RBI norms for new long-term infra funding products soon: Rajan

That apart, efforts will be made to build better project evaluation skills in banks. This, the governor said, was critical as much of the bad debts in the system were on account of poor structuring of the projects. Efforts are also on to deepen the debt market so that banks wanting to exit long term debts can do so by selling out to infrastructure funds, he added.

BUDGET SPEECH: Full text | VideoRajan also touched upon two critical issues-inflation and raise in sticky loans. On inflation, he said, RBI was working with the government to put in place a clear monetary framework. "By end of this year, CPI-based inflation will be 8 per cent and by end of next year it will be 6 per cent," he said.

Rising level of sticky assets have sort of flattened over the last quarter but warned that more work needs to be done on that front. Ushering in growth will convert some of the sticky assets into regular ones, he said.

On the subject of growth, Rajan agreed with the government's estimate of a 7-8 per cent growth in the next two years. If macro economic stability and financial stability are ensured, apart from reviving all the underpinnings of growth, it is definitely possible to grow at 8 per cent, he said.

He listed financial inclusion as a future challenge and said 5 Ps will determine the success of the effort to taking banking to the poor and unbanked. They are product (a right product that meets the needs of poor), place (accessibility), price (the products need to be rightly priced), protection (consumers need to be assured that they will not be cheated) and profit ( organisations involved must see some profits).

"We are taking lot of measures like giving license to payment banks, liberalised working of banking correspondents, leverage technology to reach out to poor people and expand the grievance redressal mechanisms," he said.

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