New Delhi: The Reserve Bank will issue small finance bank licences in the next few days, said Deputy Governor S S Mundra here on September 10. RBI last month gave in-principle approval to 11 entities to set up payments banks.
"There is another category of differentiated bank that is small finance bank which we expect to announce again in-principle approval in the next few days," Mundra said during a panel discussion at an event organised by The Economist. RBI had received 72 applications for small finance bank licences.
The small finance banks can provide basic banking services like accepting deposits and lending to the unbanked sections such as small farmers, micro business enterprises, micro and small industries and unorganised sector entities. Later interacting with reporters, Mundra said India is better prepared to deal with the impact of the likely rate hike by the US Federal Reserve.
"The relevant point to understand is how we are prepared for it. And in that context if we look today compared two years back, I think we are much better prepared for that," the Deputy Governor said, adding that current account deficit (CAD) is better, foreign exchange reserve comfortable and macro-economic environment stable.
"So, I don't think any regulatory response is immediately needed," he said, adding that RBI will not hesitate to take necessary steps. He also said the first quarter economic data released by CSO were "very near" RBI's projections. To a query on prices, he said RBI is targeting 6 per cent retail (CPI) inflation by January 2016.
"We have agreed to a CPI as a nominal anchor. There is a mandate, there is a glide path. Six per cent is the target for January 2016 which we are moving towards. I think that is the framework in which we operate," he said.
"We would see the ongoing developments. The last monetary policy was very clear... we are maintaining our accommodative stance and whenever some room arises, it would be put to good use."
Replying to a question on monsoon, Mundra said government has done a very efficient food management, and in case of challenging situations, "there is certainly an increased confidence that they will be dealt with in a more decisive manner".
When asked if volatility in rupee was a cause of concern and if RBI will intervene at any level, he said, "Volatility is always a concern. It is not any particular level, which we target... RBI action is there to ensure that there is no undue volatility".
At the panel discussion, Chief Economic Advisor Arvind Subramanian said India is the fastest growing economy now and is likely to remain so for some time. Talking about recent developments in China, Subramanian said India could benefit from the development. He said many big Chinese companies are investing in India. "... the fact that identities of these companies are Chinese gives you a sense that partly it is hedge against China," he added.
On a query related to cooperative federalism in India, he said GST has been a bipartisan effort and so was the insurance bill that has been passed.
