RBI still has enough firepower left to handle the situation: Governor Das

RBI Governor Shaktikanta Das
The Reserve Bank of India (RBI) would consider a "very careful, very calibrated unwinding of emergency measures" for the economy once an end to the coronavirus pandemic was in sight, Governor Shaktikanta Das said on Thursday, urging banks to strengthen their finances.

 

“Banks' balance sheets will be under stress — that is stating the obvious. What is more important is how banks react and respond to the challenge," Das said while delivering the keynote address at the finale of Business Standard’s six-part webinar series ‘Unlock BFSI 2.0’.

 

"Overall, the banking sector continues to be sound and stable," Das assured.

 

"The Covid-19 pandemic continues to put the world on the edge. As the pandemic ravages on, the impact on the economy is hard to measure. Proactive raising of capital will be crucial to improve resilience of banks and financial sector,” said Das.

 

The RBI "will not unwind any measures (for the economy) immediately. We are monitoring the situation and we will have a very cautious exit plan. RBI is taking a long-term view of resolutions and measures."

 

The central bank’s annual report had on Tuesday said that demand in the economy was likely to take more time to mend in the absence of greater fiscal support, even as the government was constrained in its ability to provide more stimulus.

 

“An assessment of aggregate demand during the year so far suggests that the shock to consumption is severe,” the RBI said in its annual report for the year ended June. “It will take quite some time to mend and regain the pre-Covid-19 momentum.”

 

The International Monetary Fund (IMF) sees the Indian economy contracting 4.5 per cent in the financial year to March 2021, while the Organisation for Economic Co-operation and Development (OECD) has forecast a 7.3 per cent decline in the event of a fresh wave of coronavirus cases among India’s population.

Watch: Unlock BFSI 2.0: Banking — Capital is the key 



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