The outgoing RBI Governor Raghuram Rajan has said the cooperative banking system in the country has lost its spirit and moved away. Rajan was speaking in Hyderabad at an interactive session at National Institute of Rural Development and Panchayati Raj, reports PTI.
“Cooperative banking system is the cornerstone of the financial system in this country. I want to emphasise that it is extremely important it reaches parts of the country that their financial institutions don’t and it has to be nurtured.”
“What we need to do in some case is understand why the cooperatives have departed from the spirit of the cooperative system. Why cooperatives are no longer cooperative in that sense and try and find ways to bring them back to the very important and very worthwhile goals of the cooperative movement,” Rajan said.
To a query on banks joining hands with money lenders for better financial inclusion, Rajan said though he was not averse to the idea, many issues such as methods used for recovery should be considered.
Besides cooperative banks, Rajan also spoke on the strength of Rupee and said it is pretty strong. On growth, Rajan said India’s growth rate has to be stronger and sustainable to reach Chinese levels.
He said: “China’s per capita GDP is about four times of India today. So yes, we have a long way to catch with the level of per capita GDP and that means many years of strong sustainable growth.
“I want to emphasise here, because a few years of growth will not help. After those few years, we have very slow growth. We need sustainable growth which is why we need systems in place, we need macro-stability in addition to the growth’, Rajan said.