Reserve Bank of India (RBI) governor Shaktikanta Das on Saturday said the central bank remains steadfast to take any further measures as may be required to support growth without compromising on financial stability.
Delivering the 39th Palkhivala Memorial Lecture, the governor said the principal objective during the pandemic period was to support economic activity; and looking back, it is evident that policies of the RBI have helped in easing the severity of the economic impact of the pandemic.
“I would like to unambiguously reiterate that the Reserve Bank remains steadfast to take any further measures, as may be necessary, while at the same time remaining fully committed to maintaining financial stability,” he said.
In a bid to maintain financial stability, Das emphasised the need for banks to raise resources in advance as a buffer.
Going ahead, he said, financial institutions in India have to walk a tightrope in nurturing the economic recovery within the overarching objective of preserving long-term stability of the financial system.
The current COVID-19 pandemic related shock will place greater pressure on the balance sheets of banks in terms of non-performing assets, leading to erosion of capital, he said, adding building buffers and raising capital by banks – both in the public and private sector – will be crucial not only to ensure credit flow but also to build resilience in the financial system.
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