RBI should not be residual funds provider for banking system - chief

Last Updated: Fri, Sep 20, 2013 11:19 hrs

The Indian central bank should not be the provider of residual funds for the banking system and the funds should largely come from the private sector, central bank chief Raghuram Rajan told analysts on a conference call post its policy review.

The central bank was also not putting open market purchase in bonds off the table, a measure being implemented by central banks across the world, Rajan said in a response to a question whether they would continue to buy bonds as it was indirectly funding the government's large fiscal deficit.

Reserve Bank of India Governor Raghuram Rajan surprised markets in his maiden policy review on Friday by raising interest rates to ward off rising inflation, while scaling back some of the emergency measures put in place to support the ailing rupee.

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