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Mumbai, RBI Governor <keyword id="6359111" type="General" weightage="20" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> on Thursday said the central bank does not "emulate" others when it comes to regulations and asserted that the bank's as well as his own opposition to cryptocurrencies remain unchanged, a day after US regulators allowed bitcoin Exchange Traded Funds (ETFs). He also said that emerging markets and the world cannot afford to have a "crypto mania". "What is good for another market need not be good for us. Therefore our views -- both that of the Reserve Bank and personally that of mine -- remain the same," Das said. Addressing a financial sector seminar organised by business daily Mint here, the Reserve Bank of India (RBI) chief also said that for emerging market economies and advanced economies, travelling down that path of cryptocurrencies will create huge risks which will be very difficult to contain going forward. "The question is why do you want to go down that road? What is it that you are going to get?," Das said while responding to a query about the development in the US with respect to cryptocurrencies. <keyword id="20153809" type="General" weightage="20" keywordseo="personally-das" source="keywords">Personally Das</keyword> and RBI, as an institution, are opposed to private cryptocurrencies on the grounds that they pose tremendous threat to the financial stability. "The US capital markets regulator in the same announcement also issued necessary cautionary advice and necessary warning to investors to be careful along with the risks it poses. Our position, my position and the RBI's position on this remain unchanged irrespective of who does what. Just because someone has done something, we are not here to emulate them," he said. The remarks were in the context of the US regulator SEC permitting bitcoin ETFs. The approval is seen as a landmark event in the adoption of cryptocurrencies in mainstream finance as the ETF structure gives institutions and financial advisors a familiar and regulated way to have an exposure to bitcoins. "I don't wish to comment on what a regulator of another country has done; they know what is best for their country. But I would like to say that they themselves have flagged risks in the product and advised people to be very careful. "We are all familiar with the Tulip mania in the Netherlands that had led to an asset bubble in the past. I don't think emerging markets and the world can afford a crypto mania that could lead to similar outcomes," the governor said. On whether he sees the forthcoming vote-on-account to be inflationary, Das said that going by the past records of the present government, he feels that the interim budget will not lead to inflationary pressures. Further, Das mentioned many supply side measures that the government has taken to contain price rise since the beginning of the Russia-Ukraine war.

The world cannot afford a crypto mania: Shaktikanta Das

Warning against mushrooming of lending apps and their usurious recovery prices, the <keyword id="50847" type="General" weightage="80" keywordseo="reserve-bank" source="Orion">Reserve Bank</keyword> said it is not interested in penalizing operators or stifling innovation but wants them to follow the rules of the game, governor <keyword id="6359111" type="General" weightage="100" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> said on Tuesday. Addressing the third edition of the global fintech summit here this evening, he said the intention of the central bank is not to penalize or stifle anyone but to ensure that everyone follows traffic rules. The statement assumes importance in the wake of the recent incidences wherein a few people who borrowed through these apps have been forced to commit suicide and the last week's incidence of a young pregnant woman being mowed down by the recovery agents of <keyword id="6428152" type="General" weightage="50" keywordseo="mahindra-finance" source="Orion">Mahindra Finance</keyword> which financed her father's tractor in Bihar. Since the past two years, when the negative loan app incidents began to surface the central bank had made many changes in the rule book, including mandating the loan apps to upfront disclose on whose <keyword id="6355260" type="General" weightage="50" keywordseo="nbfc" source="Orion">NBFC</keyword>'s or bank's behalf the money was being disbursed. Why the <keyword id="30067" type="General" weightage="50" keywordseo="rbi" source="Orion">RBI</keyword> has not introduced the first loss default guarantee in the recently introduced guidelines for the lending apps, the governor said, our intention is not to penalize anybody or stifle anyone else activity. All that we are saying is that please follow the traffic rules, Das said. “The Reserve Bank will continue to be supportive of it (digital lending) and will welcome it. We will, in fact, go two steps forward to discuss with you if you just take one step forward. But having said that, these innovations also must be responsible and should enhance the efficiency and resiliency of the financial system while benefiting the consumer. “Robust internal product and service assurance framework together with fair and transparent governance will go a long way to safeguard the interest of customers and ensure long-term sustainability of fintech entities themselves,” Das said. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/rally-in-banking-stocks-continue-as-credit-growth-picks-margins-get-a-boost/articleshow/94324519.cms">Rally in banking stocks continues as credit growth picks up &amp; margins get a boost</a> <a href="https://www.businessinsider.in/stock-market/news/how-indian-equity-gold-and-debt-investments-have-performed-over-the-past-two-decades/articleshow/94304653.cms">Story in charts: How Indian equity, gold and debt investments have performed over the past two decades</a> <a href="https://www.businessinsider.in/science/health/news/despite-inflation-8-out-of-10-people-intend-to-increase-spending-on-health-and-wellness-accenture-report/articleshow/94329579.cms">Despite inflation, 8 out of 10 people intend to increase spending on health and wellness : Accenture report</a>

