Growth is of highest priority: RBI Governor

RBI Governor Shaktikanta Das

RBI Governor Shaktikanta Das  

He added that financial stability is important to sustain growth in the long run

The Monetary Policy Committee noted that growth is of highest priority at this point, Reserve Bank of India (RBI) Governor Shaktikanta Das said on August 19 at the FICCI-IBA banking seminar.

He added that financial stability is important to sustain growth in the long run. Weaker-than-expected growth with signs of slowdown is the key risk to global financial stability, though banks are more resilient to shocks, he said.

The RBI has this year reduced the policy interest rate or the repo rate by 110 basic points to boost growth as inflation remained under control.

Commenting on the recent crisis in the Non Banking Financial Company (NBFC) sector, Mr. Das said that the RBI is constantly monitoring top 50 NBFC/Housing Finance Companies and it will be ensured that no such entities collapse. The RBI is keeping a close watch on the interconnectedness of banks and non-banking finance companies, he added.

"It is our endeavour to ensure that no large, systemically important NBFC collapses", he said. He ruled out an asset quality review of NBFCs for now.

Mr. Das said that Insolvency and Bankruptcy Code amendments will help ring-fence banks, adding that state-run banks should be able to access capital from markets rather than depend on the government. He called for urgent review of corporate governance at state-run banks.

Speaking on monetary transmission, Mr. Das noted that many banks have linked their loans to the repo rate which is an external benchmark, for faster transmission of the monetary policy. "Our expectation is that they will move faster," he said.

He further said that all regulations put in place by the National Housing Bank (NHB) will continue for Housing Finance Companies (HFCs), adding that the RBI is reviewing some of the norms.

(With inputs from PTI)

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Printable version | Aug 4, 2020 7:43:11 PM |

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