This is the seventh time in a row that the Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das has maintained status quo. RBI had last revised its policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low.
MPC decided to maintain status quo, that is keeping benchmark repurchase (repo) rate at 4 per cent, Das said while announcing the bi-monthly monetary policy review.
Consequently, the reverse repo rate will also continue to earn 3.35 per cent for banks for their deposits kept with RBI.
Das said MPC voted unanimously for keeping interest rate unchanged and decided to continue with its accommodative stance as long as necessary to support growth and keep inflation within the target.
MPC has been given the mandate to maintain annual inflation at 4 per cent until March 31, 2026, with an upper tolerance of 6 per cent and a lower tolerance of 2 per cent.
Observing that economy is slowly recovery from brief hiatus, the Governor said, some of the high frequency indicators reflect recovery.
Amid the severe second wave of Covid-19 and the lockdowns across states, the RBI has sharply reduced the growth estimate for the April-June quarter to 18.5 per cent. The previous estimate for the period was 26.2 per cent.
The growth projections for Q2, W3 and Q4 of FY 22 has now been kept at 7.9 per cent, 7.2 per cent and 6.6 per cent respectively.
Several banks and rating agencies have off late lower the growth estimate for the current fiscal largely on the back of the economic impact of the lockdowns and the hopes for a double-digit growth now seem to be too ambitious.
Further, the central bank foresees the retail inflation for FY22 at 5.2 per cent.
The central bank has retained its key short-term lending rates along with the growth-oriented accommodative stance during the second monetary policy review of FY22 on Friday.
Accordingly, the Monetary Policy Committee (MPC) of the central bank voted to maintain the repo rate, or short-term lending rate, for commercial banks at 4 per cent.
Likewise, the reverse repo rate was kept unchanged at 3.35 per cent, and the marginal standing facility (MSF) rate and the 'Bank Rate' at 4.25 per cent.
It was widely expected that MPC would hold rates and the accommodative stance.
In his statement post the MPC's decision, RBI Governor Shaktikanta Das said that the MPC is of the view that policy support from all sides would be required to gain growth momentum of the economy.
The decision was taken at the 589th meeting of the Central Board under the chairmanship of RBI Governor Shaktikanta Das, through video conference.
According to the RBI, the Board in its meeting reviewed the current economic situation, global and domestic challenges and recent policy measures taken by the Reserve Bank to mitigate the adverse impact of the second wave of Covid-19 on the economy.
"With the change in the Reserve Bank's accounting year to April-March (earlier July-June), the Board discussed the working of the Reserve Bank of India during the transition period of nine months (July 2020-March 2021) and approved the Annual Report and accounts of the Reserve Bank for the transition period," the RBI said in a statement.
"The Board also approved the transfer of Rs 99,122 crore as surplus to the Central Government for the accounting period of nine months ended March 31, 2021 (July 2020-March 2021), while deciding to maintain the Contingency Risk Buffer at 5.50 per cent."
Speaking at the 49th state-level memorial meet of PrananathPatnaik after his felicitation on the occasion, Das said Indian economy continues to be very strong and resilient.
“Yesterday we announced our monetary policy and we have given out the growth estimate of current year. The growth estimates have been revised downward and notwithstanding the fact that the growth has slowed down, macroeconomic parameters of India remain quite strong,” Das said.
“Whether it is fiscal deficit at 3.3 per cent or the current account deficit at 2 per cent or the inflation which is below the targeted level of 4 per cent or it is the foreign exchange reserve, we have reached the highest level of foreign reserve of about 434.6 billion USD. In several other parameters, Indian economy continues to be very strong and resilient,” the bureaucrat from Odisha said.
“We are quite confident that the Indian economy will be able to overcome the current slowdown and comeback to a high growth trajectory in the coming months and years,” he added.
Das said the measures have been taken by the government over the last six months after the budget including the deduction of corporate tax and the measures taken by the RBI in reducing interest rate by 135 basis points over the last seven months has kept the overall system surplus with liquidity.
“In this kind of environment, we do expect the interest rates to come down. With the measures taken by the government and RBI, I think India should be in a position to revive its growth,” Das added.
Speaking about late freedom fighter Prananath Patnaik, he said, “The commitment ofPatnaikto fight poverty, to help the weaker section of society is an inspiration for all of us. With that kind of inspiration, we all should be dedicated for the cause of the nation, in doing good for the people especially the poorer section of the society.”
He also hoped for the US-China truce on trade tariffs, announced over the weekend, would last as he pitched for coordinated efforts to push global growth like those after the 2008 financial crisis.
The comments from Das come following a series of five consecutive rate cuts by RBI starting February this year by a cumulative 1.35 per cent.
Both the government and RBI have acted in time. And I can say with regard RBI, we have acted a little bit ahead of time in terms of reducing our policy rates. As early as February this year, the RBI saw that there is a growth slowdown, we saw that momentum for the slowdown is building up, so we started cutting rates this year, he said.
Speaking at the India Economic Conclave organised by the Times Group, he said at that in February, the market was surprised with the RBI's call. He wondered why is it surprised market participants now also with a pause call.
In the last MPC meeting when we took a pause, I don't know why the market was surprised. February, I was told that the markets were surprised, but subsequently, I'm happy and thank all of you for accepting that it was a right call to take.
"This time the call that we've taken, I do hope that the events will unfold in a manner which will prove that the MPC decision was right, he said.
(PTI)
The Reserve Bank of India (RBI) in its sixth bi-monthly monetary policy pegged GDP growth for FY21 at 6 per cent but guided towards an uncertain inflation outlook.
In a January 31 release, the National Statistical Office (NSO) had revised down real GDP growth for FY19 to 6.1 per cent from 6.8 per cent provided in the provisional estimates of May 2019. Given this, the central bank noted that the economy is still plagued by deep output gaps.
"The RBI has several instruments to address the sluggishness in the growth momentum," Das told reporters at the customary post-policy conference.
The monetary policy committee (MPC) kept the policy repo rate unchanged at 5.15 per cent, continuing with the accommodative stance to revive growth.
The governor said the continuity in policy from last pause should not be read as a pointer to future actions. "While the decision is as per expectations, it is important not to discount RBI," he said.
(PTI)
The Union Budget earlier this month raised the fiscal deficit target to 3.8 per cent of the GDP for 2019-20, from the 3.3 per cent pegged earlier, due to revenue shortage.
