Reserve Bank of India (RBI) governor Shaktikanta Das said on Friday that steps will be taken to help sustain growth in the economy. Balancing inflation and growth would require careful analysis of new incoming data, Das said at the Vibrant Gujarat Global Summit, ahead of the monetary policy review in February.
“We will take necessary steps to maintain financial stability and to facilitate enabling conditions for sustainable and robust growth," he said in his first speech after taking charge as the 25th RBI governor.
On Thursday, Union finance minster Arun Jaitley hinted at a dovish policy stance, saying India has the highest real rate of interest in the world. He added that the central bank has been in talks with stakeholders and is well-versed with the economic situation.
Das said the external sector requires careful monitoring given the volatility in crude oil prices and the global financial market. He also warned that Indian companies should brace themselves for any impact of the vote on the Brexit deal.
“Another challenge that Indian companies may face pertains to developments around Brexit. Indian companies and policymakers need to suitably weigh all opportunities and challenges and accordingly re-strategize to respond appropriately," he said.
Preserving domestic macroeconomic and financial stability will be the RBI’s top priority against this backdrop of global uncertainty, Das said. The domestic economy and financial markets could face challenges from sudden turbulence in the global financial markets in the future, he said.
The RBI governor also stressed the need for keeping continued vigil on the asset quality of banks and to ensure that further slippages are contained. He also stressed the need to strengthen corporate governance in banks with a focus on transparency and accountability. The RBI intends to strengthen the asset liability management (ALM) framework for non-banking financial companies (NBFCs), he said.
“The debt default of a systemically important NBFC highlighted the vulnerability and need for strengthening regulatory vigil on the sector in general and on the ALM framework in particular. The Reserve Bank intends to strengthen the ALM framework for NBFCs and harmonize it across different categories of NBFCs with the objective of enabling the NBFCs to play a vital role in our economy," he said.
Earlier this month, the RBI governor said the central bank will avoid a situation of excess liquidity in the economy and any infusion of liquidity will have to be need-based. He also said that additional open market operation of ₹60,000 crore by the Reserve Bank of India is enough to meet the requirements of the economy and financial institutions.