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RBI board should be like Rahul Dravid, not Navjot Singh Sidhu: Top quotes by ex-Guv Raghuram Rajan
See what he had to say
1.RBI Board should be like Rahul Dravid, not Navjot Singh Sidhu
"So, my sense is the objective of the board is to protect the institution, not to serve others' interest; it is to protect the health of the institution but also to provide wide, sensible advice. The aim of the board is to be Rahul Dravid -- sensible, thoughtful and not, with due respect, Navjot Sidhu," he said.
2.Governors and Deputy Governors are the safety belt of a car
The RBI is something like a seat belt. As a driver, the driver being the government, it has the possibility of not putting on a seat belt but of course if you do not put on your seat belt you get into an accident and the accident can be quite severe . Once you have appointed these Deputy Governors and Governor, you have to listen to them because that is what you have appointment them for, they are your safety belt
3.RBI has authority to say no, but doesn’t do it out of petulance
The government will push, will try and get the RBI to be more lenient. RBI has responsibility for financial stability and therefore we have an authority to say no. Of course the RBI doesn't say no out of petulance. It says it because it has examined the situation and believes that this take implies too much financial instability. I think that relationship has gone on for a long and the fact that the RBI says no is not new. The government can keep asking and say please consider this, please consider that but at some point, it says okay I respect your decision, you are the financial stability regulator and I back off.
4.Aggregate fiscal deficit is worrisome
Where there is more worry is on the fiscal deficit front and here I am not talking just about the central government fiscal deficit which has been coming down but the aggregate fiscal deficit. Even as the central government is bringing it down, the states are taking it up. When you look at the total you find that over the last 3 or 4 years the aggregate fiscal deficit has actually gotten slightly worse and not better.
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5.Markets are nervous
I think the markets are somewhat nervous but I don't think given that NBFCs account for 17 to 18 per cent of assets, that this is an unmanageable problem. I think we can manage it, we have to look carefully at it, see what is really a solvency issue, what is a liquidity issue. Certainly on the solvency front, it is up to these privately managed entities to raise equity at this point when they still have the capacity and shore up their balance sheets. There is a tendency sometimes to run to the government and say please bail me out. I think first they have to exhibit everything they can do on their own before the government even contemplates anything on that sort.