"The direct inflationary impact of any budget is fiscal deficit number, when borrowing goes up, but the government has adhered to the principle of fiscal prudence. The 'escape clause' under FRBM Act, the deficit number in the current year as well as the next year are very much within the parameters set as per FRBM committee recommendations," Das said.
He was talking to reporters after the customary address of the finance minister to the central board of RBI post budget.
The government has utilised 'escape clause' under the Fiscal Responsibility and Budget Management (FRBM) Act, which allows the Centre to breach its fiscal deficit target by 0.5 percentage points at times of severe stress in the economy, including periods of structural change and when growth falls sharply.
"The good part of the government borrowing is also budgeted to come from small savings. Therefore, I don't see much of an inflationary impact. Declining crude prices has definitely positive impact on inflation...The main reason for spike in inflation is because of food inflation, mostly milk, fish, and various protein related items. Core inflation has slightly edged up because of revision of telecom tariffs," he said.
Retail inflation based on consumer price index (CPI) soared to a near six-year high of 7.59 per cent in January, surpassing the Reserve Bank of India's comfort range primarily on account of rising vegetable and food prices.
This was the highest rate of inflation since May 2014, when it came in at 8.33 per cent.
Similarly, wholesale prices-based inflation accelerated to a 10-month high of 3.10 per cent in January mainly due to costlier food articles, particulary onion and potato.
On inclusion of core inflation in the monetary policy framework, Das said, "Internally we are reviewing, we are analysing how MPC framework has worked over the last 3.5 years. There is already an internal review process going on. At the appropriate time if required we will have dialogue and discussion with the government. At the moment, it is under review within the RBI."
Asked if the board considered payment of interim dividend to the government, the governor was non-committal and said if any decision is taken, it will be made public.
"For greater transparency we are uploading minutes of RBI's central board meeting. If any decision is taken, it will be uploaded on the website," he said.
On moderating credit growth, Das said there are signs of uptick and the momentum is gathering pace.
The flow to commercial sector is seen rising from October till now and credit flow from all sources -- banks, domestic market and external commercial borrowing -- has improved to Rs 7.5 lakh crore, he said, adding nearly Rs 6 lakh crore flow has happened between October and January to the commercial sector.
"Within that if you look at bank credit to the commercial sector, it was actually a negative growth at the end of September by about Rs 1.3 lakh crore or so. Now it is plus Rs 2.7 lakh crores, the latest number we have at the end of January. So this is within the total number I mentioned," he said.
The momentum is gathering pace, he said, adding "credit flow is slowly and steadily reviving and thanks to the various measures announced in the budget and in the run up to the budget by the government and the reserves, which the RBI has announced, we do hope and we do expect the credit flow to improve in the coming months."
Replying to a question on alignment of RBI's accounting year with financial year, Das said, "It is under consideration, you'll hear very shortly on that."
RBI follows the July-June accounting year.
(PTI)
Only a couple of sectors in India are likely to see some disruptions but alternatives are being explored to overcome those issues, he said.
The deadly virus has brought a large part of the world's second-largest economy China to a standstill and its impact has been felt across industries.
India's pharmaceutical and electronic manufacturing sectors are dependent on China for inputs and they may be impacted, Das told PTI in an interview here.
"It is definitely an issue which needs to be closely monitored by every policymaker whether in India or any other country. Every policymaker, every monetary authority needs to keep a very close watch. So coronavirus issue needs to be closely watched," he said.
A similar problem, perhaps on a lower scale, occurred last time during the outbreak of Severe Acute Respiratory Syndrome (SARS) in 2003, he said adding that the Chinese economy had slowed down by about 1 per cent during that time.
At the time of SARS outbreak, China was the sixth-largest economy and accounted for only 4.2 per cent of the world's GDP. While, the Asian giant is now the world's second-largest economy, accounting for 16.3 per cent of the global GDP, therefore, any slowdown in the Chinese economy would impact the global economy.
The RBI governor said that the coronavirus outbreak appears to be larger than SARS and this time China's share in world GDP and world trade is much higher. "So, the coronavirus will definitely have an impact on the global GDP and global trade," he said adding that every major economy today will have to be very careful and must monitor the situation closely.
For India, China is an important trading partner and policymakers both in the government and the monetary authority "are very watchful of the developments that are taking place," he said.
If the Chinese authorities are able to contain the problem, the impact on the global economy and on India will be minimised, Das said.
On the impact on India, he said the pharmaceutical sector is sourcing raw materials from China.
"Most of the large pharma companies, according to information that we have, always keep stock for three-four months. So, therefore, they should be able to manage and also those provinces from where these pharma intermediates are sourced have not been impacted by the virus outbreak. Therefore, there is an expectation that the supply of pharma raw materials will be maintained," he said.
The other areas where India is dependent on China is mobile handsets, TV sets and certain other electronic products. "There again it is important that our manufacturers are able to develop alternative places of sourcing these raw materials."
"So, I think there is evidence that already our manufacturers are discussing with other countries in the Asian region. So, if they are able to quickly access raw materials from these other countries, then to that extent the problem on our manufacturing will be contained," he said.
He noted that the critical thing to be watched and monitored now is how quickly Chinese authorities are able to contain the problem. For India, he said, the important aspect is manufacturer should be able to quickly develop alternative sources.
India exports iron ore to China and it could be impacted, he said. "But in economics, something negative in one place always works positive elsewhere. So if your iron ore exports are impacted, then perhaps the raw material supply to our local domestic steel manufacturers will be at reduced costs. So their cost of production may go down."
Das said Coronavirus is a big human tragedy and the focus has to be on containing this menace.
China's GDP has risen dramatically since SARS outbreak in 2003. In 2002, China contributed 23 per cent to the world GDP growth, in 2019 China contributed an estimated 38 per cent of world growth.
The 11 Chinese provinces have announced an extended holiday period.
Meanwhile, the death toll from the coronavirus epidemic in China crossed the 2,000-mark on Wednesday with the death of 136 more people, while the overall confirmed cases climbed to 74,185, authorities said.
(IANS)
A day after Finance Minister Nirmala Sitharaman released Rs 1.7 lakh crore package for the poor and the vulnerable group to combat the impact of the 21-day coronavirus lockdown, Reserve Bank of India (RBI) today cut repo rates by 75 basis points to 4.4%.