Shaktikanta Das wants lending apps to 'follow the rules of the game'

New Delhi, <keyword id="50847" type="General" weightage="80" keywordseo="reserve-bank" source="Orion">Reserve Bank</keyword> Governor <keyword id="6359111" type="General" weightage="50" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> on Tuesday said the central bank is firmly focused on bringing down inflation to 4 per cent and remains prepared to undertake policy responses to deal with supply shocks, which have become more frequent with profound implications. The current episode of high global inflation and preceding overlapping shocks of the pandemic and Russia-Ukraine war have raised significant issues and challenges for the conduct of monetary policy, the governor said in a speech on 'Art of Monetary Policy Making: The Indian Context' at <keyword id="3658227" type="General" weightage="50" keywordseo="delhi-school-of-economics" source="Orion">Delhi School of Economics</keyword> (DSE) <keyword id="18666750" type="General" weightage="50" keywordseo="diamond-jubilee-distinguished-lecture" source="Orion">Diamond Jubilee Distinguished Lecture</keyword>. He said the monetary policy framework in India has evolved in line with the developments in theory and country practices, the changing nature of the economy and developments in financial markets. Within the broad objectives, the relative emphasis on inflation, growth and financial stability has, however, varied across monetary policy regimes since independence. Das listed out steps the central bank took to deal with the situation created in the wake of the COVID pandemic and the Russia-Ukraine war. Following the outbreak of the war, the central bank raised the policy rates by 250 basis points since May 2022. "After a near-zero policy rate for a prolonged period, central banks in these (advanced) economies started raising interest rates aggressively in 2022, which contributed to stress in certain banks in these economies. In contrast, our battle against inflation is not constrained by financial stability concerns. In fact, even during the COVID phase, we continuously took measures to strengthen financial stability," the governor said. The Reserve Bank, he said, has adopted a prudent approach and taken several initiatives to revamp the regulation and supervision of banks, NBFCs and other financial entities by developing an integrated and harmonised architecture. "Our banking system remains resilient and healthy with improved capital ratios, asset quality and profitability," he said. Das said the <keyword id="30067" type="General" weightage="50" keywordseo="rbi" source="Orion">RBI</keyword>'s experience in recent years shows that supply shocks have become more frequent with profound implications for inflation management and anchoring of inflation expectations. A key risk of sustained high inflation is that it can de-anchor inflation expectations. "It is, therefore, important to remain vigilant and take necessary steps in a calibrated and timely manner to keep expectations firmly anchored. "The Reserve Bank has been quick and calibrated while navigating through such turbulences. We look through fleeting shocks but remain prepared to undertake policy responses if such shocks show signs of persistence and getting generalised," he said. In such a scenario, monetary policy has to focus on containing the second-round effects, the governor added. "We will remain watchful of this also. The role of continued and timely supply-side interventions, as being undertaken by the government, assumes criticality in limiting the severity and duration of such food price shocks. "In these circumstances, it is necessary to be watchful of any risk to price stability and act timely and appropriately. We remain firmly focused on aligning inflation to the target of 4.0 per cent," he added. Headline inflation based on the Consumer Price Index (CPI) had eased to 4.8 per cent in June 2023 from the peak of 7.8 per cent in April 2022. It, however, surged to 7.4 per cent in July, mainly on account of a spurt in vegetable prices, which have already started moderating. Das noted that low and stable inflation helps households and businesses in planning for long-term savings and investments, which ultimately drive innovation, productivity and sustainable growth. On the contrary, high and volatile inflation corrodes the economy by denting productivity and the long-term growth potential, he said, adding inflation also imposes a disproportionate burden on the poor. The Reserve Bank has been mandated to maintain price stability, keeping in mind the objective of growth. Price stability has been numerically defined as maintaining a headline CPI inflation target of 4.0 per cent with a tolerance band of +/- 2 per cent. The tolerance band provides flexibility to accommodate growth and financial stability concerns, supply shocks and measurement and forecast errors, Das said. The target is set by the government in consultation with the Reserve Bank for 5 years.

