Rajan says Governor’s term too short to act upon

The focus point of his session in the Parliament’s Standing Committee of Finance on various aspects of economy and non-performing assets (NPAs) in banks, was when Governor Raghuram Rajan said that a three-year term is too short to deal with the banking system.

The RBI has said the gross non-performing assets of the banks may further increase to 9.3% in 2016-17 after hitting 7.6% in March 2016.

Talking about the credit scenario of the banks he said that PSUs are more hesitant on the lending front than private lenders irrespective of ample funds they are carrying at the point.

He also spoke about the impact of Brexit on India and the global economy. Before the said meet Rajan called on Finance Minister Arun Jaitley and reiterated that both should collectively set a new interest rate-setting mechanism asap.

Rajan’s term will end in next nine weeks on September 4, and he has denied continuation for the second term. He wished that RBI governor should have 5 years’ tenure as practiced in the majority of countries across the globe.

In the US Fed, apart from serving as members of the board, the chairman and vice-chairman serve for four years and they can be reappointed in turn to serve until their new term as governors expires.

According to the media reports, the meeting was held for over three hours to brief the panel, headed by senior Congress leader M. Veerappa Moily, on state of the economy, reforms and restructuring of RBI, encounters for the banking sector in India and the road ahead.