Major decisions announced by the @RBI Monetory Policy Committee (MPC) today. pic.twitter.com/2GikiOPVVX
— NSitharamanOffice (@nsitharamanoffc) March 27, 2020
Allaying fears in the minds of people following volatility in the markets, Das said that depositors need not worry about their money in banks as 'Indian banks are safe and sound.’
Also Read: Janta Curfew, Lockdown Blow: Covid-19 India Growth Curve Tumbles Down!
"In the recent past, COVID-19 related volatility in stock market has impacted share prices of banks as well, resulting in some panic withdrawal of deposits from a few private sector banks. It would be fallacious to link share prices to the safety of deposits. Depositors of commercial banks including private sector banks need not worry about the safety of their funds," said Das.
Meanwhile, Prime Minister Narendra Modi lauded the decision made by the RBI and tweeted, "Today RBI has taken giant steps to safeguard our economy from the impact of the #Coronavirus. The announcements will improve liquidity, reduce cost of funds, help middle class and businesses."
Today @RBI has taken giant steps to safeguard our economy from the impact of the Coronavirus. The announcements will improve liquidity, reduce cost of funds, help middle class and businesses. https://t.co/pgYOUBQtNl
— Narendra Modi (@narendramodi) March 27, 2020
Responding to RBI’s policy decisions, FM Nirmala Sitharaman said, "Welcome RBI Governor’s statement-the macroeconomic fundamentals of the Indian economy are sound, and in fact stronger than what they were in the aftermath of the global financial crisis of 2008-09.”
Also welcome @RBI governor @DasShaktikanta’s statement: “The macro economic fundamentals of the Indian economy are sound, and in fact stronger than what they were in the aftermath of the global financial crisis of 2008-09.” And his timely reminder to #StayCleanStaySafeGoDigital.
— Nirmala Sitharaman (@nsitharaman) March 27, 2020
Read More: COVID-19 Outbreak: G20 Announces $5 Trillion To Deal With Coronavirus Crisis
"Our mission is to do whatever it takes to flatten the epidemiological curve of the coronavirus pandemic. RBI has been proactive and closely monitoring the evolving situation. It has been coming out with a slew of announcements to fight the virus," said RBI Governor Shaktikanta Das while addressing a press conference today.
Das said in order to encourage banks to deploy the surplus funds in investments and loans in productive sectors of the economy, it has been decided to reduce the fixed-rate reverse repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 4 percent to 3.75 percent with immediate effect.
The reverse repo rate is the rate banks earn by parking deposits with the RBI.
"The policy repo rate remains unchanged at 4.4 percent, and the marginal standing facility rate and the bank rate remain unchanged at 4.65 percent," he said.
"Cumulative losses to global GDP in 2020 and 2021 at the US $9 trillion, worst global recession ever since The Great Depression. IMF projection of 1.9% GDP growth for India is highest in G20. India is among the handful of countries that are projected to strenuously stick to growth trajectory amid COVID-19. India is expected to post a sharp turnaround in 2020-21," added Das.
States such as West Bengal, Telangana, #Odisha, Assam, Karnataka & Chhattisgarh are leading in sowing activities despite the #lockdown: RBI Governor Shaktikanta Das#IndiaFightsCorona #Covid_19 #Covid19India pic.twitter.com/NAsOFwPL8V
— OTV (@otvnews) April 17, 2020
"India is among the handful of countries projected to register a positive growth rate amid the #Covid_19 crisis. The country is expected to resume its pre-slowdown trajectory by growing at 7.4% in 2021-22. RBI proposes to maintain adequate system liquidity, facilitate and incentivise bank credit flow, ease financial stress," the RBI Governor added.
Surplus liquidity in the banking system has risen significantly in the wake of government spending and the various liquidity enhancing measures undertaken by the RBI, he noted.
TLTROs 2.0 of Rs 50,000 crore to begin now to ease liquidity for mid-sized NBFCs and MFIs (banks have to make 50% of liquidity availed under TLTRO 2.0 towards these sectors): says RBI Governor#IndiaFightsCOVID19 #CoronaUpdatesInIndia pic.twitter.com/Fu6dH9vcs5
— OTV (@otvnews) April 17, 2020
Das also announced special refinance facilities for a total amount of Rs 50,000 crore to Nabard, Sidbi and National Housing Bank (NHB) to enable them to meet sectoral credit needs. To provide greater comfort to the states for undertaking COVID-19 containment and mitigation efforts, the RBI announced a 30 percent increase in the ways and means advances limit.
As part of TLTROs 2.0 of Rs 50,000 crore, Rs 25000 crore will be released to NABARD, Rs 15,000 crore to SIDBI, Rs 10,000 to NHB to provide financial stability in the wake of #CoronavirusPandemic: RBI Governor Shaktikanta Das #Covid_19
— OTV (@otvnews) April 17, 2020
"Payment moratoriums by banks for COVID-19 outbreak can be excluded from the 90-day moratorium period. LCR requirement of Scheduled Commercial Banks will be brought down from 100% to 80% with immediate effect. NBFC loans to commercial real estate projects delayed that can be extended by one more year without treating it as restructuring," stated Das.
It has been decided that in respect of all accounts for which lending institutions decide to grant moratorium or deferment, and which were standard as on March 1, 2020, the 90-day NPA norm shall exclude the moratorium period, i.e., there would an asset classification standstill for all such accounts from March 1, 2020 to May 31, 2020.
Pointing out that RBI is monitoring all macro parameters on a continuous basis, he said, economic activity has come to standstill during the lockdown.
The impact of COVID-19 is not captured in the index of industrial production (IIP) data for February, he said, adding that the contraction in exports in March at 34.6 percent is much more severe than the global financial crisis of 2008-09.
He said vehicle production and sales declined sharply in March and so did electricity consumption.
Appreciating the effort of banks and other institutions in keeping the financial market operational, Das said, there was no downtime of internet or mobile banking during the lockdown and banking operations were normal.
Banks, financial institutions have risen to the occasion to ensure normal functioning during the outbreak of this pandemic, he noted.
Providing relaxation to lenders, Das said banks shall be exempted from making dividend payment in the light of financial difficulties posed by COVID-19.
On the inflation front, he said consumer price index (CPI) based inflation has declined in March and it is expected to further ease. RBI will take advantage of the falling price situation and pass on benefit to borrowers, Das hinted.
"We shall cure, and we shall endure," said Das while concluding the presser.
(With agency input)
Accordingly, the rate now stands at 3.75 per cent of Liquidity Adjustment Facility (LAF). The reverse repo is an important monetary policy tool used by the Reserve Bank to control liquidity and inflation in the economy.
