RBI governor Raghuram Rajan, whose three-year term comes to an end in nine weeks, on Thursday indirectly pitched for a four years term for a Central bank head, said sources.
According to sources, Dr Rajan told Parliament’s Standing Committee of Finance that if Brexit were to happen today, then India would have some concern. “But since it is sometime away, India might end up gaining,” sources quoted Dr Rajan having told the parliamentary panel.
Mr Rajan, according to sources, had also told the panel that he was not in favour of reducing interest rates much. “Banks have enough cash but they are not lending. For this, he compared private banks who were lending much more than the public sector bank,” Dr Rajan reportedly told the panel.
RBI chief told the standing committee that compared to government inv-estment, private investment has been slow. The committee was also apprised by Mr Rajan of the various steps taken to deal with the bad loan problem.
Members of Parlia-ment’s Standing Committee on Finance asked Dr Rajan as what should be the tenure of the RBI Governor. He said that a three-year term is “short”.
On whether it should be five years, Dr Rajan is believed to have cited the case of US Federal Reserve. In the US Fed, in addition to serving as members of the Board, the chairman and vice-chairman serve terms of four years and may be re-appointed to those roles, who in turn serve until their terms as Governors expire.
Asked if the structure of the Monetary Policy Committee (MPC) would be put in place before the next policy review due on August 9, Dr Rajan said: “I think we are putting out the structure. Let’s see how far it goes.”
