RBI’s crypto concerns, privatization of banks, monetary policies, read to know all about it

RBI Governor Shaktikanta Das says the central bank has “major concerns” about cryptocurrencies. Almost three-quarters of startup founders surveyed by InnoVen Capital say hiring will rise this year. And Snap wants to take its India strategy to the world. That central banks across the world fear cryptocurrencies is no secret, but the Reserve Bank of India seems keener to ban them than most. Yesterday, RBI Governor Shaktikanta Das said the central bank has “major concerns” about cryptocurrencies, but didn’t elaborate.

What else did the RBI Governor say?

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  • Markets should trust RBI, will not prematurely pull out liquidity, says RBI Governor

    The Reserve Bank of India (RBI) Governor Shaktikanta Das believes that the bank and the government have managed the situation reasonably well during the entire COVID-19 period. In an exclusive interview with CNBC-TV18, Das said that the RBI has several instruments on the table to manage liquidity and will not prematurely pull out liquidity to stifle growth. He further noted that the Central Bank has many known and unknown tools to deal with liquidity situations.

    The central bank governor told investors on Wednesday to trust the bank to manage the government’s massive borrowing programme after the bond market suffered a sustained sell-off following the 2021/22 budget announcement earlier this month. The Reserve Bank of India’s assurances that it will ensure ample liquidity has failed to calm investors’ nerves over the larger than expected 12.06 trillion rupees borrowing requirement, and the central bank has rebuffed their calls for an open market operations calendar. “The market should trust the RBI,” said Governor Shaktikanta Das.

    “Our forward guidance has been much more explicit than ever before. There are some subtle messages on liquidity that markets should read. The signal was sufficiently clear in the February policy,” stated the Governor. The governor added that at the moment he is okay with the level of liquidity, “The messages from central banks are always a mix of words and subtle signals. At the moment, we are okay with the level of liquidity. All the instruments are on the table; if required we will use new instruments.”

  • RBI optimistic on growth vows to keep ample liquidity; experts discuss the impact of monetary policy

    The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) kept the repo rate unchanged in the sixth and last bi-monthly monetary policy meeting for the financial year 2020-21, governor Shaktikanta Das said on Friday. With no change this time as well, the repo rate currently stands at 4%. The reverse repo rate has been maintained at 3.35%. The MPC voted unanimously to keep policy rates unchanged.

    The central bank has maintained its policy stance at “accommodative” which could continue for as long as necessary to revive growth. The announcement is in line with the Street’s expectations as it was expecting a status quo by the central bank this time. The RBI also said that it would restore the cash reserve ratio (CRR), currently at 3-4% in a phased manner. The CRR is the percentage of a bank’s total deposit that needs to be maintained with the RBI in the form of liquid cash.

    The central bank has projected a 10.5% GDP growth in the next fiscal. This is slightly below the government’s economic survey forecast of 11%. The RBI governor also highlighted that they are undertaking a ”deep dive” on the stress in the banking system by increasing supervision and this will amount to an asset quality review.

  • Need to support economic revival, financial stability: RBI Governor

    The governor said the country’s financial system was facing both challenging times and also new opportunities. The focus should be on maintaining “good communication” among various regulators, Das said. Governor Shaktikanta Das on Saturday said the financial stability is a public good, and its resilience and robustness need to be preserved and nurtured by all stakeholders.

    The Reserve Bank of India (RBI), Das said, is positioning itself to provide an enabling environment where regulated entities are catalysed to exploit these new avenues while maintaining and preserving financial stability. The governor said the central bank was open to look at any proposal for setting up a bad bank and would examine it before issuing any regulatory guidelines.

    “Bad banks have been under discussion for a very long time. And I think you know we have in RBI provided regulatory guidelines for asset reconstruction companies. We are open to looking at any proposal for setting up a bad bank,” he said during a question and answer session.

    Das said, “We are open and from a regulatory point of view, we are open in the sense that, if any proposal comes, we are open to examining it and give it regularly and issue guidelines. But then it is for the government and other private sector players to really plan for it.”

    “As far as Reserve Bank is concerned, we try to keep our regulatory framework in sync with the requirements of the times, if there is a proposal, mark my words, if there is a proposal for setting up of a bad bank, RBI will examine and take a view on that,” he said.

    “New vistas of financial intermediation leveraging on technology and new business models will emerge,” he said. With the exponential growth of digitisation and online commerce, Das said, the central bank directed its policy efforts to put in place a state-of-the-art national payments infrastructure ensuring a safe, secure, and robust payments ecosystem. “Financial stability is a public good and its resilience and robustness needs to be preserved and nurtured by all stakeholders,” he said.

  • Privatisation of banks

    India’s finance minister had announced earlier this month that the government would privatize two of the 12 state banks in the country without naming the lenders. Indian financial system is stronger after the pandemic than in the aftermath of the global financial crisis in 2008, Das said. The potential owners of the soon-to-be privatized government-controlled banks must be financially strong to ensure that the lenders have robust risk buffers, the Reserve Bank of India Governor said.

    While the government has the final say in deciding the buyers, from the regulator’s perspective, the bidders should meet RBI’s fit and proper criteria and have enough financial strength to capitalize the banks significantly, Governor Shaktikanta Das said in an interview to CNBC-TV 18 on Wednesday.