Under the Reverse Repo Rate, banks deposit excess funds with the RBI and ear interest for it. The move is expected to encourage banks to ease lending and investments into the economy.
Announcing the slew of measures via online channels, RBI Governor said that policy repo rate would for now be maintained at 4.4 per cent. Further, he announced other measures such as going in for TLTRO 2.0 and re-financing facilities for critical institutions.
Together these would mean an additional liquidity to the tune of Rs 1 lakh crore with Rs 50,000 crore as TLTRO 2.0 and Rs 50,000 crore refining support to NABARD, NHB and SIDBI.
In terms of liquidity infusion, Das said that RBI will conduct the round two of targeted long-term repo operation (TLTRO) worth Rs 50,000 crore. TLTRO is a loan scheme for banks which come at the current repo rate from the RBI.
This type of operation is generally conducted to relieve the banks from some of their debt repayment obligations towards bondholders. Thus, it boosts cash flows emanating from the banking sector.
"... It has been decided to conduct targeted long-term repo operations (TLTRO 2.0) for an aggregate amount of Rs.50,000 crore, to begin with, in tranches of appropriate sizes," he said.
"The funds availed by banks under TLTRO 2.0 should be invested in investment grade bonds, commercial paper, and non-convertible debentures of NBFCs, with at least 50 per cent of the total amount availed going to small and mid-sized NBFCs and MFIs."
Earlier, the Reserve Bank Governor had said that a fresh TLTRO will be conducted through which Rs 1 lakh crore would be injected through multiple tranches. Besides, RBI announced a 90-day extension for the resolution period for large stressed assets which have not been resolved within the 210-day deadline as per the central bank's June 7, 2019 order.
The RBI Governor also said that NPA classification will exclude the moratorium period. Moreover, in order to ease the liquidity position, the LCR requirement for Banks is being brought down from 100 per cent to 80 per cent with immediate effect.
"The requirement shall be gradually restored back in two phases a 90 per cent by October 1, 2020 and 100 per cent by April 1, 2021," he said.
The apex bank prohibited commercial and cooperative banks from making any further dividend payouts from profits pertaining to the financial year ended March 31, 2020 until further instructions.
Furthermore, the RBI hinted at further cuts in interest rates to maintain adequate liquidity in the system and counter the intensification of risks to growth and financial stability brought on by COVID-19.
Das said that easing of inflationary pressure on the economy and the outlook that it is on a declining trajectory and could fall further "make policy space available to address the intensification of risks to growth and financial stability brought on by COVID-19."
Early developments suggest that inflation is on a declining trajectory, having fallen by 170 basis points from its January 2020 peak.
In the period ahead, inflation could recede even further, barring supply disruption shocks and may even settle well below the target of 4 per cent by the second half of 2020-21, Das said while unveiling second instalment of measures aimed at providing liquidity in the economy and allow credit flows to grow.
"Such an outlook would make policy space available to address the intensification of risks to growth and financial stability brought on by COVID-19. This space needs to be used effectively and in time", he added.
The RBI Governor said that the bank will monitor the evolving situation continuously and use all its instruments to address the daunting challenges posed by the pandemic.
Read: COVID-19 Causes Severe Disruption To Indian Economy, Says World Bank
"The overarching objective is to keep the financial system and financial markets sound, liquid and smoothly functioning so that finance keeps flowing to all stakeholders, especially those that are disadvantaged and vulnerable," Das said
In addition, the RBI Governor cited the IMF projections that has put India among the handful of countries that is projected to cling on tenuously to positive growth (at 1.9 per cent) in 2020.
In fact, this is the highest growth rate among the G-20 economies, Das said that this comes even as the global economy is expected to plunge into the worst recession since the Great Depression, far worse than the global financial crisis.
For 2021, the IMF projects sizable V-shaped recoveries: close to 9 percentage points for the global GDP. India is expected to post a sharp turnaround and resume its pre-COVID pre-slowdown trajectory by growing at 7.4 per cent in 2021-22, he said.
Meanwhile, India Inc welcomed the RBI decisions.
Industry body Assocham's Secretary General Deepak Sood said RBI's several relief measures should help the NBFCs, Housing Finance Companies, small businesses and above all considerably avert the risk of further NPAs.
"The fact that the NPA re-classification norms giving more time to the stressed loans to remain 'standard' are accompanied by the need for higher provisioning by banks shows the prudence path followed by the RBI. Higher provisioning would provide a long-term stability and higher protection to the banks," Sood was quoted as saying in a statement.
According to Mohit Singla Chairman of Trade Promotion Council of India: "Rs 50,000 crore special finance facility provided to financial institutions such as NABARD, SIDBI and NHB will surely help the rural economy which is stressed for funds due to the crisis."
"Additional steps like; 90-day NPA norm not to apply on to the moratorium granted on the existing loans by banks, lowering the reverse repo rate and LCR requirement of banks brought down to 80 percent from 100 per cent, will surely ease pressure on the banking system."
Furthermore, the BSE Sensex soared over 986 points on Friday after RBI's second batch of stimulus measures lifted sentiment amid the coronavirus gloom.
After starting over 1,116 points higher, the 30-share BSE Sensex pared some early gains to end 986.11 points or 3.22 per cent higher at 31,588.72.
Similarly, the NSE Nifty zoomed 273.95 points, or 3.03 per cent, to finish at 9,266.75.
Axis Bank was the top gainer in the Sensex pack, surging 13.45 per cent, followed by ICICI Bank (9.89 per cent), IndusInd Bank (9.13 per cent), Maruti (7.36 per cent), TCS (5.32 per cent), Kotak Bank (4.96 per cent)and Reliance Industries (4.86 per cent).
On the other hand, Nestle India, HUL, Tech Mahindra and Sun Pharma ended in the red, shedding up to 3.15 per cent.
Interest rate-sensitive banking, financial, auto and realty indices on the BSE settled up to 6.83 per cent higher.
In his second televised address since the nationwide lockdown began on March 25, Reserve Bank of India (RBI) Governor Shaktikanta Das pledged to boost liquidity and expand bank credit.
Meanwhile, the Indian rupee appreciated by 45 paise to 76.42 against the US dollar in intra-day trade on Friday after Reserve Bank of India Governor Shaktikanta Das announced measures to ensure adequate liquidity in the system to ease the financial stress caused by the Covid-19 pandemic.
