{"id":4216,"date":"2020-05-06T17:19:54","date_gmt":"2020-05-06T11:49:54","guid":{"rendered":"http:\/\/yourcareerheights.com\/?p=4216"},"modified":"2020-05-06T17:47:52","modified_gmt":"2020-05-06T12:17:52","slug":"highlights-of-rbi-governor-das-comments-in-an-interview-to-cogencis","status":"publish","type":"post","link":"https:\/\/yourcareerheights.com\/?p=4216","title":{"rendered":"Highlights of RBI Governor Das\u2019 comments in an interview to Cogencis"},"content":{"rendered":"
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In his first media interaction since the nationwide lockdown took effect to contain the spread of COVID-19, Reserve Bank of India Governor Shaktikanta Das told Cogencis\u00a0 on April 27th, 2020 that the central bank is yet to take a view on budget deficit monetisation or private placement of bonds. Mr. Das said even though there is an animated discussion on the subject of the central bank monetising the government's budget deficit amidst the ongoing fight against COVID-19 pandemic, he has not taken a view on the issue.<\/h3>\n

Following are the highlights of Reserve Bank of India Governor Shaktikanta Das' first interview since the beginning of nationwide lockdown announced over a month ago:<\/strong><\/p>\n

* Fiscal measures key to combat economic impact of\u00a0COVID-19
\n* FY21 fiscal gap going beyond 3.5% becomes unavoidable
\n* RBI has not taken a view on\u00a0monetisation\u00a0of government deficit
\n* On issue of\u00a0monetisation, RBI must keep operational realities in sight
\n* On issue of\u00a0monetisation, must preserve RBI's balance sheet strength
\n* Will evaluate alternative funding sources for fiscal deficit
\n* Won't make specific comment on private placement of bonds with RBI
\n* Will take judicious, balanced call if RBI will take bond private placements
\n* On bond private placements, will take judicious call based on situation
\n* Not taken any view on\u00a0COVID\u00a0bonds
\n* Repo rate, as decided by\u00a0MPC, is the\u00a0\"single\"\u00a0policy rate
\n* Repo rate alone conveys the stance of monetary policy<\/p>\n

FISCAL PACKAGE<\/strong>
\n* Government working on economic package to tackle\u00a0COVID-19 impact
\n* Meeting FY21 fiscal gap of 3.5% very challenging
\n* Expect government to take judicious call on fiscal deficit
\n* Expect government to take balanced call on question of fiscal gap
\n* Government took steps to aid vulnerable, disadvantaged sections
\n* GST collections to be significantly impacted by\u00a0lockdown
\n* Can't rule out hit on direct taxes due to\u00a0lockdown
\n* Must\u00a0prioritise\u00a0support steps when deciding fiscal package size
\n* Must\u00a0prioritise\u00a0interventions when deciding fiscal steps size
\n* Fiscal steps must be well targeted to\u00a0optimise\u00a0outcome
\n* Exit strategy for fiscal interventions equally important
\n* Fiscal measures for\u00a0COVID\u00a0package must have sunset provisions
\n* Must balance economic needs with sustainable fiscal gap level
\n* Fiscal gap must be consistent with economic stability
\n* Fiscal gap must be consistent with financial stability
\n* Extent of overshooting of fiscal deficit aim depends on government
\n* Government will take measures that give maximum impact<\/p>\n

PRIVATE PLACEMENTS<\/strong>
\n* There is animated public discourse on RBI\u00a0monetising\u00a0deficit
\n* Debate on\u00a0monetising\u00a0deficit not new within RBI
\n* Past RBI governors had to contend with\u00a0monetisation\u00a0debates
\n* Debate on deficit\u00a0monetisation\u00a0brought solutions like\u00a0FRBM\u00a0Act
\n* Past RBI governors found solutions based on then conditions
\n* On\u00a0monetisation\u00a0issue, must meet macroeconomic stability goal
\n* On\u00a0monetisation\u00a0issue: Macroeconomic stability is RBI's main mandate
\n* Always maintain all instruments are on table
\n* Maintain both conventional, unconventional tools on table
\n* Will take a judicious view when time comes on\u00a0COVID\u00a0bonds
\n* Not participated in any primary auction of T-bills, bonds so far
\n* RBI's operations, debt management warrant participation in secondary market
\n* RBI's market operations at times are for elongation of debt maturity
\n* Market operations also aim to fill maturity spectrum gap in RBI holding<\/p>\n

