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Riskier firms should have more access to CPs: Raghuram Rajan

Rajan during his annual address at the Foreign Exchange Dealers Association of India, in Mumbai, on Friday, expressed his concerned about the lower rated firms in the market. The governor stated, though the flow of outstanding Commercial Papers (CPs) have doubled in the last two years to reach over rupees 3 lakh crore, the riskier firms do not have the required access to the bond market

Arnima Dwivedi

Arnima DwivediBy Arnima Dwivedi

Published on 27 Aug 2016 5:21 AM GMT

Riskier firms should have more access to CPs: Raghuram Rajan
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Mumbai: In a parting message to market regulators before his terms expires on September 4 , the outgoing Reserve Bank of India governor, Raghuram Rajan has set out a list of Dos and Don’ts for the RBI.

Rajan has asked the central bank to be wary of the circulation and export of bond markets or allowing infrastructural firms to borrow large amounts overseas.

The RBI governor suggested the regulator to take interest in innovations in the market. “You should not put ban on innovations just because it makes you feel safer,” he said.

Riskier firms should have access to CPs:

  • Rajan during his annual address at the Foreign Exchange Dealers Association of India, in Mumbai, on Friday, expressed his concerned about the lower rated firms in the market.
  • The governor stated, though the flow of outstanding Commercial Papers (CPs) have doubled in the last two years to reach over rupees 3 lakh crore, the riskier firms do not have the required access to the bond market. “It is good that highly rated firms are bypassing banks to borrow from the commercial paper market but low rated firms do not have the same access,” said Raghuram Rajan.
  • He stated, “We need riskier firms and projects to be able to access the bond markets for funds.”

Also Read: Repo rate to remain unchanged, says Raghuram Rajan in his last monetary policy

Rajan sets agenda for Urjit Patel:

  • Saying that he has full faith in Urjit Patel, the RBI governor also gave an agenda to his successor, asking him to guide the Monetary Policy Committee (MPC) to achieve the inflation target.
  • "I am confident that Urjit Patel, who has worked closely with me on monetary policy for the last three years, will ably guide the MPC going forward in achieving our inflation objectives," said Rajan.
  • The RBI governor stated that the creation of MPC has made the bonds attractive despite the increase in inflation.
  • He said that the MPC creation has successfully convinced the markets to expect lower inflation over the next five years.
  • “Despite the fact that the inflation, as measured by Consumer Price Index (CPI), has inched up to 6.07 per cent in July, MPCs have made the bonds more attractive for the markets,” said the RBI chief.

You my also read: Rajya Sabha passes GST bill with thumping majority

Arnima Dwivedi

Arnima Dwivedi

A journalist, presently working as a sub-editor with newstrack.com. I love exploring new genres of humans and humanity.

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