Forex traders said positive domestic equities and weakening of the American currency in overseas also supported the rupee.
At the interbank foreign exchange, the rupee opened at 76.59, and then gained further ground and touched a high of 76.42 against the US dollar, registering a rise of 45 paise over its previous close.
On Thursday, rupee had settled at an all-time low of 76.87 against the US dollar.
Also Read: India Fights Corona: RBI Announces EMI Breather, Injects Rs 3.7L Cr Liquidity
The central bank reduced the reverse repo rate - the rate at which banks park their fund with the central bank - by 25 basis points to 3.75 per cent.
This will encourage banks to lend to the productive sectors of the economy.
With regard to other measures, Das said RBI will begin with giving an additional Rs 50,000 crore through targeted long-term repo operation (TLTRO) to be undertaken in tranches.
As part of TLTROs 2.0 of Rs 50,000 crore, Rs 25000 crore will be released to NABARD, Rs 15,000 crore to SIDBI, Rs 10,000 to NHB to provide financial stability in the wake of #CoronavirusPandemic: RBI Governor Shaktikanta Das #Covid_19
— OTV (@otvnews) April 17, 2020
Besides, he announced a re-financing window of Rs 50,000 crore for financial institutions like Nabard, National Housing Bank and Sidbi.
The combination of measures to boost liquidity, improve monetary transmission and relax repayment schedules is the need of the hour in which RBI has been proactive and repeatedly insisting that they would do whatever it takes.
"Of course this provides much-needed liquidity and positive message for NBFC especially and a much-elaborated stimulus package is awaited," said Abhishek Goenka, Founder & CEO, IFA Global.
The measures undertaken by the RBI boosted investor sentiment. However, there are concerns over the impact of coronavirus outbreak on the domestic as well as the global economy.
As part of TLTROs 2.0 of Rs 50,000 crore, Rs 25000 crore will be released to NABARD, Rs 15,000 crore to SIDBI, Rs 10,000 to NHB to provide financial stability in the wake of #CoronavirusPandemic: RBI Governor Shaktikanta Das #Covid_19
— OTV (@otvnews) April 17, 2020
The number of cases around the world linked to the new coronavirus has crossed over 21 lakh. In India, over 13,000 coronavirus cases have been reported so far.
Meanwhile, domestic bourses were trading on a positive note on Friday with benchmark indices Sensex trading 595.79 points higher at 31,198.40 and Nifty up by 169.45 points at 9,162.25.
Foreign institutional investors (FIIs) remained net sellers in the capital market, as they sold equity shares worth Rs 2,920.36 crore on Thursday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 2.05 percent to USD 28.39 per barrel.
Meanwhile, the dollar index, which gauges the greenback's strength against the basket of six currencies was trading 0.24 percent lower at 99.78.
(With agency inputs)
Making the announcement on the basis of an assessment of the current and evolving macroeconomic situation by the Monetary Policy Committee (MPC) at its meeting today, RBI Governor Shaktikanta Das said the reverse repo rate has been reduced to 3.35 per cent from 3.75 per cent.
The repo rate cut by 40 basis points from 4.4 % to 4%. Reverse repo rate stands reduced to 3.35%: Reserve Bank of India (RBI) Governor Shaktikanta Das pic.twitter.com/bjxWjWX9Gj
— OTV (@otvnews) May 22, 2020
Global rate inexorably headed to recession. Interest rate reduced by 40 basis points. The rate is down from 4.4% to 4%: RBI Governor Shaktikanta Das pic.twitter.com/bsA3iGQrRE
— OTV (@otvnews) May 22, 2020
The MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target.
These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.
RBI Governor Shaktikanta Das today said domestic economic activity has been impacted severely by the lockdown which has extended over the past two months. High frequency indicators point to a collapse in demand beginning March 2020 across both urban and rural segments. Electricity consumption has plunged, while both investment activity and private consumption suffered precipitous declines, as reflected in the collapse in capital goods production and the large retrenchment in the output of consumer durables and non-durables in March.
High frequency indicators of service sector activity such as passenger and commercial vehicle sales, domestic air passenger traffic and foreign tourist arrivals also experienced sizable contractions in March. The only silver lining was provided by agriculture, with the summer sowing of rice, pulses and oilseeds in the country progressing well, with total area sown under the current kharif season up by 43.5 per cent so far, and the rabi harvest promising to be a bumper as reflected in record procurement, the RBI Governor said in his briefing.
Reverse repo rate down, at 3.5%. Domestic demand has collapsed, economic activity severely affected due to 2-month lockdown. Industrial production shrank by close to 17% in March with manufacturing activity down by 21%. Output of core industries contracted by 6.5%: RBI Governor pic.twitter.com/XFs1xX9hTh
— OTV (@otvnews) May 22, 2020
Headline inflation may remain firm and ease in second half of the year. It is expected to fall in Q3 and Q4 below target of 4%
India seeing collapse of demand; electricity, dip in petroleum product consumption; fall in private consumption
-- RBI Governor Shaktikanta Das pic.twitter.com/zu8aBU3lMF
— OTV (@otvnews) May 22, 2020
Agricultural sector has offered a ray of hope. It is because of the forecast of normal monsoon: RBI Governor Shaktikanta Das
— OTV (@otvnews) May 22, 2020
Retail inflation, measured by the consumer price index, moderated for the second consecutive month in March 2020 to 5.8 per cent after peaking in January. This was mainly due to food inflation easing from double digits in December 2019 – January 2020.
In April, however, supply disruptions took a toll and reversed the softening of food inflation, which surged to 8.6 per cent from 7.8 per cent in March. Prices of vegetables, cereals, milk, pulses and edible oils and sugar emerged as pressure points1.
The Reserve Bank remained in pro-active liquidity management mode, expanding its array of measures, both conventional and unconventional, to augment system-level liquidity as also to channel liquidity to specific sectors facing funding constraints. Systemic liquidity remained in abundance, with average daily net absorptions under the liquidity adjustment facility (LAF) increasing to ₹5.66 lakh crore in May 2020 (up to May 20) from ₹4.75 lakh crore in April. During 2020-21 (up to May 20), ₹1,20,474 crore was injected through open market operation (OMO) purchases and ₹87,891 crore through three targeted long-term repo operation (TLTRO) auctions and one TLTRO 2.0 auction.
In order to distribute liquidity more evenly across the yield curve, the Reserve Bank conducted one ‘operation twist’ auction involving the simultaneous sale and purchase of government securities for ₹10,000 crore each on April 27, 2020.
