Guest post: Rajan at the RBI – will his reforms work? | beyondbrics

Guest post: Rajan at the RBI – will his reforms work? | beyondbrics:

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By Hemindra Hazari of Nirmal Bang Institutional Equities

Since Raghuram Rajan took over as governor of the Reserve Bank of India on September 4, the battered rupee and India’s badly bruised stock and bond markets have staged a sharp recovery. Markets, it seems, believe the governor can restore confidence and revive inflows of foreign capital.

His initiatives include making it easier for banks to open new branches, with the possibility of differentiated bank licenses and the likelihood of continuous or on-tap bank licensing. To develop the money and government securities markets, the RBI plans to introduce cash settled 10 year interest rate future contracts as well as futures on overnight interest rates. It also plans to introduce inflation-indexed savings products and to set up an exchange to trade invoices issued by small businesses against large companies."

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