Keep strengthening balance sheets, Das tells private banks
MUMBAI: Reserve Bank of India (RBI) governor Shaktikanta Das on Tuesday urged the heads of a select group of private sector banks to continue strengthening their balance sheets proactively.
The call comes barely a week after he met heads of stateowned banks. Going by statements issued on Tuesday and on May 19, he discussed near-identical issues with both sets of bankers. His call on balance sheets comes amid the second wave of the covid-19 pandemic, which has presented another round of asset quality concerns for banks.
A stronger and a more resilient balance sheet, thus, will be able to better withstand shocks emanating from the pandemic. Moreover, a stronger balance sheet also ensures that banks continue to lend despite challenges and do not choke the flow of credit in the economy.
Das met chief executives of select private sector banks by video conference on Tuesday. The meeting was also attended by deputy governors M K Jain, M Rajeshwar Rao, Michael D Patra and T Rabi Sankar, the central bank said. “In his opening remarks, the governor recognized the crucial role played by the private sector banks as important stakeholders in the Indian banking sector,” the statement said.
Other matters discussed were: an assessment of current economic situation and the state of the banking sector; credit flows to different segments of the economy, particularly to small borrowers; progress in the implementation of covid resolution framework 1.0; monetary policy transmission and liquidity scenario; and implementation of various RBI policy measures. “He impressed upon the banks to quickly and swiftly implement the measures announced by the RBI on May 5 in right earnest. He also advised the banks to ensure continuity in provision of various financial services including credit facilities to individuals and businesses in the face of challenges brought on by the pandemic,” the central bank said.
On May 5, the RBI announced a series of liquidity measures to help banks support the healthcare infrastructure and small borrowers impacted by the second covid wave. Das had said the RBI will make available an on-tap liquidity window of ₹50,000 crore to support healthcare infrastructure and a special three-year special long-term repo operation (SLTRO) of ₹10,000 crore for small finance banks. Stepping in to rescue small borrowers with loans of up to ₹25 crore, the RBI allowed lenders to restructure their debt.