Furthermore, the Reserve Bank has provided ₹22,334 crore as refinance to National Bank for Agriculture and Rural Development (NABARD), Small Industries Development Bank of India (SIDBI) and National Housing Bank (NHB) so far (as on May 21, 2020) and ₹2,430 crore to mutual funds through a special liquidity facility (SLF) with a view to easing liquidity constraints and de-stress financial markets. Since February 6, 2020 the Reserve Bank has announced liquidity augmenting measures of ₹9.42 lakh crore (4.6 per cent of GDP).
RBI increases maximum period of pre and post shipment credit period to 15 months from 1 year. It will roll over Rs 15,000-crore refinance facility for SIDBI for 90 days and 15,000-crore line of credit to EXIM Bank
--Reserve Bank of India (RBI) Governor Shaktikanta Das pic.twitter.com/yG9A5tgDvd
— OTV (@otvnews) May 22, 2020
In the external sector, India’s merchandise trade slumped in April 2020, with exports shrinking by 60.3 per cent and imports by 58.6 per cent (y-o-y), respectively. While imports contracted in all 30 commodity groups in April, exports contracted in 28 out of 30 groups. The trade deficit narrowed in April 2020 – both sequentially and on a year-on-year basis – to its lowest level in 47 months.
On the financing side, net foreign direct investment inflows picked up in March 2020 to US$ 2.9 billion from US$ 0.8 billion a year ago. In 2020-21 so far (till May 18), net foreign portfolio investment (FPI) in equities increased to US$ 1.2 billion from US$ 0.8 billion a year ago. In the debt segment, however, there were portfolio outflows of US$ 3.8 billion during the same period as compared with outflows of US$ 1.4 billion a year ago.
By contrast, net investment under the voluntary retention route increased by US$ 0.7 billion during the same period. India’s foreign exchange reserves have increased by US$ 9.2 billion in 2020-21 so far (up to May 15) to US$ 487.0 billion – equivalent to 12 months of imports.
The Reserve Bank said that the inflation outlook is highly uncertain. As supply lines get restored in the coming months with gradual relaxations in the lockdown, the unusual spike in food inflation in April is expected to moderate. The forecast of a normal monsoon also portends well for food inflation. Given the current global demand-supply balance, international crude oil prices are likely to remain low although they may firm up from the recent depressed levels. Soft global prices of metals and other industrial raw materials are likely to keep input costs low for domestic firms. Deficient demand may hold down pressures on core inflation (excluding food and fuel), although persisting supply dislocations impart uncertainty to the near term outlook. However, volatility in financial markets could have a bearing on inflation. These factors, combined with favourable base effects, are expected to take effect and pull down headline inflation below target in Q3 and Q4 of 2020-21.
Turning to the growth outlook, economic activity other than agriculture is likely to remain depressed in Q1:2020-21 in view of the extended lockdown. Even though the lockdown may be lifted by end-May with some restrictions, economic activity even in Q2 may remain subdued due to social distancing measures and the temporary shortage of labour.
Recovery in economic activity is expected to begin in Q3 and gain momentum in Q4 as supply lines are gradually restored to normalcy and demand gradually revives. For the year as a whole, there is still heightened uncertainty about the duration of the pandemic and how long social distancing measures are likely to remain in place and consequently, downside risks to domestic growth remain significant. On the other hand, upside impulses could be unleashed if the pandemic is contained, and social distancing measures are phased out faster.
The MPC is of the view that the macroeconomic impact of the pandemic is turning out to be more severe than initially anticipated, and various sectors of the economy are experiencing acute stress. The impact of the shock has been compounded by the interaction of supply disruptions and demand compression. Beyond the destruction of economic and financial activity, livelihood and health are severely affected. Even as various measures initiated by the Government and the Reserve Bank work to mitigate the adverse impact of the pandemic on the economy, it is necessary to ease financial conditions further. This will facilitate the flow of funds at affordable rates and revive animal spirits. With the inflation outlook remaining benign as lockdown-related supply disruptions are mended, the policy space to address growth concerns needs to be used now rather than later to support the economy, even while maintaining headroom to back up the revival of activity when it takes hold.
Accordingly, all members voted for a reduction in the policy repo rate and maintaining the accommodative stance as long as it is necessary to revive growth and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target.
Since the MPC met in March 2020, global economic activity has remained in standstill under COVID-19 related lockdowns and social distancing. Among the key advanced economies (AEs), economic activity contracted in the US, Euro area, Japan and the UK in Q1:2020. Among emerging market economies (EMEs), the Chinese economy went into a pronounced decline and data on high frequency indicators suggest that activity may have also shrunk in other EMEs such as Brazil and South Africa.
Global financial markets calmed after a turbulent period in March, and volatility ebbed as swift and large fiscal and monetary policy responses helped to soothe sentiment. Equity markets recovered some lost ground, while government bond yields remained range-bound, although somewhat elevated in some EMEs due to country-specific factors. Portfolio flows to EMEs revived in April and the rush to safe havens eased. With the US dollar weakening, major EME currencies, which had experienced persistent downward pressure, traded with an appreciating bias. Crude oil prices firmed up modestly as oil producing countries (OPEC plus) agreed to cut production, and prospects for revival in demand improved on expectations of imminent easing of lockdowns. Gold prices remained elevated on hedging demand. CPI inflation remained subdued across major AEs and EMEs primarily due to a collapse in oil prices and compression in demand amidst lockdowns, while food inflation picked up due to supply disruptions.
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Addressing members of industry chamber CII, Das said a big push to certain targeted mega infrastructure projects can spur the economy, as was done by the Golden Quadrilateral project in the past.
"This could begin in the form of a north-south and east-west expressway together with high speed rail corridors, both of which would generate large forward and backward linkages for several other sectors of the economy and regions around the rail/road networks. Both public and private investment would be key to financing our infrastructure investments," he said.
Noting that the progress made on physical infrastructure in the country in the last five years needs to be viewed as no less than a dynamic shift, he said India would need around USD 4.5 trillion for investment in infrastructure by 2030, as per the Niti Aayog.
On financing options for infrastructure, he said non-performing assets (NPAs) relating to infrastructure lending by banks have remained at elevated levels and there is clearly a need for diversifying financing options.
Asked about industry proposals for one-time restructuring of debt and the central bank buying corporate bonds directly, Das said he has noted the suggestions and will take appropriate steps as and when required.
