India at doorstep of post-Covid recovery; RBI deployed instruments that were not in toolkit, says RBI Guv

Shaktikanta Das said that confident policymakers will be able to overcome challenges due to Covid.

rbi, reserve bank of india, Shaktikanta das, economic recovery
Analysts expect that Reserve Bank of India (RBI) MPC may not slash policy rates this time

RBI Governor Shaktikanta Das today said that Indian is at the doorstep of the revival process. Shaktikanta Das added that confident policymakers will be able to overcome challenges due to Covid and at the moment, both fiscal and monetary policies are accommodative. Speaking about the bank reforms, the RBI Governor further said that governance reforms are most important in the bank and non-bank sectors and the bank governance reforms are ownership agnostic. He underlined that RBI has deployed instruments that were not in the toolkit and it is looking to innovate on instruments to respond to the pandemic. 

In the video conferencing, the RBI Governor hailed the government’s effort amid the pandemic and said that the government has undertaken prudent and well-calibrated measures so far. However, he added that the government will have to spell out a fiscal roadmap post-Covid. He highlighted that both fiscal and monetary policies are counter-cyclical.

Also Read: Coronavirus makes India walk faster than world in these 2 areas; new jobs may flood market soon

In the address today, Shaktikanta Das apprised that he has asked the banks and non-banking financial companies (NBFCs) to build buffers to be more resilient. He added that banks need to boost capital in the coming months. The banks and NBFCs are also asked to take stress tests in the context of Covid. The RBI Governor further said that the central bank has impressed the need to proactively build capital buffers to ensure credit flow is maintained.

Meanwhile, the Reserve bank today announced to conduct ‘On tap Targeted Long-term Repo Operations’ of up to three years tenor for a total amount of up to Rs 1 lakh crore at a floating rate linked to the policy repo rate. Liquidity availed by banks under the scheme has to be deployed in corporate bonds, commercial paper, and non-convertible debentures issued by the entities in specific sectors, over and above the outstanding level of their investments in such instruments as of 30 September 2020. Liquidity availed under the scheme can also be used to extend loans and advances to these sectors.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.