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Reserve Bank of India Governor D. Subbarao said that the opening of foreign direct investment (FDI) in the retail sector would bring down inflation further.
Speaking to reporters after chairing the meeting of the Board of Governors of RBI , here on Thursday , he said this move was expected to bring a lot of benefits to the country, producers, consumers and others. Competitive pricing would be beneficial to consumers.
While agreeing that inflation was not at a comfort level, Subbarao said it must be noted that inflation level was brought down from double-digit to around 7.5 now. This was because of the continuous and constant efforts, taken over a period, by the RBI and the Government. There is a need to bring it down further, he said.
More measures
At the forthcoming policy meeting on October 30, a few more measures are expected to be announced to rein in inflation. Asked about the lowering of India’s growth projection by leading global financial institutions, including the Asian Development Bank, Subbarao said the RBI projected in July that the country’s growth rate would be at 6.5 per cent. It is closely monitoring various aspects of global and domestic economic developments.
He was confident that the country would return to the accelerated growth path as the “growth drivers” were intact. Asked about the slow progress in the financial inclusion programme, the Governor said banks had been asked to step up measures to expand the programme in rural areas.
The new accountholders enrolled under the financial inclusion initiatives should be able to access all banking services. They should not be limited to a few services. Banks have been directed to review the progress of financial inclusion frequently. To a question, Subbarao said that there was a plan to introduce polythene currency notes for higher denominations on a pilot basis. The experiment would be taken up at a small level. Based on the outcome, it may be expanded, he said.
Education loans
PTI reports: The Government is working on a scheme under which it would extend guarantee for advances upto Rs 7.5 lakh, RBI Governor D. Subbarao said. The move is a bid to remove problems faced by students in obtaining education loans,
“There are grievances of students not getting loans or encountering problems while getting loans... The government is now working on a guarantee scheme,” he told students here at an interactive programme organised by RBI and ABP News.
“It is yet to be launched. Hopefully it would come and resolve some of these issues,” he said replying to a question on the woes of students in getting educational loans.
On paper, for loans upto Rs 4 lakh there should be no collateral security or guarantee. “For good students and good institutions it is easier to get loans than for students from not so good or institutions not rated high,” he said.
“But our endeavour is irrespective of level of achievements of institutions, they must have access to education loan upto Rs 4 lakh,” he said.
He said the RBI wanted to deepen penetration of banks either through branches or business correspondents since more than 50 per cent of the households in the country did not have bank accounts.
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