Deputy Governor Subir Gokarn said the Reserve Bank does not want to re-enter the refinancing space, saying this is best carried out by dedicated institutions. "If any refinance is needed then we need to create a separate institution with its own balance sheet and its own governance structure and not get embedded into the marco regulatory functions of the central bank," Gokarn told a summit on capital markets organised by FICCI here. He was answering a query from the audience whether the regulator has any plan to refinance the troubled microfinance sector. Pointing out that over the years RBI had moved away from refinancing, he said, "I don't know why the central bank becomes the obvious choice for everyone for this kind (refinancing) of an activity? "If you look at refinancing as a national policy driven activity though, it had started off as a part of the central bank's mandate with the hiving of IDBI in 1971 and Nabard in 1982 with an idea to incubate them and allow them to operate on the strength of their own balance sheets," he said. This hive off was also aimed at ensuring that RBI's macro regulatory functions do not get compromised because of such specific micro functions," he said. "We have moved away from this over the years and I think that is the way it should be. IDBI and Nabard were separated to do these jobs and these are best left to separate institutions and not the RBI," he concluded.
Moneycontrol
No comments:
Post a Comment