EXIT PLAN<\/strong>
\n* Calibrated roadmap for entry, exit of accommodation is a must
\n* Questions on RBI, government exit plan for\u00a0COVID\u00a0package are pertinent
\n* Decision on entering, exiting from\u00a0\"chakravyuh\"\u00a0is important
\n* Exit plan from\u00a0\"chakravyuh\"\u00a0must be made when entering it
\n* Exit from\u00a0\"chakravyuh\"\u00a0must be carefully thought through
\n* Extraordinary steps must be taken in time, withdrawn in time
\n* Don't want market to think RBI is going into a tightening mode
\n* Will exit special measures when confident economy is near normal
\n* Exit from special measures should not be premature
\n* Won't delay withdrawal of special measures beyond a point
\n* At current juncture, all decision-making is tough
\n* COVID-19 has posed extraordinarily challenging situation<\/p>\n

REVERSE REPO<\/strong>
\n* Repo rate, as decided by\u00a0MPC, is the\u00a0\"single\"\u00a0policy rate
\n* Repo rate alone conveys the stance of monetary policy
\n* Reverse repo rate essentially a liquidity management tool
\n* Discussed\u00a0LAF\u00a0corridor, reverse repo rate with\u00a0MPC\u00a0earlier
\n* Reverse repo decision is very much in the domain of RBI
\n* Briefed\u00a0MPC\u00a0on rationale behind reverse repo rate cut
\n* Took\u00a0MPC\u00a0into confidence on reverse repo rate cut
\n* Low reverse repo an adverse rate for liquidity absorption
\n* Low reverse repo to deter banks from parking funds with RBI
\n* Must see low reverse repo rate as a transient arrangement
\n* Market should not be complacent on transient arrangements
\n* Transient moves due to liquidity management imperatives
\n*\u00a0LTROs,\u00a0TLTROs\u00a0are at or aligned to repo rate<\/p>\n

TLTRO-II<\/strong>
\n* Had\u00a0sense\u00a0TLTRO\u00a02.0 response may not be as good as\u00a0TLTRO
\n*\u00a0TLTRO\u00a02.0 auction results convey a\u00a0\"telling message\"
\n*\u00a0TLTRO\u00a02.0 shows banks not willing to take risk beyond a point
\n* On\u00a0TLTRO\u00a02.0, we are reviewing whole situation
\n* To decide on approach to\u00a0TLTRO\u00a02.0 based on review
\n* Challenge of ensuring credit to smaller\u00a0NBFCs\u00a0remains
\n* To take steps to address liquidity of\u00a0NBFCs\u00a0as necessary
\n* On liquidity to\u00a0NBFCs, RBI remains in battle-ready mode<\/p>\n

STATES<\/strong>
\n* Constantly monitoring cash balances of individual states
\n* Hiked\u00a0WMA\u00a0limit of states in view of need for more cash
\n* Mindful that states need enough cash for fight against\u00a0COVID
\n* RBI can activate standing deposit facility at any moment
\n* Not taken final view on standing deposit facility rate<\/p>\n

CREDIT RATING, FX MARKET<\/strong>
\n* Investors trust India irrespective of credit rating
\n* Investors trust India irrespective of rating upgrade or downgrade
\n* On ratings, investors much better informed on India versus earlier
\n* FX market has been orderly during\u00a0COVID\u00a0crisis
\n* Fall in rupee is less when compared with other emerging economies
\n* Won't rule out possibility of FX inflows picking up
\n* FX inflows can rise due to liquidity in advanced economies
\n* Liquidity from advanced nations can spill over to India
\n* India's macroeconomic fundamentals are strong
\n* Indian economy stronger compared with 2008 financial crisis
\n* Have enough foreign exchange reserves
\n* In case FX outflows happen, will be able to deal with any eventuality
\n* Policy responses have to be out of the ordinary<\/p>\n

