India At Doorstep Of Revival Process From Covid-19 Downturn: RBI Governor Shaktikanta Das

The RBI Governor said that governance reforms are most important in the bank and non-bank sectors, and the bank governance reforms are ownership agnostic.

RBI Governor Shaktikanta Das (File Photo/ AFP)

New Delhi: The Reserve Bank of India (RBI) Governor Shaktikanta Das on Wednesday said that the Indian economy is at the doorstep of revival process. Confident policymakers will very soon overcome the challenges posed by the Covid and at the moment, both fiscal and monetary policies are flexible and accommodative, he further added. The RBI Governor, while speaking about the banking reforms, said that governance reforms are most important in the bank and non-bank sectors, and the bank governance reforms are ownership agnostic. He underlined that RBI in an out of the box move has deployed instruments that were not in the toolkit and it is looking to innovate on instruments to respond to the ongoing pandemic.

We are almost at the doorstep of the revival process and it is very important that the financial entities have adequate capital (to support growth). Many of them have already raised the capital and others are planning to do so: Reserve Bank of India Governor Shaktikanta Das pic.twitter.com/LXEuKz9yiy

— ANI (@ANI) October 21, 2020

In the video conferencing, the RBI Governor praised the government’s effort amid the pandemic. As he mentioned that the central government has taken well-calibrated and prudent measures. Adding to his statement, he highlighted that both fiscal and monetary policies are counter cyclical,and the government needs to chalk out a fiscal map post-Covid. In the address, the Governor apprised that he has asked the banks and non-banking financial companies (NBFCs) to be more resilient by building buffers.Banks need to boost capital in the coming months. The banks and NBFCs are also asked to take stress tests in the context of Covid. The RBI Governor further said that the central bank has impressed the need to proactively build capital buffers to ensure credit flow is maintained. Meanwhile, the Reserve Bank on Wednesday announced to conduct ‘On tap Targeted Long-term Repo Operations’ of up to three years tenor for a total amount of up to Rs 1 lakh crore at a floating rate linked to the policy repo rate. Liquidity availed by banks under the scheme has to be deployed in corporate bonds, commercial paper, and non-convertible debentures issued by the entities in specific sectors, over and above the outstanding level of their investments in such instruments as of September 30, 2020. Liquidity availed under the scheme can also be used to extend loans and advances to these sectors.