RBI needs to formulate its next monetary policy: SBI chief Arundhati Bhattacharya


The RBI needs to consider the inflation and also the administration's dedication on fiscal discipline, next fiscal while defining its money related arrangements, said SBI chairperson Arundhati Bhattacharya.

By adding further,“RBI has to consider the fact that CPI is coming below what they had indicated to be glide path and given the fiscal discipline is being maintained . So definitely this is something that the RBI will be thinking about.”

The Consumer Price Index (CPI) was not up to the mark as the RBI estimates it to be 6 percent but it stood only till 5.69 percent in January.

After much discussions over whether the government will able to stick to the fiscal deficit road map, Finance Minister Arun Jaitley addressed in his Budget speech that, “ the fiscal deficit target of 3.5 per cent for next fiscal will be adhered to”.

Bhattacharya praises the government as it sticks to the fiscal deficit target by saying in the sidelines of an event that, “I think they have done a great job.”

The last bi-monthly monetary policy for 2016-17 is on April 5 as in the last monetary policy which was on February 2, the Reserve Bank had said it will consider the fiscal deficit road maps as well as the inflation issues to decide on future rate cuts.

“Structural reforms in the forthcoming Union Budget that boost growth while controlling spending will create more space for monetary policy to support growth, while also ensuring that inflation remains on the projected path of 5 per cent by the end of 2016-17,” RBI said.

While addressing the capital infusion in PSU banks, Bhattacharya said, “ It (Capital Infusion) is an ongoing exercise. So I think we should believe them that it is an ongoing exercise and whatever support is required they will give.”

When asked about the consolidation and what PSBs are thinking , Bhattacharya said, “PSBs can hardly think about this. It is for the owners to decide. IDBI has been mentioned because it is incorporated under Companies Act. So that makes it a little easier to handle IDBI.”

“With respect to other banks there is a Bank Nationalization Act, SBI and SBI Associate Banks Act -those acts have to be amended in case you have to bring down ownership that might be little more difficult,” she added.

With regard to the IDBI bank, government has to lower its stake to below 50 percent as it currently holds 80.16 percent in the IDBI bank.

(Image Courtesy: The Financial Express)