Das Shaktikanta
Photographer: Kanishka Sonthalia / Bloomberg
Photographer: Kanishka Sonthalia / Bloomberg
Emerging markets need to build foreign repositories as buffers against outside hits even at risk of being added to the U.S. Treasury’s money-handling watchlist, Reserve Bank of India Governor Shaktikanta Das said.
Das’s comment at Saturday’s speech comes a month after the Treasury Department of the South Asian country added to the watchlist announcing India’s “significant” trade surplus with the US and the purchase of a “stable” currency. ”During the year to June.
India’s rupee was the worst player in Asia last year, as the central bank opposed relentless foreign investment by buying dollars that have pushed the country’s investment to $ 586 billion. That is catching up with Russia, which has the fourth largest stock in the world.
In his speech the regulator also stressed the need for rapid increase in capital buffers of Indian lenders and strengthening risk management systems.
An RBI thrush is looking for “primary causes of vulnerability rather than symptoms,” Das said in a reminder speech on ‘Towards stable financial system. ‘
The RBI warned that pressure in the banking system could rise once it withdraws specific measures aimed at improving cash flow to cash-strapped companies, it said earlier this month. The central bank also said it expects non-performing funds to rise to 13.5% of total returns by the end of September, one of the highest rates among major economies, from 7.5% a year on back.
Read about RBI’s warning on financial sustainability
Indian lenders entered the epidemic already weakened by a two-year shadow banking crisis exacerbated by asset quality, which slowed credit growth and a capital downturn. The outbreak of the coronavirus is followed by one of the world’s harshest lockouts of millions of job losses and the closure of industries.
Read about the RBI’s promise to bankers to stand up
In response, the RBI has adopted unprecedented measures, including a loan repayment moratorium that ended in August, followed by a two-year debt restructuring program. However, the measures have made it difficult to assess the extent of the loan problem.