<div>The Reserve Bank of India wants to make sure that the country's banking system is cleaned up so that there is no room for fraud during stressed times, Governor Raghuram Rajan told a banking conference on Monday.</div><div> </div><div>The government's step to curtail fiscal deficit is helping the central bank's monetary policy, Rajan said. But one of the biggest concerns was that enough credit was not flowing to the agricultural sector, he said.</div><div> </div><div>Rajan said there was a need to change the management appointment process in public sector banks to make it more transparent.</div><div> </div><div>The central bank is in talks with the government to improve governance in public sector banks, Rajan told the banking conference.</div><div> </div><div>He said problems that have emerged in recent bank scandals were due to outsourced project evaluation.</div><div><strong><br /></strong></div><div><strong>Investment Growth</strong></div><div>Rajan said India's macroeconomic indicators are improving and inflation has been coming down consistent with the central bank's forecast, but Asia's third-largest economy needs investment growth to pick up.</div><div> </div><div>Rajan, however, said Friday's industrial output and inflation data suggested that recovery was "uneven."</div><div> </div><div>Output from mines, utilities and factories grew by a much slower-than-expected 0.5 per cent year-on-year, government data showed on Friday, down from June's revised 3.9 per cent rise.</div><div> </div><div><strong>Inflation</strong></div><div>The RBI governor said inflation was still high and there was no point in cutting interest rates to see inflation pick up again.</div><div> </div><div>The RBI wants to bring down interest rates when it is "feasible", Rajan said.</div><div> </div><div>Retail inflation, which the central bank tracks for setting lending rates, edged down marginally to 7.8 per cent in August from 7.96 per cent a month earlier, helped by slower annual rises in prices of fuel and clothes.</div><div> </div><div>(Reuters)</div>