RBI AUTONOMY, ROLE<\/strong>
\n* RBI's autonomy is never in doubt
\n* All decisions are independently taken by RBI
\n* RBI takes own decisions, but engages with stakeholders
\n* Stakeholder consultation essential part of RBI's approach
\n* Government is much more than a stakeholder
\n* Consultation flows both ways between government, RBI
\n* Past stint with government helps me take balanced calls
\n* No compromise on core principles of central banking
\n* Shouldn't underestimate RBI's role in tackling\u00a0COVID\u00a0crisis
\n* Monetary policy, liquidity management very powerful tools<\/p>\n

COVID-19<\/strong>
\n* This is a time of trial, an endurance test
\n* We live in extraordinary times
\n* We Indians must remain resilient
\n* We must believe in our capacity to come back stronger
\n* Dealing with a pandemic superimposed on a slowdown
\n* Response to\u00a0COVID\u00a0crisis has to be coordinated
\n* All arms of public policy need to work together on\u00a0COVID\u00a0response
\n* Government has very important role in response to\u00a0COVID\u00a0crisis<\/p>\n

BANKS<\/strong>
\n* March 27 norms allow banks to offer moratorium on all loans
\n* Bank boards must OK policy on offering moratorium on loans
\n* Onus on banks to offer loan moratorium based on their assessment
\n* Based on capital,\u00a0NPA\u00a0ratios, Indian banks are healthy, safe
\n* To take calibrated steps to protect banks' books in future
\n* We are constantly monitoring banking sector
\n* Have strengthened supervisory systems, mechanisms<\/p>\n

NBFCs<\/strong>
\n* To take more granular look at financial companies if vulnerability seen
\n* Supervisory systems for financial companies more proactive now
\n* No policy view on limiting deposit taking only to banks
\n* Examining\u00a0harmonising\u00a0norms across bank licence windows
\n* In many cases, courts have reversed orders in our favour
\n* SC has observed RBI is\u00a0\"not just another regulator\"<\/p>\n

FINTECH\u00a0SPACE<\/strong>
\n* India is an innovator, pioneer in payments space
\n* Unified Payments Interface has been commended globally
\n* With our advice, National Payments\u00a0Corp\u00a0set up global arm
\n* National Payments\u00a0Corp\u00a0arm to\u00a0internationalise\u00a0UPI,\u00a0RuPay\u00a0card
\n* UPI can be vehicle for cross-border money transfer, remittance
\n* Want\u00a0fintech\u00a0companies to flourish on regulatory sandbox
\n* Want credit flow to happen through new methods via\u00a0fintech<\/p>\n

Please click on the following link for the :\u00a0Full transcript of RBI Governor\u2019s interview to Cogencis, Tuesday, April 28, 2020<\/a><\/p>\n

Source: rbi.org.in & http:\/\/www.cogencis.com\/newssection\/highlights-rbi-governor-das-comments-interview-cogencis\/<\/p>\n<\/div>\n<\/div><\/div><\/div><\/div><\/div><\/div>","protected":false},"excerpt":{"rendered":"

In an hour-long interview to Cogencis, Das said even though there is an animated discussion on the subject of the central bank monetising the government’s budget deficit amidst the ongoing fight against COVID-19 pandemic, he has not taken a view on the issue. <\/p>\n","protected":false},"author":1,"featured_media":4004,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[723,722,10,120,268,805,45],"tags":[885,886,35,128,804,40],"class_list":["post-4216","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate-taxes","category-economic-reforms","category-economy","category-finance-ministry","category-fiscal-policy","category-ltro","category-rbi","tag-corporate","tag-covid-19-package","tag-economy","tag-fintech","tag-fiscal-policy","tag-rbi"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/yourcareerheights.com\/wp-content\/uploads\/2019\/12\/Economy1.jpg?fit=413%2C280&ssl=1","jetpack_sharing_enabled":true,"jetpack-related-posts":[],"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/posts\/4216","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4216"}],"version-history":[{"count":3,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/posts\/4216\/revisions"}],"predecessor-version":[{"id":4219,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/posts\/4216\/revisions\/4219"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/media\/4004"}],"wp:attachment":[{"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4216"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4216"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4216"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}