Ahead of its third quarterly policy, the Reserve Bank has said that inflation was still high and there was no room for fiscal or monetary stimulus to boost growth in slowing economy.
Barabanki (UP): Stating commodity prices have increased, RBI Governor D Subbarao Wednesday asserted that fighting inflation is the top priority and even invoked the promise printed on currency notes, a remark that could further dash hopes of a rate cut later this month.
To specific questions on the possibility of a rate cut, Subbarao, however, told reporters that he did not want to speak on the issue as of now. Anything about this will be known on January 29 monetary policy review report, he added.
"Controlling inflation is our most important work," he said while addressing an outreach programme of the central bank at Lalpur Karauta village here.
Prices of almost every commodity, especially edibles and cloths, have registered an increase and inflation has affected every section of society, particularly the poor, he said.
"In the last two years, we have been successful in controlling inflation to some extent, but I admit the rate is still high. To control inflation is and will remain our priority," he said.
"If you see the currency note, it is printed on it that 'I promise to pay the bearer the sum of Rs 100' and it has my signature as the RBI Governor. What does the promise and signature means. It means that the RBI will control inflation and maintain its purchasing power," he said.
The Governor said financial inclusion was an important developmental programme of the RBI.
"There are around six lakh villages in the country, but only 60,000 have banking facilities. There are 90 percent villages which do not have banks," he said.
"This is unfortunate that the people in these villages are not getting benefit of banking services," he said.
He said that the RBI's target was that every household in the country has a bank account.
"Therefore, I request all the banks that they should achieve this tough target at the earliest," he said.
Subbarao said that fake Indian currency notes (FICN) is big problem.
"There are some criminals and anti-social elements which are involved in forgery. We are making all efforts to get out FICN out of circulation. While our effort is that police department should remain alert, I request the people to identify FICN," he said.
The Governor also cautioned the people against fake letters in RBI's name for lottery notifications.
"Some of you may be getting letters on fake letter head of the RBI stating that you have won lottery. They ask for bank details so that lottery money could be deposited in the account. I want to caution you that don't trust such letters, they all are bogus and the RBI does not run any lottery. If you get any such letter inform police," he said.
Later talking to the reporters while expressing disappointment over the low credit-deposit ratio in Uttar Pradesh, Subbarao said the central bank has selected 10 worst-performing districts with a view to improving this scenario.
"In Uttar Pradesh (UP), credit-deposit ratio is merely 46-47 percent, which is very disappointing. To improve this, RBI has selected 10 districts with lowest credit-deposit ratio and it will be increased by three percent," he said.
The names of the selected districts were, however, not disclosed.
The credit-deposit ratio indicates how much banks lend out of the deposits they have mobilised.
Terming difficulties faced by weaker sections to access credit as "unfortunate", RBI Governor said there is a need to increase credit flow by improving credit-deposit ratio in minority-dominated 140 development blocks in the state.
Subbarao said banking facility would be provided in more than 200 Lohia villages in Uttar Pradesh.
Commercial banks would open 3,000 branches in the state by March 2014 and he had a discussion with Chief Minister Akhilesh Yadav Tuesday on the matter, the Governor added.