Talking to mediapersons after officially assuming the post of governor amid a function at the central bank on Friday, Kshetry said there is a need to expand banking services to the rural areas because the urban areas are already seeing a huge presence of banks in recent years.
He further said he will pay due attention to strengthening the supervision capacity of the central bank in the wake of rapidly growing number of the financial institutions. “There are complaints that the supervision capacity of the central bank has not been effective enough to match with the growing number of financial institutions. I will soon adopt policy to deal with the problem," he said.
Kshetry said the cooperatives that have been mobilizing huge amount of deposit in recent years are not under the supervision of the central bank and there is a need for second-tier institutions to avert any possible crisis in the economy, he said.
The governor also said that the current high pressure on inflation is due to supply constraints rather than the monetary policy and hoped that inflation will ease in the days to come. “It is worrisome that the recent declines in the prices of petroleum products have not brought positive impact on the general price levels,” he said.
When asked about the future monetary policy, he assured that the central bank will not adopt a tight monetary policy that could bring negative impact on private sector investments in the economy. He also said financial sector reform will be further accelerated as per the need of the central bank and economy and more severe measures would be implemented to compel willful defaulters to pay back bank loans .
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