RBI firmly focused to bring down inflation to 4%: Shaktikanta Das

Mumbai, Reserve Bank Governor <keyword id="19913110" type="General" weightage="20" keywordseo="Shaktikanta-Das" source="keywords">Shaktikanta Das</keyword> on Friday said India has been building up <keyword id="20344434" type="General" weightage="20" keywordseo="gold-reserves" source="keywords">gold reserves</keyword> as part of its forex deployment. "We are building up gold reserves that is a part of our reserve deployment," Das told reporters at the customary post-policy review press conference here. He did not give any specifics on the quantum of gold buys, but pointed to the official data which shows an increase in the value of gold reserves. As per official data, the value of gold in the <keyword id="20344433" type="General" weightage="20" keywordseo="forex-reserves" source="keywords">forex reserves</keyword> stood at USD 51.487 billion as on March 22, which is USD 6.287 billion higher than the value as at end-March 2023. As per a recent news report, RBI bought 8.7 tonne of gold in January alone which is the highest in two years. The <keyword id="19894998" type="General" weightage="20" keywordseo="central-bank" source="keywords">central bank</keyword>'s gold holdings had touched 812.3 tonne at the end of January from 803.58 tonne in the preceding month, as per the World Gold Council. The price of gold has also seen a rally over the last few months. Earlier in the day, Das announced that the overall forex reserves have touched an all-time high of USD 645.6 billion as of March 29, a breakup of which will be made available on Friday evening with the release of the weekly statistical supplement (WSS). Speaking to reporters, Das said RBI has consciously focused on building forex reserves over the last four-five years to act as a buffer against any future risks where there are dollar outflows from India. He also said the central bank's approach on the forex front adds strength to the national balance sheet as well. Das also said that having a stable rupee is a priority for the Reserve Bank.

