The RBI did not make any change in the repo rates in the policy review released on August 6. The central bank had earlier cut the policy rate by 1.15 percent in the last two meetings. Currently, the repo rate is 4 percent, reverse repo rate is 3.35 percent and marginal standing facility (MCF) rate is 4.25 percent.
He said that after the prevention of the epidemic, the economy will have to proceed with caution to get on the path of strength. Regarding the relief measures announced by the central bank recently, Das said, “By no means should we assume that the RBI will withdraw the measures soon.”
He said once the clarity on the outbreak and other aspects of the Kovid-19 pandemic was made, RBI would start making its forecasts on inflation and economic growth. He said that overall, the banking sector remains steadily strong and stable and the integration of public sector banks is a step in the right direction.
Das said, 'The size of banks is important, but efficiency is more important. It is obvious that banks will face stress, but more important is how banks respond to challenges and face them. '
Lone Moratorium was a temporary solution
The central government and the Reserve Bank of India (RBI) took several steps to provide relief to the general public during the lockdown. One of these is the loan moratorium. RBI Governor Shaktikanta Das said that the loan moratorium facility was a temporary solution. The debt resolution framework is expected to provide durable relief to borrowers facing Kovid-19 constraints.
The response from the RBI to the situation arising from the Corona virus epidemic has been unprecedented. The measures taken by RBI are intended to deal with the difficult situation of Kovid-19 and it is clearly not sustainable.
He said that after stopping the epidemic, the economy will have to proceed with caution to get on the path of strength. The financial sector should return to normalcy. Das made it clear that in no way should it be assumed that the RBI would withdraw the measures soon.
Overall, the banking sector remains consistently strong and stable.
Banks will face stress
Consolidation of public sector banks is a step in the right direction, size of banks is important, but efficiency is more important. Banks will face stress, this is obvious. More important is how banks respond to challenges and deal with them.
Once there is clarity on the outbreak and other aspects of the Kovid-19 pandemic, the RBI will start making its forecasts on inflation and economic growth. The Reserve Bank Governor said that there is a lot of scope for reforms to avoid fraud in banks.
Raising capital will be very important for banks, financial sector to go ahead.