“It is very important that financial institutions have adequate capital (to support growth),” he said. Many of them have already raised capital and others are planning, he mentioned, adding that they certainly would in the coming months.
Both fiscal and monetary policy were countercyclical and accommodative, both working in close symmetry, added the RBI chief.
The fiscal measures taken by the government to face the pandemic have so far been well calibrated and prudent, Das said. “The central government has provided prudent measures to provide financial support to the weakest sectors and small businesses,” he said.
“I think that after COVID, once the pandemic is contained, the government will certainly have to detail a fiscal roadmap that India should adopt,” he added.
On the stress in the banking sector and NBFC, the RBI governor said: “We need to create a capital buffer for banks, NBFC to deal with the stress caused by COVID-19.”
Das spoke at the launch of the book ‘Portraits of Power: Half a Century of Being on Ringside’, written by former bureaucrat and current Finance Commission Chairman NK Singh.
To prevent the spread of the virus in the country, the central government imposed a nationwide lockdown in the last week of March. As a result, the economy contracted by a record 23.9% during April-June.
The Indian economy is projected to contract 10.3% this year, according to a forecast from the International Monetary Fund (IMF). The Reserve Bank of India expects the economy to contract 9.5% in the current financial year.
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