India is building up gold reserves says RBI governor Shaktikanta Das

In a tightening cycle, a premature pause in monetary policy action would be a costly policy error, <keyword id="50847" type="General" weightage="50" keywordseo="reserve-bank" source="Orion">Reserve Bank</keyword> Governor <keyword id="6359111" type="General" weightage="100" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> opined while voting along with five other members of the <keyword id="6369693" type="General" weightage="80" keywordseo="mpc" source="Orion">MPC</keyword> for raising the key lending rate by 35 basis points earlier this month, according to the minutes of the meeting released on Wednesday. Prior to the December hike in repo rate, the <keyword id="30067" type="General" weightage="80" keywordseo="rbi" source="Orion">RBI</keyword> had raised the key short-term lending rate by 190 bps in four tranches. "I am...of the view that a premature pause in monetary policy action would be a costly policy error at this juncture. Given the uncertain outlook, it may engender a situation where we may find ourselves striving to do a catch-up through stronger policy actions in the subsequent meetings to ward off accentuated inflationary pressures," said the minutes of the Monetary Policy Committee (MPC). The meeting was held during December 5-7. The Governor also said that in a tightening cycle, especially in a world of high uncertainty, giving out explicit forward guidance on the future path of monetary policy would be counterproductive. This may result in the market and its participants overshooting the actual play out of real conditions, he opined. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/credit-growth-far-away-from-being-considered-as-exuberant-says-rbi-governor-das/articleshow/96401523.cms">Credit growth far away from being considered as 'exuberant', says RBI Governor Das</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/rbi-governor-das-on-history-major-taunt-was-messi-also-a-post-graduate-in-history/articleshow/96395995.cms">RBI Governor Das on 'history major' taunt: Was Messi also a post-graduate in history?</a>

RBI Governor Shaktikanta Das against pause in rate hikes: MPC minutes

<ul><li>The aspect of adequacy of forex reserves is always kept in mind while <keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword> intervenes in the forex market, says RBI governor. </li><li>The Indian rupee has depreciated by 7.4 % against the US dollar but performed better than other Asian peers. </li><li>Das said a stable exchange rate is a beacon of financial and overall macroeconomic stability and market confidence.</li></ul> The <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (RBI) does not have any fixed dollar: rupee exchange rate and its market interventions are to curb excessive volatility, said Governor <keyword id="6359111" type="General" weightage="50" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword>. He also said the aspect of adequacy of forex reserves is always kept in mind while RBI intervenes in the forex market. The umbrella continues to be strong. Announcing the Monetary Policy statement on <keyword id="15127776" type="General" weightage="50" keywordseo="friday-das" source="Orion">Friday Das</keyword> said during the current financial year (up to September 28), the US dollar has appreciated by 14.5 %against a basket of major currencies. This has caused turmoil in currency markets globally. The Indian rupee movement has been orderly as compared to the currencies of most other nations, Das said. He said the Indian rupee has depreciated by 7.4 % against the US dollar during the same period - faring much better than several reserve currencies as well as many of its emerging market economies and Asian peers. Das said a stable exchange rate is a beacon of financial and overall macroeconomic stability and market confidence. Citing the divergent views on the exchange rate of the rupee and the adequacy of our forex reserves Das said the rupee is a freely floating currency and its exchange rate is market determined. "Second, the RBI does not have any fixed exchange rate in mind. It intervenes in the market to curb excessive volatility and anchor expectations. The overarching focus is on maintaining macroeconomic stability and market confidence," he said. According to him, RBI's actions helped in engendering investor confidence as reflected in the return of capital inflows since July. "Over the medium term, the primacy of price stability embedded in our flexible inflation targeting (<keyword id="19671" type="General" weightage="50" keywordseo="fit" source="Orion">FIT</keyword>) framework provides the anchor for exchange rate stability," he remarked. The RBI's interventions in the forex market are based on continuous assessment of the prevailing and evolving situation. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/here-is-how-much-your-emi-will-go-up-after-the-recent-repo-rate-hike/articleshow/94552904.cms">Here is how much your EMI will go up after the recent repo rate hike</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/presidential-commission-recommends-stamping-of-h-1b-visas-inside-us/articleshow/94551768.cms">Presidential commission recommends stamping of H-1B visas inside US</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/rbi-hikes-repo-rate-by-50-bps-taking-it-to-a-three-year-high-of-5-9-das-says-inflation-at-alarmingly-high-levels/articleshow/94550429.cms">RBI hikes repo rate by 50 bps, taking it to a three-year high of 5.9% – Das says inflation at ‘alarmingly high levels’ across jurisdictions</a>

