New India central bank chief announces reforms

India's new central bank chief has kicked off his first day in office by announcing measures to stabilise the country's economy and currency.

Raghuram Rajan acknowledged he is taking over the Reserve Bank of India at a tough time but insisted Wednesday that India has "a fundamentally sound economy."

He announced in a televised speech that existing banks would be able to open new branches without RBI permission and said new banking licences would be issued by January. He also said the central bank would issue inflation-indexed savings certificates.

Rajan takes control of the central bank amid fears of a currency crisis. India's economic growth slowed to 4.4 per cent in the April-June quarter and the Indian rupee has lost more than 20 percent of its value since May.

Rajan, a former IMF chief economist, also said achieving "low and stable" inflation was crucial, in his first public comments since taking over as Reserve Bank of India governor earlier on Wednesday.

"The economy does face challenges, at the same time India is fundamentally  a sound economy with a bright future," he said in comments broadcast live on television.

Rajan added that the Reserve Bank of India (RBI) needed to be a "beacon of responsibility" and that protecting the value of money is an "important objective".

He replaces Duvvuri Subbarao as RBI governor.

Subbarao said earlier Wednesday that his successor was in for a bumpy ride with the rupee having fallen sharply and an economy that grew at a decade low of five percent in the last financial year.