As the world’s biggest financial crisis since the Great Depression unfolded, the mandarins at the Reserve Bank of India had their task cut out — grappling with the pace of reducing interest rates and managing the government’s burgeoning borrowing programme.
There’s another equally important role of the RBI that has gone unnoticed, though — of supervision. While India hasn’t been as badly hit as many other global economies, that doesn’t quite eliminate the need for reform.
At a recent JRD Tata Memorial Lecture, RBI Governor D. Subbarao did throw some light on the regulatory aspects. “The question we need to answer is whether an existing practice or a change in rule delivers higher and more secure real economy growth; not whether it develops the financial sector,” he said.
The RBI has already begun the task of re-writing the rules of the game.