ISO 9001:2015 Certified
closex Call Us 11-23320714, 23721504, ficci@ficci.com

 Upcoming Event
to forge a partnership on Technology Commercialization Initiative, FICCI-AMITY and IC2 Institute University

Shaktikanta Das says RBI prepared for more measures to fight COVID pandemic 

Money Control , Sep 16, 2020

Reserve Bank of India Governor Shaktikanta Das on September 16 said the central bank is prepared to take further measures to prepare the economy and banking system to fight the Covid-19 pandemic.

The governor said this at a virtual seminar organized by industry lobby FICCI.

The governor said the economic recovery remains slow and will be gradual. Further, bank credit growth remains muted in the system, Das said.

The RBI has taken a slew of measures beginning March to help the banking system fight the Covid-19 pandemic. These include a cumulative repo rate cut of 115 bps and an array of liquidity measures to help various sectors, including multiple rounds of targeted long term repo operations.

Restructuring to help business recovery

Das said the idea of a one-time restructuring or resolution plan for COVID-hit stressed assets is to help businesses that are suffering due to the coronavirus.

In the wake of COVID, the RBI had announced a six months moratorium for all term loans and subsequently announced a one-time recast scheme. Recently, an expert panel headed by K V Kamath had submitted its proposals with respect to the financial parameters that need to be factored in for the loan recast process. Under this, banks can offer moratorium up to two years for COVID-hit accounts.

Cash flows of firms that were otherwise doing well have also been hit, Das said, adding, “The idea of one-time loan recast is to help these firms recover from financial difficulties while helping banking system to control NPAs.”

The revival of businesses will help keep NPAs low, Das said.

There is a careful and balanced decision on the part of the RBI with respect to restructuring. On the one hand, the concern of any bank should be the protection of depositors’ interest, Das said, adding at the same time, banks have to keep the financial stability of banking sector in mind.

“We don’t want NPAs to go up steeply,” said Das.

Banking system NPAs are at elevated levels at this stage. Bad loans spiked following a prolonged NPA clean-up process initiated in 2015 by former governor Raghuram Rajan. The COVID impact is likely to worsen the situation. According to RBI’s estimates, gross NPAs of banks could rise to around 15 per cent by March next year in a worst-case scenario.

The vulnerability of the NBFC sector a concern

To a question on why gold loan NBFCs are not treated at par with commercial banks when it comes to loan-to-value ratio, Das said the RBI has taken this approach as a precautionary measure to ensure NBFC segment, especially gold loan NBFCs, doesn’t plunge into another crisis.

In August, the RBI increased the permissible LTV ratio for loans against pledge of gold ornaments and jewellery for non-agricultural purposes, from 75 per cent to 90 percent. This relaxation will be available till March 31, 2021; beyond that, it will be again back to 75 per cent.

However, this measure was applicable only to banks and not NBFCs. Following this, NBFCs had approached regulator seeking level playing field.

Justifying the logic behind this, Das said gold loan NBFCs have a higher risk since much of the loan book is concentrated on gold loans, whereas for the banks, gold loans are only a small portion of their whole book. NBFCs were subjected to light regulation till a few years ago and this has resulted in a crisis in certain companies, Das recalled.

The RBI wants to ensure no NBFC fails, Das said, adding that this is the logic why NBFCs continue to have tighter regulations.

 

 

Also Read

RBI battle ready to revive the economy, India will certainly bounce back: Governor RBI

RBI battle-ready to meet economy's needs: Governor Shaktikanta Das     

Benign financing conditions spurred record issuance of corporate bonds worth around Rs 3.2 Lakh crore says RBI Governor     

Will take necessary measures to promote growth: RBI Guv Shaktikanta Das     

Economic recovery likely to be gradual: RBI Guv Shaktikanta Das     

Covid-19: Indian economy to recover gradually, says RBI Governor     

India's economic recovery to be gradual, says RBI Governor Shaktikanta Das     

Economic recovery likely to be gradual: Das     

India has big opportunity in food processing, tourism: RBI governor     

RBI's Das says economy showing signs of stability, focus on 5 areas for revival     

Vulnerability of NBFC sector still a concern: RBI governor     

Will take necessary measures to promote growth: RBI Governor     

RBI governor Shaktikant Das: Indian economy will recovery gradually     

Will take necessary measures to promote economic growth: RBI Governor     

Recovery of the pandemic-hit Indian economy will be gradual, says RBI Guv Shaktikanta Das     

Economic recovery in India likely to be gradual: RBI governor Shaktikant Das     

RBI battle ready to take steps for economic recovery, says RBI Governor Shaktikanta Das     

RBI optimistic of economic revival, enlists areas to spur growth     

RBI 'battle ready' to kick-start growth, says Shaktikanta Das     

Economy showing signs of stability, will take necessary measures to promote growth: RBI Governor Das     

Loan resolution plan had to be a balanced call, says RBI Governor Shaktikanta Das     

Indian economy showing signs of stability, RBI to take necessary measures: Shaktikanta Das     

Economic recovery likely to be gradual: RBI Governor Shaktikanta Das     

Shaktikanta Das says RBI to take more steps, if required, to battle COVID-19: Highlights     

Will take necessary measures to promote growth: RBI Governor     

Economic recovery still not well entrenched; RBI battle ready to support growth: Governor Das     

