the previous close.
‘RBI has not adopted inflation targeting yet, talking to Govt’
Mumbai: Reserve Bank of India (RBI) Governor Raghuram Rajan said on Friday that the central bank is yet to move to inflation targeting and is still in discussions with the government on the same. ‘We haven't moved into inflation targeting as yet. That's something the Urjit Patel committee suggested, and its not something the RBI has accepted,’ Rajan said in his keynote address at the convocation of the central bank-run Indira Gandhi Institute for Development Research here.
On adopting CPI inflation as the benchmark for fighting price rise, he said ‘We probably should focus on CPI rather than WPI. What the RBI has said is that we are exploring the recommendations of the Urjit Patel report, and there are some aspects of it which have to be discussed with the government. We have to explore some of these aspects with the government, including the setting up of a monetary policy committee, including what, if any, the inflation target will be,’ he explained.
On retail inflation, he said, ‘We need to bring the CPI down. Whatever level it comes down to, but the path to bring it down to is 8 per cent by the end of this year, and 6 per cent at the end of the second year.’
The Patel report has called for moving away from the current wholesale price index based inflation to retail price based CPI inflation as the chief data point for RBI to set inflation expectations. The report, released early January, has also called for inflation targeting, which is a process under which Parliament should set a target on inflation for the central bank.
The report, penned by the deputy governor Patel has accordingly proposed a CPI target of 8 per cent by January next and 6 per cent by January 2016. CPI index for February came in at 8.1 per cent and WPI at 4.78 per cent for the month.
‘In the long-run, people get wiser. You can't fool them (the public), and you don't get any additional growth... you get growth from other things but not from generating inflation.’ However, ‘in the short run, there may be a cost to bringing down inflation in terms of growth. But in the long-run, bringing down inflation is a good thing and helps sustainable growth,’ Rajan said. He has hiked the repo rates in three out of four policy reviews since taking charge last September.
‘I think I should have the discretion of deciding my own retirement date. Absolutely there is no problem, this was communicated to Governor well in advance. It was my personal decision,’ he told reporters here. On whether there was any difference with Rajan over policy matters, the outspoken Chakrabarty said, ‘There is no such problem... I am taking early relieve. I am not running away.’ As regards future plans, he said he will think about it after April 25. ‘At present there is no plan.’
Asked if he was going to meet Finance Minister P Chidambaram, he said that he reports to the RBI Governor and has conveyed to him the decision to leave the RBI. ‘I think he (Rajan) must have done that thing (to the Finance Minister),’ he said.
After Chakrabarty’s exit there will be two vacancies for Deputy Governors in the central bank. The Government is yet to find a replacement for Anand Sinha who retired in January.
The RBI has four deputy governors — two from within the organisation, one economist and one banker. Chakrabarty, who was appointed as RBI Deputy Governor in 2009, is considered frank with his views.
He was the senior most among the four deputy governors. Known for his strong views on the efficacy of cash reserve ratio (CRR) as a tool for monetary management, he reportedly had difference of opinion on the issue with the then SBI Chairman Pratip Chaudhuri in 2012 who wanted its abolition.
He was appointed RBI Deputy Governor for a three-year term on June 15, 2009 and was subsequently given a two-year extension. His extended term was to end on June 15, 2014.
Meanwhile, RBI Governor Raghuram Rajan thanked Chakrabarty for his services to the central bank on Friday, saying an exercises has been initiated to find his successor. ‘The Reserve Bank is very grateful for his many years of excellent work in very difficult times,’ the central bank governor said in a statement.
‘His experience as a banker has given him the ability to diagnose weaknesses in the system, and made him a forceful advocate for change. I personally have benefited enormously from his advice,’ Rajan added in the statement. Chakrabarty always speaks his mind, and has been a very valuable guide for successive governors, the Reserve Bank of India Governor said.
Reserve Bank okays 74% Foreign investment in Federal Bank
Mumbai: With the increase in foreign investment limit in Federal Bank to 74 per cent, foreign investors will be allowed to purchase stake in the private bank, the Reserve Bank of India (RBI) said on Friday. Federal Bank has been removed from the ban list and the restrictions placed on the purchase of shares have been withdrawn with immediate effect, the apex bank said.
‘Equity shares of Federal Bank Ltd, can now be purchased through primary market and stock exchanges,’ the Reserve Bank of India said in a notification. The restrictions were removed as government approved increasing foreign investment in Federal Bank from 49 per cent to 74 per cent for its paid up equity share capital. ‘... the aggregate shareholding through Foreign Institutional Investors (FIIs)/Non-Resident Indians (NRIs)/Persons of Indian Origin (PIOs)/Foreign Direct Investment (FDI)...in Federal Bank has gone below the prescribed threshold ban limit stipulated under the extant FDI policy,’ the Reserve Bank of India added.
FIIs, NRIs and PIOs (Persons of Indian Origins) can invest in primary and secondary capital markets in India through PIS. However, RBI monitors the ceilings on FII/NRI/PIO investments in Indian companies on a daily basis. To effectively monitor the limit, RBI has fixed cut-off points two percentage points lower than the actual ceiling. Shares of Federal Bank on Friday closed at Rs 85.95 apiece on the BSE, up 2.26 per cent from the previous close.
‘RBI has not adopted inflation targeting yet, talking to Govt’
Mumbai: Reserve Bank of India (RBI) Governor Raghuram Rajan said on Friday that the central bank is yet to move to inflation targeting and is still in discussions with the government on the same. ‘We haven't moved into inflation targeting as yet. That's something the Urjit Patel committee suggested, and its not something the RBI has accepted,’ Rajan said in his keynote address at the convocation of the central bank-run Indira Gandhi Institute for Development Research here.
On adopting CPI inflation as the benchmark for fighting price rise, he said ‘We probably should focus on CPI rather than WPI. What the RBI has said is that we are exploring the recommendations of the Urjit Patel report, and there are some aspects of it which have to be discussed with the government. We have to explore some of these aspects with the government, including the setting up of a monetary policy committee, including what, if any, the inflation target will be,’ he explained.
On retail inflation, he said, ‘We need to bring the CPI down. Whatever level it comes down to, but the path to bring it down to is 8 per cent by the end of this year, and 6 per cent at the end of the second year.’
The Patel report has called for moving away from the current wholesale price index based inflation to retail price based CPI inflation as the chief data point for RBI to set inflation expectations. The report, released early January, has also called for inflation targeting, which is a process under which Parliament should set a target on inflation for the central bank.
The report, penned by the deputy governor Patel has accordingly proposed a CPI target of 8 per cent by January next and 6 per cent by January 2016. CPI index for February came in at 8.1 per cent and WPI at 4.78 per cent for the month.
‘In the long-run, people get wiser. You can't fool them (the public), and you don't get any additional growth... you get growth from other things but not from generating inflation.’ However, ‘in the short run, there may be a cost to bringing down inflation in terms of growth. But in the long-run, bringing down inflation is a good thing and helps sustainable growth,’ Rajan said. He has hiked the repo rates in three out of four policy reviews since taking charge last September.
Next Story
