Home >Industry >Banking >RBI tells banks to ensure credit flow to stressed sectors

MUMBAI : Reserve Bank of India (RBI) governor Shaktikanta Das on Monday cautioned bankers to remain watchful of the evolving pandemic situation and also ensure credit flow to different sectors, including to stressed sectors, small borrowers and retail.

Banks should also keep vigil on payment systems, in the wake of reports of digital outages and data breach, Das said in his meeting with the heads of public and private sector banks through videoconferencing.

“He touched upon the importance of credit flows in sustaining the nascent economic recovery and advised banks to remain watchful of the evolving situation and continue taking measures pro-actively for maintaining their business continuity, sharpening business strategies and raising adequate capital for strengthening balance sheets. He also emphasized the need for banks to maintain a close vigil on the payments and other IT systems operated by banks and fortifying those for enhanced efficiency and resilience to offer seamless and uninterrupted customer service," said the RBI.

The meeting, which came less than a week after the post policy announcement, was attended by deputy governors M.K. Jain and M. Rajeswar Rao, as well as a few other senior officials of the RBI.

Progress in the implementation of the covid restructuring framework, under which banks can do a one-time restructuring for entities facing financial stress on account of the pandemic, was also discussed at the meeting.

Das also discussed the outlook on stressed assets amid concerns of the second wave of the pandemic and the need for capital augmentation. The bankers also discussed the current liquidity scenario and the need for monetary transmission to customers.

Following the monetary policy meeting, the central bank had last week announced a 1 trillion bond-buying plan to keep long-term interest rates in check amid a massive government borrowing programme.

As part of the government security acquisition programme (G-SAP 1.0), the RBI will buy bonds worth 1 trillion from the secondary market in the three months to 30 June, with the first purchase of 25,000 crore on 15 April.

The RBI had been under intense pressure from bond traders, worried about a glut of government papers, to announce a purchase plan to mop up the surge in supply.

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