RBI stands battle-ready to take whatever steps needed for Covid-hit Indian economy: Governor Shaktikanta Das     

COVID impacted economy, may see gradual recovery: RBI Governor Shaktikanta Das     

Economy showing sign of stability, but recovery to be gradual: RBI Governor Das     

RBI assures industry of taking all necessary measures to ensure liquidity in system & promote economic growth     

Economic recovery likely to be gradual, RBI stands battle-ready: Shaktikanta Das     

RBI's Shaktikanta Das bats for small depositors, defends loan restructuring     

Economy showing sign of stability, but recovery to be gradual: RBI Governor Das     

RBI battle ready to revive the economy, India will certainly bounce back: Governor RBI     

Covid-hit Indian economy to witness gradual recovery, says RBI Governor Shaktikanta Das     

Economy showing sign of stability, but recovery to be gradual: RBI Governor Das     

Economic recovery still not well entrenched, says RBI Governor     

RBI Guv Shaktikanta Das: Depositors' money topmost priority, even as one-time rollover for businesses is considered     

Will take necessary measures to promote growth: RBI Governor     

RBI chief says India's recovery not entrenched, will only be gradual     

RBI Governor highlights five key areas that will determine India's growth in the post-COVID world     

COVID-impacted economy, may see gradual recovery: RBI Governor     

Covid impacted economy, may see gradual recovery: RBI Guv     

Covid-19: Indian economy to recover gradually, says RBI Governor     

RBI stands battle-ready to take whatever steps need to be taken for economy: Guv     

'GDP a reflection of ravages of COVID-19': RBI Guv Shaktikanta Das says economic recovery likely to be gradual     

Economy showing sign of stability, but recovery to be gradual: RBI Governor Das     

Covid impacted economy, may see gradual recovery: RBI Guv     

Covid-19: Indian economy to recover gradually, says RBI Governor     

Economy showing sign of stability, but recovery to be gradual: RBI governor Shaktikanta Das     

Will take necessary measures to promote growth: RBI Guv Shaktikanta Das     

RBI stands battle-ready to take whatever steps needed for Covid-hit Indian economy: Governor Shaktikanta Das     

Economic recovery likely to be gradual: RBI Guv Shaktikanta Das     

Covid-19: Indian financial system to recuperate step by step, says RBI Governor     

Will take necessary measures to promote growth: RBI Governor     

RBI battle-ready, keen to take obligatory steps to advertise progress: Shaktikanta Das     

Economy showing sign of stability, but recovery to be gradual: RBI Governor Das     

Covid impacted economy, may see gradual recovery: RBI Governor     

Will take all necessary measures to ensure liquidity & promote economic growth: RBI Governor     

RBI Governor Shaktikanta Das said - The impact on the economy due to Corona will gradually reduce     

COVID impacted economy, may see gradual recovery: RBI Governor Shaktikanta Das     

Will take necessary measures to promote growth: RBI Governor     

Financial reforms not reached full velocity, tourism sector can turn out to be engine of financial development     

Interest of bank depositors has to be protected: RBI governor Shaktikanta Das     

India has tremendous potential and will certainly bounce back: RBI Governor     

Some economic indicators showing signs of stabilisation, but recovery not 'fully entrenched': RBI Governor     

RBI governor Shaktikanta Das dashes hopes of V-shaped economic recovery     

RBI rules out relaxation in loan recast: 'Must protect investors'     

RBI Das says COVID debt recast balanced depositor-borrower interests     

Economic recovery in India likely to be gradual: RBI governor Shaktikant Das     

Markets maintain gains on global cues, auto stocks rise (Roundup)     

RBI Governor Shaktikanta Das says India’s economic recovery likely to be gradual     

Will take essential measures to advertise enlargement: RBI Governor     

Economic recovery in India likely to be gradual: RBI governor Shaktikant Das     

RBI is 'Battle Ready' to save ailing economy amid pandemic, says Governor Shaktikanta Das     

Economic reform still not done: RBI Governor Shaktikanta Das     

Indian economy likely to recover gradually amid COVID-19: RBI Guv     

RBI taking all necessary measures to promote economic growth: Guv     

RBI stands battle-ready to take whatever steps need to be taken for economy: RBI governor     

Economic recovery still not well entrenched, RBI is 'battle ready': RBI Guv     

RBI stands battle-ready to take steps for economy: RBI governor     

Economy may see gradual recovery but RBI battle-ready: RBI Governor     

Covid impacted economy, may see gradual recovery: Shaktikanta Das     

Economy showing signs of stability: RBI governor     

RBI governor says India's economic recovery is likely to be gradual as coronavirus still rages     

Will take necessary measures to promote development: RBI Governor     

Will take all necessary measures to ensure liquidity & promote economic growth: RBI Governor     

RBI battle-ready, willing to take necessary steps to promote growth: Shaktikanta Das     

Loan resolution, tourism & processed food can drive economic revival: RBI Governor     

Will take necessary measures to promote growth: RBI Governor     

Will take necessary measures to promote growth: RBI governor Shaktikanta Das     

Event:

 FICCI National Executive Committee Meeting: Keynote address by Mr Shaktikanta Das, RBI Governor to Members of FICCI