Raghuram Rajan rules out US Federal Reserve rate hike impact on Indian economy

RBI Governor Raghuram Rajan

Mumbai, Aug 6: Reserve Bank of India (RBI) Governor Raghuram Rajan has ruled out any major disruptions in Indian market as and when the US Federal Reserve hikes its record low interest rates.

When asked if there is need to wait until the US Fed acts to increase the cap on foreign holdings in government debt,
the RBI Governor answered in the negative.

Addressing the customary post-policy conference call with analysts here on Wednesday, Rajan said India can’t hold back its reforms waiting for external developments.

He further said there is a fair amount of expectation that the Fed would start increasing its near zero interest rates from September.

Commenting on the plan to gradually increase the foreign portfolio investors’ cap on holding in government debt, he said it will be prudent to wait for some time to get a good sense of the external environment.

Dausa Urban Co-operative Bank Limited penalised

The RBI has imposed a monetary penalty of Rs. one lakh only on the Dausa Urban Co-operative Bank Limited in exercise of powers vested in it under the provisions of Section 47A (1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies), for the violations of the guidelines/directives on Know Your Customers (KYC)/Anti Money Laundering (AML) in respect of absence of system of risk categorization, fixation of threshold limits and putting in place appropriate software for generating alerts for identification of suspicious transactions.

The RBI had issued a showcause notice to the bank in response to which the bank submitted a written reply and also made personal hearing.

(With Agency Inputs)

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