Shaktikanta Das Hints at More Measures to Fight COVID-19 Impact on Indian Economy

RBI governor stresses the requirement of a new model by lenders in the time to come. Shaktikanta Das hints at more measures to fight COVID-19 impact on the Indian economy

RBI May Take More Steps to Tackle the Pandemic

Shaktikanta Das announced in a webinar on 27th August that the Central Bank will not withdraw any COVID related measures immediately. Further, he indicated that it might take more rate cuts and policy actions in the future. Also, RBI will give estimates on inflation and growth after there is some clarity on the Covid-19 curve. Appreciating the operational efficiency of banks in challenging times, he said that the financial sector of India is quite resilient.

RBI Governor, Shaktikanta Das To Take More Measures to Fight the Pandemic
RBI Governor, Shaktikanta Das To Take More Measures to Fight the Pandemic

Country’s Bank System Sound and Stable

Das noted that the country has not exhausted its resources. However, it needs to use them judiciously for promoting the growth of the COVID hit economy. RBI governor said that Debt-to-Gross Domestic Product (GDP) ratio, fiscal deficit, and current account deficit were is under much better control. He added that the country’s banking sector is sound and stable and will return to normalcy once this pandemic ends.

Banks Need Better Risk Management

Warning banks about depriving their income resources, he advised banks to focus on risk management to eliminate the risk of frauds which has been on a constant rise. Also, Das emphasized that the banks must proactively react to the challenge as it is going to stress the balance sheets to a great extent. Proactive capital raising can ensure credit flow and restore investors’ confidence.

Moratorium- a Temporary Solution

The temporary solutions, including a moratorium on loan instalments, deferment of interest payments, and restructuring will harm the financial health of banks. Hence, the bank has designed a recast package in the interest of all stakeholders’ including depositors and other crisis-affected entities. Shaktikanta Das added that the RBI is expecting an efficient implementation of the debt resolution plan by the banks.

The RBI Monetary Policy Committee maintained status-quo on repo rate at 4% in its August meeting.

In all, the RBI governor confirms that the Indian economy is still strong amid the pandemic despite the slow growth.

Leave a Reply

Get Verified Suppliers of Rice, Wheat, Dry Fruits, Pulses and Other Grains