"I can assure you that RBI remains extremely vigilant, we are monitoring the situation, and as and when certain steps are required, we will not hesitate to take those steps...you are aware about the way the RBI intervened, to support the mutual fund industry and the RBI will always be proactive...as and when whatever steps are required we are prepared to consider," Das said.
Reflecting on some other dynamic shifts underway in the Indian economy, Das said Indian agriculture has witnessed a distinct transformation and the total production of foodgrain reached a record 296 million tonnes in 2019- 20, registering an annual average growth of 3.6 per cent over the last decade.
"Shifting the terms of trade in favour of agriculture is the key to sustaining this dynamic change and generating positive supply responses in agriculture. Experience shows that in periods when terms of trade remained favourable to agriculture, the annual average growth in agricultural gross value added (GVA) exceeds 3 per cent," he said.
Lauding long-pending reforms undertaken by the government in the farm sector recently, he said all these initiatives have opened a whole new world of opportunities for industry and businesses and the consequential creation of jobs and augmentation of farmers' income can be enormous.
These achievements represent the most vivid silver lining in the current environment, Das said, adding the fortunes are shifting in favour of the farm sector in the economy.
Observing that India has now become a power surplus country, exporting electricity to neighbouring nations, the RBI Governor said the share of renewable energy in overall installed capacity has doubled to 23.4 per cent at end-March 2020 from 11.8 per cent at end-March 2015.
"This spectacular progress has set the stage for India targeting to scale up the share of renewable energy in total electricity generation to 40 per cent by 2030. The shift to greener energy will reduce the coal import bill, create employment opportunities, ensure sustained inflow of new investments and promote ecologically sustainable growth," he said.
The Governor further said information and communication technology (ICT) has been an engine of India's economic progress for more than two decades now.
Last year, the ICT industry accounted for about 8 per cent of the country's GDP and was the largest private sector job creator across both urban and rural areas.
In 2019-20, software exports at USD 93 billion accounted for 44 per cent of India's total services exports and financed 51 per cent of the country's merchandise trade deficit during the last five years.
Besides, he said, the 'Startup India' campaign recognised the potential of young entrepreneurs and provided them a conducive ecosystem.
"This has also helped to strengthen India's position as an innovation hub, with several startups attaining unicorn status (USD 1 billion valuation). India added seven new unicorns in 2019, taking the total count to 24, the third largest in the world," he said.
Globally, the regulatory uncertainty relating to work permits and immigration policies may also amplify and the sector has to also deal with concerns relating to data privacy and data security, Das noted.
He also expressed hope that global shifts in Global Value Chains (GVCs) in response to COVID-19 and other developments will create opportunities for India.
"Besides focusing on diversifying sources of imports, it may also be necessary to focus on greater strategic trade integration, including in the form of early completion of bilateral free trade agreements with the US, EU and UK," he said.
"These dynamic shifts in our economy need to be converted into structural transformations which yield sizable benefits for our economy and help to position India as a leader in the league of nations.
"They involve testing challenges but also the reaping of significant rewards. Indian industry will have the pivotal role in what could be a silent revolution. Can the CII be its spearhead? I leave you with these ideas and dare you to dream," he said.
(PTI)
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Indian economy contracted 23.9 per cent in the first quarter of the current financial year.
Addressing a virtual conference organised by industry body Ficci, Das said that Gross Domestic Product (GDP) data released by the government was a "reflection of the ravages of the COVID-19".
Observing that the economic recovery was not yet fully entrenched, the RBI Governor said recovery is likely to be gradual.
"The recovery is, however, not yet fully entrenched and more over in some sectors the optics which was noticed in June and July, they appear to have levelled off... by all indications, the recovery is likely to be gradual as efforts towards reopening of the economy are confronted with increasing infections," he said.
As per government data, GDP during the April-June quarter contracted 23.9 per cent on account of the strict lockdown imposed by the government towards end of March to check the spread of coronavirus infections.
In his address, Das spoke about the initiatives taken by the central bank to ease the liquidity situation and make available funds to the businesses impacted by the pandemic and subsequent lockdowns.
The Governor also assured the industry that "RBI is battle ready... whatever measures are required will be taken by the RBI" to help the industry and businesses to come out of the COVID-19-induced crisis.
Further, he asked businesses to capitalise on the new opportunities created by the pandemic at the global level.
(PTI)
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The benchmark repurchase (repo) rate has been left unchanged at 4 per cent, Governor Shaktikanta Das said said while announcing the decisions taken by the central bank’s Monetary Policy Committee (MPC).
“It also unanimously decided to continue with the accommodative stance as long as necessary to sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward,” he said.
Consequently, the Marginal Standing Facility (MSF) rate and the bank rate remain unchanged at 4.25 per cent. The reverse repo rate will also continue to earn 3.35 per cent for banks for their deposits kept with RBI.
This is the first bi-monthly meeting of MPC in the current financial year and after the government’s recent mandate to maintain annual inflation at 4 per cent with an upper tolerance of 6 per cent and a lower tolerance of 2 per cent for another five years.
The central bank has retained growth projection of 10.5 per cent for the current financial year as was estimated in its February bi-monthly policy.
MPC saw inflation edging up to 5.2 per cent in the first half of the new fiscal from 5 per cent in the January-March period and moderate to 4.4 per cent in Q3 of FY22.
The governor said MPC unanimously voted for keeping interest rate unchanged and decided to continue with its accommodative stance to support growth.
This is the fifth time in a row that MPC has decided to keep the policy rate unchanged. RBI had last revised its policy rate on May 22, 2020 in an off-policy cycle to perk up demand by cutting interest rate to a historic low.
The central bank had slashed the repo rate, the rate at which banks borrow from the RBI, by 115 basis points between March and May 2020 to support growth.
Retail inflation rose to a three-month high of 5.03 per cent in February mainly on account of higher food prices. The Consumer Price Index (CPI) based retail inflation stood at 4.06 per cent in January. At the same time, a fresh wave of COVID-19 has resulted in over 90,000 cases per day and the situation has led to localised lock-down impacting economic activities.
To provide clarity over its bond buying programme through Open Market Operations (OMO), Das announced Rs 1 lakh crore target for the first quarter under the new instrument called G-sec acquisition programme or G-SAP 1.0.
The first purchase of government securities for an aggregate amount of Rs 25,000 crore under G-SAP 1.0 will be conducted on April 15, 2021.
