NEW DELHI: The outgoing governor of Reserve Bank of India Raghuram Rajan chastized public sector banks for their reluctance to transmit rate cuts.Rajan spoke about "reluctance of public sector banks (PSBs) to lend, and together with private sector banks, the reluctance to fully pass through past policy rate cuts into bank lending rates."Rajan for the first time openly lauded his successor Dr. Urjit Patel. He talked about the necessity of small reforms rather than 'big bang' reforms and predicted that, "as global conditions become less uncertain, the pace of reform can pick up. The lessons we have learnt during this period on what works will be invaluable then."Raghuram Rajan was speaking today at the Foreign Exchange Dealers Association of India 's annual day address. He spoke about debt markets and about the reasons on why debt markets have become more attractive in recent months. The key takeaways from his speech are:1)Owing to reluctance of PSBs to make their offerings more attractive, highly rated companies are bypassing banks to borrow from the commercial paper (CP) markets, with outstanding commercial paper having more than doubled in the last two years to over three lakh crores." he added.2)The Governor for the first time appreciated Dr. Urjit Patel and said "I am confident that Dr. Urjit Patel, who has worked closely with me on monetary policy for the last three years, will ably guide the Monetary Policy Committee going forward in achieving our inflation objectives."3)Rajan also appreciated the government's efforts and said "Recent reforms of the SARFAESI Act and Debt Recovery Tribunals in the short term, and the new Bankruptcy Code in the medium term, should help in enhancing the prospects of repayment, thus reducing credit spreads."4)Rajan, who demits office next month, spoke about the importance of maintaining a low inflation rate and also predicted that inflation will fall in the near future. "I have no doubt that inflation will fall in the months ahead. The key point is that market participants know that the Monetary Policy Committee has to maintain low and stable inflation, certainly over the next five years for which its mandate has been set, and it will do what it takes. This lowers the inflation risk premium, and thus reduces the nominal fixed interest rate for everyone." he said.5)Governor also cautioned the policymakers against rules which are destined to benefit a particular entity and added that "the RBI is a liberalizer, we have to be careful not to relax prudential regulations simply because an entity or activity is deemed of national importance."6)Lastly, he praised central bank's efforts, "Observers may be impatient, but my belief is that steady and irreversible reform and “mini Bangs” like yesterday’s rather than a "Big Bang" is the need of the hour."