Thursday, June 29, 2023

The economy is recovering well: Governor of the Reserve Bank of India Das


MUMBAI: Shaktikanta Das, governor of the Reserve Bank of India, stated on Wednesday that the Indian economy has experienced a "solid recovery" and is one of the largest economies growing at the fastest rate. He stressed that in the ongoing delicate worldwide climate, policymakers focus on adjusting strategy compromises, keeping up with security, and supporting maintainable development.

The governor stated in the foreword to the Financial Stability Report (FSR) that new risks required a reevaluation of global standards for financial sector regulations. As per the FSR, the proportion of non-performing resources (NPAs) to add up to credits is projected to improve to 3.6% by Walk 2024 under a gauge situation, contrasted with a 10-year low of 3.9% in Walk 2023. A baseline scenario is one in which expectations are met and the macroeconomic situation does not get worse.

However, the RBI cautioned that under medium or severe stress scenarios, the gross NPA ratio of banks, which measures a bank's bad loans, may rise to 4.1% or 5.1% if economic conditions worsen. In any case, the report guaranteed that all banks would have the option to meet the base capital necessities significantly under unfriendly pressure situations.

Das emphasized that financial stability is non-negotiable and that all financial system stakeholders must work to maintain it. He emphasized India's financial sector's resilience and stability, as evidenced by its steady credit expansion, low NPA rates, and adequate capital and liquidity buffers. Das stated that a "twin balance sheet advantage" for growth has been created by consolidating the banking and corporate sectors' balance sheets.

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