Raghuram Rajan on his very first day after assuming the charge of RBI unveiled bold new steps to support the rupee. His proposals also had a lot of offer to Indian households reeling under the burden of high inflation.
Raghuram Rajan on his very first day after assuming the charge of RBI unveiled bold new steps to support the rupee. His proposals also had a lot of offer to Indian households reeling under the burden of high inflation.
To protect the savings of households against inflation, Rajan said that RBI will issue inflation-indexed savings certificates linked to the consumer price index by November end. Though Rajan did not offer further details about the savings certificates, Indian households will benefit as interest rate on these instruments will be linked the consumer-based inflation rates.
Till now the only savings instrument which could directly protect the savings of Indian households against inflation was the inflation-indexed bonds. But these bonds were linked to wholesale price index. Since inflation numbers based on wholesale price index are usually much lower than those based on consumer price index, the inflation-indexed bonds are not very popular at the retail level.
"Households have expressed a desire to be protected against CPI inflation. Together with the government, we will issue Inflation Indexed Savings Certificates linked to the CPI New Index to retail investors by end- November 2013," Rajan said on taking charge as the 23rd Governor of the Reserve Bank of India.
Rajan also announced the setting up of an Indian Bill Payment System so that households can use bank accounts to pay school fees utilities, medical bills, and make person to person transfers electronically. "We want to make payments anywhere anytime a reality," Rajan said.
To improve financial services access to people in rural areas, the RBI will facilitate the setting up of mini-ATMs by non-bank entities all over the country, Rajan said.
To facilitate cash payments through pre-paid cards in remote areas, RBI will conduct a pilot project to enable such payments though Aadhar-based identification. "Currently holders of pre-paid instruments issued by non-bank entities are not allowed to withdraw cash from the outstanding balances in their pre-paid cards or electronic wallets. We intend to conduct a pilot enabling cash payments using such instruments and Aadhaar-based identification," he said.
Rajan also announced that the RBI will focus on popularising the use of mobile-based payments. "Mobile payments can be a game changer both in the financial sector as well as to mobile companies. We will set up a Technical Committee to examine the feasibility of using encrypted SMS-based funds transfer using an application that can run on any type of handset," he said.
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