More on the Rajan Report

The responses to the landmark report on financial sector reforms headed by Raghuram Rajan are beginning to pile in.

Overall, the responses have been very positive. (I often wonder if there is selection bias driving coverage of these types of events though. Is there really anyone out there who differs from Rajan in outlook enough to potentially have serious disagreements with the content of his report yet who also follows these issues closely enough to know when the report will be released so that they can write an op-ed in time?) One commentator did point out that the timing of its release could perhaps have been a bit more fortuitous. I was a bit disappointed that the press coverage focused exclusively on the committee’s macro recommendations while completely ignoring its suggestions for increasing financial inclusion. This is too bad as the committee obviously paid great attention to this issue and the reforms it advocates -- such as allowing a wider variety of players to serve as business correspondents (currently NBFCs, a group which comprises all of the largest MFIs, are barred from serving as business correspondents), lifting interest rates caps on small denomination loans, and cautiously allowing greater entry of small deposit-taking local area banks – are both prudent and have the capacity for enormous positive impact. Oh well, I guess this is what the news-reading public cares about.

For some of the better coverage see here, here, and here.

Just to give things a little balance, here is one negative response. I should warn that I didn’t really understand the article.