RBI Governor D Subbarao on Thursday promised to maintain a comfortable liquidity position and adequate credit flow to productive sectors, indicating that more steps to keep the growth momentum could be on the anvil. The central bank also said “a period of painful adjustment is inevitable”. Subbarao also came down on a highly-leveraged shadow banking system across the world. “Under the nose of the regulators grew a very extensive and complex network of a shadow banking system, comprising hedge funds, broker-dealers, private equity funds, structured investment vehicles and conduits and money market funds,” he said. The shadow banking system suffered much lighter regulation, he said.
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