y v reddy : rural credit - status and agenda speech by dr y v reddy, governor of the reserve bank of india, at the administrative staff college of india, hyderabad, 16 november 2004. * * * distinguished participants and guests, it is privilege to be associated with the international seminar in honour of professor ch. hanumantha rao. his valuable contributions as a member of the board of directors of rbi, my professional association with him for about three decades being a fellow osmanian, and above all, my personal regard for him, make the participation in the inaugural session today a source of pride and pleasure for me. there is a wide - range of subjects being considered by a galaxy of eminent scholars and policy - makers, but i will confine my comments in the inaugural address to rural credit. the subject has always been at the core of rbi ’ s activities. telugus ’ seem to have been playing a special role in the design and implementation of rural credit policies in india. the monumental work of all - india rural credit survey of 1951 - 52 was the contribution of a committee in which half the membership was telugus. rural electrification corporation and nabard have been led by telugus and had telugus as chairmen, for a large part. i cannot recall any economist who could equal professor ch. hanumantha rao in research, publication and policy involvement in the field of rural credit. in the context of economic reforms, professor rao has published two papers which constitute a treasure trove for all those interested in rural credit. the first titled ` policy issues relating to irrigation and rural credit in india ’ ( 1993 ) makes a comprehensive analysis of problems, prospects and tasks. the second, titled “ reform agenda for agriculture ” ( 2003 ) proposes specific credit reforms in the light of experience gained and makes a strong pitch for “ a major change in the mindset. ” but being telugus, we are individualistic and tend to differ - sometimes politely. let me illustrate : shri m. narasimham garu, the bhishma - pitamaha of the financial sector reforms in india ( 1991 ) recommended redefining of and reduction in priority - sector lending, describing some of it as “ behest lending ”. professor rao promptly disagreed ( 1993 ) with him on redefining priority sector lending though there was agreement between the two on phasing out of concessional rates of interest. before proceeding further, it is appropriate to co - opt shri montek singh ahl

zhou xiaochuan : the current financial situation and development of the financial market in china speech by mr zhou xiaochuan, governor of the people ’ s bank of china, at the national conference for the work of foreign - funded banks, beijing, 12 april 2004. * i. * * the current macro financial performance is broadly stable, but some problems remain. this year, china ’ s national economy continued to grow rapidly. consumer demand rose stably, urban and rural incomes increased steadily, foreign trade soared, and treasury revenue surged. the current financial performance is broadly stable. it is noteworthy, however, that there still exist in the economic performance such problems as faster than desired investment expansion and money and credit growth as well as heightened pressure of inflation. according to preliminary statistics, at the end of march 2004, broad money m2 increased to rmb23. 18 trillion yuan by 19. 2 percent over the same period of 2003. loans in renminbi and foreign currencies by all financial institutions increased to rmb17. 90 trillion yuan by 20. 66 percent over the same period of 2003. new loans registered rmb912. 2 billion yuan in the first quarter. in particular, loans in renminbi increased by rmb834. 2 billion yuan, representing an acceleration of rmb23. 8 billion yuan over the same period of 2003. to prevent inflation and assets price bubbles and the emergence of bad loans in banks resulted from faster than desired growth of money and credit, and to forestall financial risk as well, the people ’ s bank of china ( pbc ) took and will take some policy measures, including the hike of another 0. 5 percentage point in the required reserve ratio from april 25 on, the arrangement of differentiated required reserve ratios and floating central bank lending rates. besides, the pbc raised the central bank lending rates and rediscount rates. from the macroeconomic perspective, the major issues in the current macroeconomic situation are reflected in the following four aspects. first, money supply grew faster than desired with actual m1 and m2 higher than predicted and so did credit with its growth rate 10 percentage points higher than that forecasted in the beginning of 2004. hike of required reserve ratio will help control money injection and loan growth, ensuring the stable performance of the financial market. second, the direct financing accounts for too low a ratio to the total financing in china and the indirect financing too high a ratio. although it is quite common that in developing economies