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Homechevron_rightIndiachevron_rightCentral Bank can...

Central Bank can consider the idea of bad bank: RBI Governor

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Central Bank can consider the idea of bad bank: RBI Governor
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Shaktikanta Das, Governor of Reserve Bank of India (RBI), indicated that to tackle Non-performing Assets (NPAs) central bank can look into the idea of a bad bank if there is a proposal for it. He was speaking at the Nani Palkhivala Memorial Lecture, on Saturday, on the topic 'Towards a Stable Financial System'. Earlier, Financial Stability Report released by Reserve Bank of India had reported that Gross Non-Performing Assets of banks may increase from 7.5 per cent in September 2020 to 13.5 per cent in September 2021 under the baseline scenario.

He advocated for the need for evolving a prudent and judicious approach towards managing the financial system not only during the pandemic but also in its aftermath. As a way forward from this pandemic, banking and non-banking financial institutions must be combined with good governance and appropriate risk culture in the organisation, he added.

Adequate macro-prudential regulations and anti-systemic risk measures are needed in addition to having substantial capital adequacy for financial institutions. The RBI Governor recognised that lack of such macro measures was evident in the 2008 crisis. However, he observed that the financial instability caused by Covid-19 pandemic is much worse than the 2008 crisis.

"In difficult circumstances, such as the current one, it is important that all stakeholders recognise and partake in their shared responsibility for the collective benefit of the society at large. History is replete with examples of such endeavours in response to difficult situations and that, in essence, has been the story of human progress and modern economies," he underlined.

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TAGS:Economy RBI 
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