RBI does not have fixed dollar:rupee exchange rate: Shaktikanta Das

Mumbai (Maharashtra) [India], August 8 (ANI): <keyword id="64190" type="General" weightage="100" keywordseo="RBI-Governor" source="Orion">RBI Governor</keyword> <keyword id="6359111" type="General" weightage="20" keywordseo="Shaktikanta-Das" source="Orion">Shaktikanta Das</keyword> says <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword> will moderate from July onwards as the monsoon has improved and <keyword id="489239" type="General" weightage="20" keywordseo="Global-food-prices" source="Orion">global food prices</keyword> have shown signs of easing in July. Das said, "Global food prices showed signs of easing in the month of July after registering an increase since March 2024." A degree of relief in food inflation is expected from the pickup in southwest monsoon and healthy progress in Kharif sowing. Buffer stocks of cereals continue to be above the norms, according to RBI Governor Shaktikanta Das. Das added, "Assuming a normal monsoon and taking into account the 4.9 per cent inflation print, Q1 CPI inflation for the current financial year (2024-25) is projected at 4.5 per cent, with q2 at 4.4 per cent, Q3 at 4.7 per cent and Q4 at 4.3 per cent. CPI inflation for the first quarter of next financial year (Q1 2025-26) is projected at 4.4 per cent." The inflation landscape reflects mixed signals, to which Das said, "<keyword id="21258540" type="General" weightage="20" keywordseo="headline-inflation" source="keywords">Headline inflation</keyword> eased up to 5.1 per cent in June 2024 due to higher than expected food inflation. Fuel remained in deflation for the 10th consecutive month. Core inflation moderated to a historic low in the months of May and June." RBI Governor Shaktikanta Das, outlined the <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword> with real <keyword id="19972825" type="General" weightage="20" keywordseo="GDP-growth" source="keywords">GDP growth</keyword> of 7.2 per cent for the fiscal year 2024-25 and headline inflation eased to 5.1 per cent in June, on Thursday. Das said, "Real GDP growth for 2024-25 is projected at 7.2 per cent with Q1 at 7.1 per cent, Q2 at 7.2 per cent, Q3 at 7.3 per cent and Q4 at 7.2 per cent. Real GDP growth for Q1 2025-26, this is something which we are giving for the first time, is projected at 7.2 per cent. The risks are evenly balanced." He added, "We have slightly moderated the <keyword id="387719" type="General" weightage="20" keywordseo="growth-projection" source="Orion">growth projection</keyword> for the first quarter of the current financial year in relation to the projection we gave in the previous MPC in June. This is primarily due to updated information on certain high-frequency indicators which show lower than anticipated corporate profitability, general government expenditure and core industries output." This forecast marks a slight moderation from previous estimates provided in the Monetary Policy Committee (MPC) meeting in June, attributed to recent updates on high-frequency indicators such as corporate profitability, general government expenditure, and core industries output. The inflation landscape reflects mixed signals, to which Das said, "Headline inflation eased up to 5.1 per cent in June 2024 due to higher than expected food inflation. Fuel remained in deflation for the 10th consecutive month. Core inflation moderated to a historic low in the months of May and June." Balancing robust growth projections with a nuanced understanding of inflation dynamics Governor Das stated, "Food inflation which has a weight of around 46 per cent in the CPI basket, contributed to more than 75 per cent of headline inflation in May and June. Vegetable prices increased sharply and contributed about 35 per cent to inflation in June. High inflation pressures persisted across other major food items also." Governor Das mentioned softening in core inflation continues to be broad-based with core services inflation touching a new low in the current CPI series during the month of May and June 2024. Das stated, "The high food price momentum likely to have continued in the month of July also. Large favourable base effects may however push headline inflation downwards in July. The Impact of the revision in milk prices mobile tariffs also needs to be carefully monitored." A degree of relief in food inflation is expected from the pickup in south west monsoon and healthy progress in Kharif sowing. Buffer stocks of cereals continue to be above the norms, according to RBI Governor Shaktikanta das. Das anticipates some relief in food inflation due to the expected pickup in the southwest monsoon and healthy progress in Kharif sowing. Buffer stocks of cereals remain above the normative levels, contributing to a more stable food price environment. Global food prices, which have been on an upward trajectory since March 2024, showed signs of easing in July.

