India banking News

Moody's Investors Service on Tuesday said the reforms undertaken by the government will help boost investor confidence and bolster growth potential, but cautioned muted private investment and banking sector risks will remain a constraint on India's sovereign rating.

Warning against excessive banking regulation, RBI Governor Raghuram Rajan today said this may lead to activities shifting to shadow financial system and admitted to the lack of "know-how" for such businesses.

More than half of a record 160 million accounts opened in India as part of a drive to offer banking to all are still empty.

The RBI requested feedback on its proposals by April 30.

Government is believed to have asked public sector banks on Wednesday to consider lowering their interest rates, even as some lenders want further signals on RBI's monetary policy before passing on the benefits to their retail and corporate borrowers.

Promising financial autonomy to PSU banks, Finance Minister Arun Jaitley on Wednesday asked heads of public sector lenders to take commercial decisions without fear or favour.

Credit flow to the commercial sector has come down from 14.2 percent in April to 11.1 percent in October on account of weak demand for banking funds.

The commentary comes days ahead of the announcement of a comprehensive financial inclusion plan scheduled to be made by Prime Minister Narendra Modi on August 15.