In an interaction with American financial institutional investors in New York last week at an event organised by US India Business Council, Rajan said another priority of the RBI is to clean up banks and their non-performing assets.

Rajan said RBI's continued focus on fiscal consolidation and inflation will mean that they will reach their targeted goals, according to a USIBC media statement.

During the interaction, Rajan said he is optimistic about the passage of GST and the opportunities for compromise that will help realise the goals of the GST - a unified tax market, improvement in tax collection and broadening the tax base, USIBC said.

USIBC applauded the Indian government for its recent reform introduced in private sector banking that permits the total foreign holding in private banks to have a composite cap of 74 percent and eliminates existing sub-limits for FDI and FII capital (which were at 49 percent).

Banks and investors will have greater flexibility to raise capital and to meet the stringent capital adequacy norms. This reform is a critical step in supporting credit growth in the financial markets and the Indian economy, USIBC said.

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