RBI Governor Shaktikanta Das projects 7.2% GDP growth for 2024-25, reports eased inflation to 5.1% in June

Drawing inspiration from <keyword id="6359315" type="General" weightage="100" keywordseo="arjuna" source="Orion">Arjuna</keyword>'s prowess in archery during the Swayamvar of Draupadi in the epic Mahabharata, <keyword id="30067" type="General" weightage="80" keywordseo="rbi" source="Orion">RBI</keyword> Governor <keyword id="6359111" type="General" weightage="80" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> said the central bank is zeroing in on inflation. He also said, "Our constant endeavour is to keep an eye on inflation, which is our primary target." While addressing the FIBAC 2022 Conference, the <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (RBI) Governor on Wednesday said, "In Mahabharata, the great warrior and archer Arjuna was aiming at the eye of the revolving fish. There was a fish and the fish was revolving and he was looking at it through a pool of water which was underneath. I'm quite certain that he would have certainly assessed the speed at which the fish was revolving, the wind conditions prevailing, the intensity of the ripples in the pool of water below, the noise levels in the kings' court and similar other factors," and added that, "Our constant endeavour is to keep an eye on inflation, which is our primary target." FIBAC 2022 Conference is jointly organised by FICCI and Indian Banks Association. Das said, "When international prices of wheat went up, in <keyword id="3658" type="General" weightage="50" keywordseo="india" source="Orion">India</keyword> despite India being a surplus in the foodgrain, our domestic wheat prices also went up. Crude prices hit USD 130 per barrel. So on February 24, when Ukraine and Russia war started, it completely changed the entire picture." Talking about curbing inflation, he said, "Because of the inflation-targeting framework, till Covid-19 hit our country or the world, our average CPI (consumer price index) inflation was 3.9 per cent from 2016 to February 2020. Similarly now, when the war started this year in February, in April we announced in our monetary policy the number of measures that were taken." Talking about the current state of the economy, Shaktikanta Das said, "Now, where do we stand today, the growth momentum has been sustained. Inflation is expected to moderate. Banking and the entire financial sector is stable and resilient, it has withstood multiple shocks. Balance sheets of the banks are today looking very robust. The corporate sector balance sheets are also strong. The MSME sector has also withstood the crisis." SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/with-challenges-carefully-firewalled-indian-economy-now-is-very-attractive-for-investors-fm/articleshow/95255527.cms">With challenges carefully firewalled, Indian economy now is very attractive for investors: FM</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/this-is-indias-decade-and-gdp-is-likely-to-cross-7-5-trillion-by-2031-says-morgan-stanley/articleshow/95256483.cms">This is India’s decade and GDP is likely to cross $7.5 trillion by 2031, says Morgan Stanley</a>

