SME Times News Bureau | 05 Feb, 2015
A day after Reserve Bank of India Governor Raghuram Rajan kept
key interest rates unchanged in the latest policy review, he offered an
explanation for maintaining status quo by saying inflation was still a cause
for concern.
"We still have concerns about inflation," Rajan said Wednesday in a
conference call with analysts.
He added, however, that the deflationary global environment gave the Reserve
Bank some room for manouevre with monetary policy.
"We are still in conventional monetary policy territory. Given the
deflationary environment elsewhere, it's actually easier for us because we are
not fighting inflation in an environment where inflation is picking up
elsewhere," Rajan said.
India's retail inflation fell to a low of five percent in December 2014, from
9.87 percent during the corresponding month of 2013.
The December retail inflation was, however, a rise over the record low of 4.4
percent consumer price index (CPI) registered in November 2014.
December's retail inflation increase came after fourth straight month of
decline till November.
Rajan said Tuesday that attaining the projected inflation target of 6 percent
by January 2016 is at risk due to expected "food price shocks as the full
effects of the monsoon's passage unfold, and from geo-political developments
that could materialise rapidly."
"The future policy stance will be inluenced by the RBI's projections of
inflation relative to the medium term objective of 6 percent by January 2016,
while being contingent on incoming data," Rajan told the press in the
post-policy briefing.
He said it would be easier to meet the 8 percent CPI target for 2018.
wholesale price index (WPI) based inflation fell to 0.11 percent in December
2014 from 6.40 percent in the corresponding month of 2013.
The rate of inflation based on WPI was nil for November from 1.77 percent for
the previous month (October).
"Future food prices and the timing and magnitude of held back administered
price revisions impart some uncertainty to an otherwise improving inflation
outlook," the policy statement said.
Meanwhile, the
central bank announced two four-member teams as the external advisory
committees (EAC) for small finance banks and payments banks.
In a statement, the RBI said the EAC for the small finance banks will be headed
by former RBI deputy governor Usha Thorat.
The other members are M.S. Sahoo, secretary of the Institute of Company
Secretaries of India (ICSI), M.S. Sriram, professor at IIM Bangalore and
distinguished fellow of the Institute for Development and Research in Banking
Technology (IDRBT), and M. Balachandran, chairman of the National Payments Corporation
of India (NPCI).
The EAC for the payments banks will be headed by Nachiket M. Mor, director of
the Central Board of RBI.
The other members are Roopa Kudva, former managing director and chief executive
officer, CRISIL Limited, Shubhalakshmi Panse, former chairman and managing
director of Allahabad Bank, and Deepak Phatak, chair professor at IIT Bombay.
According to RBI, 72 applications have been received for setting up small
finance banks and 41 applications for payments banks.