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Both fiscal and monetary policies are in an accommodative stance and are working in close symmetry at the moment, according to Reserve Bank of India (RBI) Governor Shaktikanta Das.
Das felt that the country is almost at the doorstep of a revival process. In fact, both fiscal and monetary policies are today at the moment counter-cyclical, said Das at the Mumbai release of NK Singh’s book, Portraits of Power .
“As far as the Reserve Bank is concerned, we are already in a monetary expansion mode and, in fact, we have deployed instruments and tools, which are not in the toolkit of the RBI, but we are trying to constantly innovate with new instruments,” emphasised the Governor.
Build capital buffers
Das said the RBI has impressed upon banks and non-banking finance companies (NBFCs) on the need to build up proactively capital buffers.
This will not only strengthen their inherent resilience to tide over the financial stress, if any, but also ensure that credit flow is maintained, especially to support growth in a phase when the economy comes to a revival phase.
“And we are, I think, today in India...We are almost at the doorsteps of revival process. And it is very important that financial entities have adequate capital.
“Many of them have already raised the capital, others both in the publicand private sector, they are planning and they would certainly do so in the coming months,” said Das.
Governance
The RBI Governor observed that governance in banks and financial institutions and NBFCs has become very important.
“Banks, which have robust governance practices, robust internal control systems, robust risk assessment, and which do not undertake a smart accounting, if I can put it that way, I think those banks are the ones that are never over leveraged, and they always survive, not only survive, they grow in every crisis,” he said.
So, therefore, today irrespective of ownership of banks, governance reforms is ownership agnostic.
Governance reforms, in terms of improving the governance practices in banks, the functioning of the boards, the functioning of the CEO, the functioning of the board committees, the risk assessment functions, all that becomes very important both for Indian banks and NBFCs, he added.
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