RBI keeping Arjuna's eye on inflation, says Governor Shaktikanta Das

Mumbai, RBI Governor <keyword id="6359111" type="General" weightage="20" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> on Monday said the central bank is "not comfortable" with the gross non-performing assets ratio of 8.7 per cent in urban cooperative banks (UCBs) and asked them to work towards improving the same. Addressing directors of UCBs in the financial capital at an RBI-organised conference, Das urged that such lenders should improve the governance standards, avoid related-party transactions and focus on credit risks, among others. It can be noted that the UCB sector has been fraught with multiple challenges and also witnessed difficult times in the recent past, like the implosion of the city-headquartered Punjab and Maharashtra Bank. Das reminded the directors of the UCBs that banks run on depositors and added that protection of the hard-earned money pooled in from the middle class, poor and retirees is far more sacred than going to a temple or a gurdwara. While the overall picture at an aggregate level looks nice, the situation on GNPAs and capital adequacy is "not at all satisfactory", Das said. He said the overall GNPAs have improved to 8.7 per cent, which is "not a good number. It is not a comfortable number even at an aggregate level". Scheduled commercial banks' GNPAs stood at a decadal best level of 3.9 per cent in March 2023 and are widely estimated to improve further. To manage the scourge of <keyword id="127693" type="General" weightage="20" keywordseo="npas" source="Orion">NPAs</keyword> better, Das suggested that there should be a focus on credit risk management with better underwriting. He said the RBI has come across instances of conflicts of interest or related party transactions, which need to be avoided. Similarly, there have been instances of many of the top defaulters being individuals or businesses having the ability to pay, Das said. The top 20 defaulters account for over 60 per cent of the loan overdue, and focusing on this segment can help improve the overall NPAs, he added. On the capital adequacy front, he noted that there has been an improvement in the ratios to 16.6 per cent at the end of FY23 from 15.5 per cent a year ago. Making it clear that he wants to share the RBI's concerns with the lenders, Das exhorted the UCBs to focus on the quality of governance by paying attention to compliance, risk management and internal audit. He said the RBI has come across instances where there is only "paper compliance" and no compliance is observed when an on-field inspection takes place, Das said, adding that the internal audit function also requires focus. The governor asked bank management to present a risk analysis report to the board on a quarterly basis, rather than making it into an annual effort. It is also necessary for the directors - who are elected and not appointed based on their skill sets, unlike the SCBs - to understand the financial sector, credit risk, banking, information technology and risk management, Das said. The <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> has prescribed a board of management to help the elected board members with professional help in running a bank, and the same should not be seen as an impediment, he added. Stressing that the board discussions should be free and fair, Das said it is important to have any dominance of one or two persons in the decision-making. "There should be free, frank and democratic discussions. Board members should be encouraged to ask whatever questions they have on their mind," he said. Das also expressed the RBI's discomfort with board committees like those handling important functions, such as audit and risk not meeting regularly, stating that it has come across instances where such meetings are not held for months or even multiple years. He also asked UCBs to monitor asset-liability mismatches, follow transparent accounting practices and recruit people based on requirements and ability to spend. On the technology front, he said the RBI has found that the quality of the core banking solution is not at all satisfactory in some banks, and the treasury operations are not getting reflected in the CBS. Going ahead, the UCB segment will be facing competition from tech-savvy entities like digital lenders, fintechs, non-bank lenders and micro-lenders, and hence, need to focus more on technology, Das said. The governor said the UCB sector - built to serve as the neighbourhood bank - is "doing well" from an overall perspective, and also made it clear that the RBI is fine with some of the entities in the sector growing big.

Not comfortable with NPAs in urban co-op banks says RBI, asks lenders to focus on governance

