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RBI has taken steps to smoothen impact of second Covid wave: Deputy Governor

MK Jain observed that the second wave had some challenging aspects but both the RBI and the government were dealing with the issue and taking steps to smoothen the impact on the financial system.Premium
MK Jain observed that the second wave had some challenging aspects but both the RBI and the government were dealing with the issue and taking steps to smoothen the impact on the financial system.

  • In the last two months, the RBI announced a slew of measures to help flow of credit to the badly hit sectors and maintain adequate level of liquidity in the system

RBI Deputy Governor M K Jain on Friday said that the second wave of coronavirus has posed some challenges but both the central bank and the government have taken steps to mitigate its impact. He also said that the domestic banking system is strong, as per the preliminary data for the quarter ended March 2021.

Addressing a virtual conference, the deputy governor said: "The banking sector was in strong position when Covid hit...the preliminary data suggest that in terms of CRAR (capital-to-risk weighted assets ratio) that has been improved upon, the profitability has been improved upon, provision coverage ratio that has also been improved over the previous year, and the gross NPA as well as net NPA has come down."

Jain observed that the second wave had some challenging aspects but both the RBI and the government were dealing with the issue and taking steps to smoothen the impact on the financial system.

In the last two months, the RBI announced a slew of measures to help flow of credit to the badly hit sectors and maintain adequate level of liquidity in the system.

Today, the deputy governor said that the central bank strived to ensure financial resilience of banks and NBFCs by prescribing a set of micro prudential norms like minimum capital requirements. He also said that the RBI has asked financial entities to undertake stress tests at regular intervals and accordingly take risk mitigation measures.

Jain said that the banks have made improvements in the risk management capacities. Yet, he added, the changing operating and risk environment requires banks to be vigilant, strong and agile so as to identify risks early and absorb the shocks and be able to adapt to the newer ground realities.

"I am hopeful that banks and other financial institutions in India will rise to the challenge, continue to demonstrate the resilience and be able to contribute to a USD 5 trillion economy and beyond," he said.


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