The RBI Governor said the system has sufficient liquidity and the Union Budget has made provisions to ease the NBFC crisis.
By Samrat Sharma
Finance Minister Nirmala Sitharaman and RBI Governor Shaktikanata Das addressed a joint press conference after the customary post-budget meeting on Monday. The event gave glimpses of the positive chemistry between the finance ministry and the central bank. The RBI Governor said the system has sufficient liquidity and the Union Budget has made provisions to ease the NBFC crisis. The FM and the Governor agreed on most of the issues, but both skirted specific questions on the health of the economy. Here are the ten takeaways from the press conference:
1) No immediate fuel price hike
The Budget has proposed the imposition of additional special excise duty of Re 1 per litre and road and infrastructure cess of Re 1 per litre on both petrol and diesel, but this hike will take some time to come into effect.
2) Fuel hike effect to be studied in August
Monetary Policy Committee will study the effect of fuel hike in the next month, says the RBI governor. Sudden hike of Rs 2 per litre may cause instability
3) Bank recap a positive development
The RBI governor praised the recapitalisation of banks with Rs 70,000 crore, calling it a positive development. The banking system has been suffering from low liquidity and has been seeking recapitalisation from the government.
4) NBFCs are being monitored
Shaktikanta Das assured that RBI is monitoring NBFCs based on their size and previous repayment behaviour. He also added that liquidity is a problem in NBFCs now.
5) Surplus liquidity in the system
The RBI governor seemed very sure of the fact that there is surplus liquidity in the system and liquidity is not a problem now. Though, he clarified that he is talking about the system, not NBFCs.
6) No clarification required on the increased tax on FPIs
FPIs have taken a pinch after the taxes have been increased on certain sections of FPIs. Over Rs 3,111 crore has been pulled out from the FPI equity market in just eight days of July, taking cues from the recent uncertainty caused after the budget. But, FM Nirmala Sitharaman denies giving any clarity on it.
7) Board to decide the dividend
RBI dividend will be decided by the board, says Shaktikanata Das. RBI shares almost its entire profit with the government.
8) Fiscal deficit on a positive side
The RBI governor appreciated the improvement in fiscal deficit from 3.4 per cent to 3.3 per cent.
9) Banks to implement NVSP package
Shaktikanata Das insisted on banks to implement National Voters Service Portal (NVSP) package. This may improve the KYC norms and can make the proceedings smoother.
10) Discussion on overseas borrowing
The governor said there will be further discussion with the government on raising part of the overseas borrowing.