He assured that RBI is committed to ensuring ample system liquidity in consonance with the accommodative stance of MPC.
“When I say ample liquidity, I mean a level of liquidity that would keep the system in surplus even after meeting the requirements of all financial market segments and the productive sectors of the economy,” he said.
The Reserve Bank will of course continue to do whatever it takes to preserve financial stability and to insulate domestic financial markets from global spillovers and the consequent volatility, Das added.
To provide additional liquidity to states, RBI has decided to accept the recommendations of an Advisory Committee constituted by it to review the Ways and Means Advance (WMA) limits for State Governments/UTs and other related issues.
Accordingly, it has been decided to enhance the aggregate WMA limit of states and UTs to Rs 47,010 crore, an increase of about 46 per cent from the current limit of Rs 32,225 crore which was fixed in February 2016.
“Further, it has also been decided to continue the enhanced interim WMA limit of Rs 51,560 crore granted by RBI due to the pandemic for a further period of six months i.e. up to September 30, 2021,” he said.
Das further said that to nurture the still nascent growth impulses, it is felt necessary to support continued flow of credit to the real economy.
Accordingly, liquidity support of Rs 50,000 crore for fresh lending during 2021-22 will be provided to All India Financial Institutions (AIFIs).
He announced that Rs 25,000 crore will be provided to NABARD, Rs 10,000 crore to NHB and Rs 15,000 crore to SIDBI.
It is to be mentioned here that special refinance facilities of Rs 75,000 crore were provided to AIFIs during April-August 2020.
The central bank also announced relaxation in the period of parking of External Commercial Borrowing (ECB) proceeds in term deposits.
The benchmark repurchase (repo) rate has been left unchanged at 4 per cent, Governor Shaktikanta Das said while announcing the decisions taken by the central bank's Monetary Policy Committee (MPC).
Consequently, the reverse repo rate will also continue to earn 3.35 per cent for banks for their deposits kept with RBI.
He said MPC voted for keeping interest rate unchanged and decided to continue with its accommodative stance to support growth.
The central bank had slashed the repo rate by 115 basis points since late March 2020 to support growth.
This is the fourth time in a row that MPC has decided to keep the policy rate unchanged. RBI had last revised its policy rate on May 22 in an off-policy cycle to perk up demand by cutting interest rate to a historic low.
The 27th meeting of the rate-setting MPC with three external members -- Ashima Goyal, Jayanth R Varma and Shashanka Bhide -- began on February 3. This is the first meeting of the rate setting panel after the Budget 2021-22, announced this week, projected a nominal GDP growth rate of 14.5 per cent and a fiscal deficit of 6.8 per cent for the financial year beginning April 1.
The government moved the interest rate setting role from the RBI Governor to the six-member MPC in 2016. Half of the panel, headed by the Governor, is made up of external independent members.
MPC has been given the mandate to maintain annual inflation at 4 per cent until March 31, 2021, with an upper tolerance of 6 per cent and a lower tolerance of 2 per cent.
The economic revival will continue "unabated", Das said, asserting that there is no need for a downward revision of RBI's 10.5 per cent GDP growth forecast for FY22.
Speaking at Times Network's India Economic Conclave, Das said, "We have 'insurance' to protect economic revival like a fast-paced vaccination drive, greater ability among people to follow COVID protocols", and one does not see lockdowns as well.
"The renewed surge in COVID cases in many parts of the country is a matter of concern," the governor said.
"I would feel that the revival of economic activity, which has happened, should continue unabated going forward. My understanding and our preliminary analysis shows that the growth rate next year the 10.5 per cent which we had given would not require a downward revision," he added.
It can be noted that India reported over 50,000 new COVID-19 infections on Wednesday with states like Maharashtra reporting newer highs, and a new strain of virus has also been found.
Some pockets of the country have already resorted to stricter lockdowns in the face of the rising infections. It can be noted that a nationwide lockdown last year led to a deep economic impact and the GDP is set to contract by over 7 per cent in FY21.
"...at this point of time, one does not forsee a kind of lockdown that we experienced last year. Last year, it came as a huge shock," Das said.
The governor affirmed the central bank's commitment to use all its policy tools to facilitate the economic revival from the debilitating impact of the pandemic while ensuring price and financial stability.
It can be noted that after deep rate cuts initially, the RBI has been focusing on a slew of measures uncharacteristic policy measures to help the economic revival as inflation its primary objective became into a point of concern.
Das declined to comment on the inflation trajectory he sees going ahead, asking everybody to wait for the resolution of the Monetary Policy Committee early next month which will have the RBI's outlook.
On the future of the 'V-shaped' growth recovery, he made it clear that the RBI had never used any alphabet to denote the recovery but came out with a number, which is being maintained.
When asked about the bond market, Das said the central bank and the market are in no fight and added that the relationship should be non-combative. He, however, added that the RBI would like for an orderly evolution of the yields curve and no sudden spikes.
The RBI does not want excessive volatilities in the forex market and has been accumulating reserves to protect against the possible impact of the withdrawal of the stimulus measures in advanced economies, Das said.
At present, India's forex reserves are sufficient to cover for 18 months of imports but there is no level of the reserves which the RBI is tracking, Das said, committing to keep the rupee stable.
Das said in the year of the pandemic, India processed 274 crore direct benefit transfer transactions to help the pandemic-affected population.
He said real time gross settlement (RTGS), which is used to transfer large sums of money, has multi-currency capabilities and there is also a scope to explore if its footprint can be expanded beyond the country.
Das said there are no differences with the government over cryptocurrencies and the RBI has conveyed major concerns on the same to the government, which will eventually take a decision on the matter.
Financial sector stability is a major cause of worry which is being assessed as the RBI works on the central bank's digital currency, he said.
Das affirmed that the RBI does not wish to hurt innovation done by the financial technology players and will keep its regulations in sync with their work.
When asked about the budget proposal to privatise two state-run lenders, Das said there had been discussion between the Mint Street and North Block before the budget and after it as well, and added that the process is moving ahead.
The RBI sees the banking landscape divided into four in the future, which will include a few large banks having a pan-India and also foreign presence, some mid-size lenders, small sized banks and the last category will be digital players, he said.
Maintaining health of the banking sector with a strong capital base and ethics-driven compliance culture remains a policy priority for the RBI, he said, adding that the RBI has taken a slew of measures to improve governance at the urban cooperative banks.