'Demonetisation has come at huge cost'

Raghuram Rajan

Raghuram Rajan

Rajan, who ended his three-year term as RBI Governor on September 4 last year, said he had taken some Indian currency with him to the US.

Dr Rajan told NDTV that he and Mr Kumar "have had some very good conversations in the past.

In my view, it never came back to us that here is a decision that you've to make or here's the timing we want to do this scheme", said Rajan.

Among other things, Rajan also spoke about public sector banks, saying mergers should take place when banks are healthy.

Speaking during the promotion of his book "I do what I do" Rajan said, "The role of the regulator is to ensure that once the loan is made if it gets into trouble that the trouble is recognised early".

Former Reserve Bank of India governor Raghuram Rajan on Friday called for revamping the boards of public sector banks, making them independent of the government and allowing them to select the chairman and chief executive officers (CEOs).

India's economy has seen a sudden decline to 5.7 percent and Rajan said the country should maintain 8 percent to 9 percent growth. He referred to financial services company JP Morgan's report on demonetisation where it claimed that the cost of note ban could be 1-2 per cent of the GDP.

"So long as PSU banks are primarily governed by a board having the ability to change the management... the government via the ministry has dual governance without responsibility", said Rajan who is now Professor of Finance at the University of Chicago Booth School of Business. "The government did not offer me a new contract and that's where it ended", he said. "We don't do", he said.

He said: "I think that is a very important judgement and an indication that there are many ways, many directions in which we are moving as a country".

When asked if he would be willing to return to India for another position or was happy teaching in the US, Rajan said he is not special among the diaspora and there were many people who, if called upon, would come back and do what is necessary.

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