New India central bank chief announces reforms

Under pressure amid fears of an economic crisis, Raghuram Rajan acknowledged he is taking over the Reserve Bank of India at a tough time. Still, he insisted that India has “a fundamentally sound economy” and that a mood of doom and gloom is overblown.

India’s economic growth slowed to 4.4 percent in the April-June quarter and the Indian rupee has lost more than 20 percent of its value since May.

Rajan had not been expected to make specific policy changes on the day he was sworn into office, but he announced short-term measures at a televised news conference.

“It involves considerable change, and change is risky,” he said of his agenda. “But as India develops, not changing is even riskier.”

Among the measures he promised for coming months were that existing banks would be able to open new domestic branches without RBI permission and that long-awaited new banking licenses would be issued by January.

The central bank will also soon issue inflation-indexed savings certificates and take steps to encourage financial services for the poor, including making payments easier through mobile banking, he said.

He also pledged to improve the system for banks to recover bad loans by accelerating the work of debt recovery tribunals and asset reconstruction companies.

Rajan plans his first full policy address on Sept. 20.

“Some of the actions I take will not be popular,” he said, but added, “The governorship of the central bank is not meant to win one votes of Facebook ‘likes.’”