Categories: Business

RBI Governor fears, NPA and capital erosion will increase due to Coronavirus epidemic

Photo: ANI

Coronavirus pandemic will result in high NPAs and capital erosion, says RBI Governor

Mumbai. Reserve Bank of India Governor Shaktikanta Das, while addressing the 7th SBI Banking and Economic Conclave on Saturday, said the country may see an increase in non-performing assets (NPAs) and capital erosion due to the Corona virus epidemic. He said that the Reserve Bank of India has taken several steps to preserve our economic system, support the economy in the current crisis.

RBI Governor Das said that development is the first priority for RBI and financial stability is equally important. He said that the RBI has strengthened its offsite monitoring mechanism to identify emerging risks. Das informed that RBI is in talks with all stakeholders to find a solution for the PMC cooperative bank. The policy measures of the RBI for the medium term will have to carefully assess what the crisis takes.

The central bank governor said the corona virus epidemic would increase NPAs and erode capital. Therefore, this time is crucial for raising capital, preparing buffers, ensuring credit flow and strengthening the financial system. Das said that with the removal of the lockdown ban, signs of the Indian economy returning to normal are beginning to show. Indian companies and industries have done better in times of Corona virus crisis.

Das said that a statutory, empowered infrastructure system is needed to deal with property trapped under pressure. He said that the MPC has reduced the policy repo rate by 115 basis points. The RBI has cut the repo rate by 250 basis points since February 2019.

Reserve Bank Governor Shaktikanta Das said that there are signs of returning to normalcy of Indian economy. Activities have increased after the various restrictions imposed under lockdown were relaxed. However, he said that it is still uncertain when the supply chain will start fully. How long it will take for the demand situation to return to normal and how long this epidemic leaves an impact on our potential growth remains to be seen.

The RBI governor said that the need of the hour is to restore confidence, maintain financial stability, regain economic growth and move forward with strength.

This post was published on July 11, 2020 1:19 pm

Content Team

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