New Delhi, Interest rate is likely to remain high for the moment, <keyword id="192432" type="General" weightage="20" keywordseo="reserve-bank-governor" source="Orion">Reserve Bank Governor</keyword> <keyword id="6359111" type="General" weightage="20" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> said, stressing the central bank will remain extra vigilant and keep "Arjun's eye" to ensure a sustained decline in inflation. The lending rates are ruling high after the RBI cumulatively hiked the <keyword id="714684" type="General" weightage="20" keywordseo="key-policy-rate" source="Orion">key policy rate</keyword> (repo) by 250 basis points since May 2022 in a bid to tame inflation which touched a high of 7.44 per cent this July. The consumer price index (CPI) based retail inflation is now declining and fell to 5 per cent in September. The government has mandated the central bank to ensure inflation remains at 4 per cent with a margin of 2 per cent on the either side. "Interest rate will remain high. How long they will remain high, I think only time and the way the world is evolving will tell," the governor said in response to a query at Kautilya Economic Conclave 2023. On the sidelines of the Conclave, Das said the RBI remains very focused on the inflation dynamics. "We are extra vigilant and we stand ready to take whatever action that needs to be taken. We need to see sustained decline in inflation...our objective is to reach 4 per cent," he said. On elevated crude oil prices in the international market, he said, "what matters is the pump prices in India". The pump prices of petrol and diesel are important as far as inflation in India is concerned, Das added. Responding to queries on impact of crisis in Middle East, the governor said that in the last fortnight, US bond yields have risen, which has wider implications for other economies. Crude oil prices have also gone up. "Some of these uncertainties were there, but they have become more pronounced in some sense. What is different in the context of India, we are impacted by whatever is happening all over, no doubt on that. "Our macroeconomic fundamentals continue to be sound. Eventually, in these uncertain times, what matters is how strong is your macroeconomic fundamentals, how strong is your financial sector. I think on both these parameters India is well placed," Das said. He also said the dollar index has become strong and bond yields in the US have reached all-time highs. "But if you look at the volatility of the Indian rupee, from January 1 till now, the rupee depreciation is 0.6 per cent whereas on the other side, the appreciation of the US dollar for the same period has been 3 per cent. So rupee is stable. We are there in the forex market to prevent excessive volatility," the governor added. In his address at the Conclave, Das said that in the prevailing global environment of slowing growth and stubborn inflation, especially in the last few miles before reaching the target, economic activity in India exhibits resilience on the back of strong domestic demand. "Real GDP growth for 2023-24 is projected at 6.5 per cent and India is poised to become the new growth engine of the world," he added. Das said the RBI remains "extra vigilant" on the evolving inflation dynamics. In the current situation, monetary policy must remain actively disinflationary to ensure that ongoing disinflation process progresses smoothly, he said. "In the world we live in today, beyond giving a generalised kind of forward guidance that we will be very alert, we will be extra vigilant, we will monitor the inflation-growth dynamics hawk's eye or Arjuna's eye...we will remain alert and we will be very prompt in our response," said Das.

Only time will tell how long interest rate will remain high: Shaktikanta Das

According to a top <keyword id="47209" type="ORGANIZATION" weightage="80" keywordseo="Finance-Ministry">finance ministry</keyword>, a new law on bankruptcy aimed at improving the ease of doing <keyword id="6355515" type="ORGANIZATION" weightage="80" keywordseo="Business">business</keyword> will be introduced in Parliament at the earliest. 
 "<keyword id="6375770" type="UNKNOWN" weightage="80" keywordseo="Bankruptcy-law">Bankruptcy law</keyword> will improve ease of doing business in India. Government will try to introduce the bill in the Parliament at the earliest," Economic Affairs Secretary Shaktikanta Das said in a tweet. 
 
A government-appointed panel had yesterday suggested a modern bankruptcy law to deal with insolvency cases within 180 days that may arise on account of business failures or economic downturns. 
 
The draft legislation prepared by a panel, headed by former Law Secretary T K Vishwnathan, also proposes early identification of financial distress so that steps could be taken to revive the ailing companies. 
 
Vishwnathan had presented the Bankruptcy Law Committee Report to Jaitley here yesterday. <keyword id="6355261" type="POSITION" weightage="80" keywordseo="Finance-minister">Finance Minister</keyword> <keyword id="42575" type="PERSON" weightage="80" keywordseo="Arun-Jaitley">Arun Jaitley</keyword> had said the government would try to introduce a bill dealing with bankruptcy law in the forthcoming Winter Session of Parliament. 
 
The panel's report, which entails the draft legislation, noted that the recovery rates obtained in India are among the lowest in the world. 
 
It proposes to establish an Insolvency Regulator to exercise regulatory oversight on insolvency professionals and agencies. 
 
The committee's report has been put up on the Ministry's website. Comments and suggestions on the report have been invited till November 19. 
 
Image credit: Indiatimes

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