Reserve Bank of India (RBI) governor Raghuram Rajan on Sunday, clarified that there has been no difference of opinion between the government and the banking regulator on the implementation of the ambitious financial inclusion scheme – a pet project of Prime Minister Narendra Modi – likely to be unveiled on August 15.
The RBI, however, was not in the favour of an overdraft facility of Rs 5,000 per account. Rajan said, "The discussions with the finance ministry are going on." It is now being considered that the overdraft facility be provided to those operating the account successfully for at least a year. Rajan was speaking after board meeting of the RBI, in which finance minister, Arun Jaitley, was also present.
Rajan also said the monetary policies were on course to meet the inflation target of 8% by January 2015.
The financial inclusion scheme aims at widening the banking net and bringing the marginalised sections of the society under the its fold. About 15 crore accounts will be opened through 7.5 crore households.
On inflation and interest rate, Rajan hinted that the banking regulator will take steps on rate cuts as soon as there is some comfort on the inflation front. "We think that at the current interest rate, we are on course to meet those targets".
"At this point, the uncertainty is two-way. If news comes on either side, we can change what the policy is. But as of now, we think the policy is on target. We are contingent on the data coming in," Rajan added.
Responding to whether the government is satisfied with the RBI's handling of key rates, finance minister Arun Jaitley said, "This an issue that the RBI decides and I am sure it has factored in various circumstances."
After the key rates remained unchanged on August 5, the ministry in a statement said, "The finance ministry states that on its part, the government remains committed to the path of fiscal consolidation and reviving the investment cycle that will help bring down inflation and pick-up growth further.
The RBI governor has already stated that it will not hold interest rates high any longer than necessary and if disinflation proceeds as warranted, there will eventually be room to cut rates. The ministry further states that … "going forward, the RBI should examine the liquidity situation, inflation and growth in setting policy rates."
Meanwhile, preliminary discussions over the modern monetary policy framework as announced in the budget have commenced between the RBI and the government.