RBI Governor Shaktikanta Das Cautions Bank Chiefs Over Global Spillovers

On Wednesday, Reserve Bank of India (RBI) Governor Shaktikanta Das held a meeting with the managing directors and chief executive officers of public sector banks and certain private sector banks.

Shaktikanta Das acknowledged the role played by commercial banks in supporting economic growth

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Reserve Bank of India (RBI) Governor Shaktikanta Das on Wednesday advised Indian banks to remain watchful of the evolving macroeconomic situation, including global spillovers. He advised bankers to take mitigating measures proactively so that the potential impact on their balance sheets is minimised and financial stability risks are contained, a press release by the Central Bank said. 

On Wednesday, Das held a meeting with the managing directors and chief executive officers of public sector banks and certain private sector banks. 

According to the release, Das in his remarks acknowledged the crucial role played by commercial banks in supporting economic growth throughout the turbulent times since the outbreak of the pandemic and the ongoing financial market turmoil. He said, despite the challenges, India’s banking sector has remained resilient and continued to improve in various performance parameters.

The economy is seeing signs of recovery as consumer spending and credit growth have picked up. With improved collection efficiency, banks are also recovering from the pandemic. However, in the wake of the tightening liquidity in the banking system, banks are looking to mop up deposits, a report by MoneyControl said.

Inflation has been a matter of concern across the globe and among major central banks. This has been the case even before the Ukraine war. But supply disruptions caused by the war – especially in grain and energy sectors have added to the pressures.

Shaktikanta Das has earlier said, “we are in the midst of a third major shock – a storm – arising from aggressive monetary policy actions” and even more aggressive communication from advanced economy central banks. In a highly integrated global financial system, they inevitably cause negative externalities through global spillovers, Das had said.

Among other matters, issues relating to lagging growth in deposits vis-à-vis credit growth, asset quality, investments in information technology infrastructure, adoption of new-age technology solutions, functioning of Digital Banking Units, etc. were also discussed, the release said.