FSR report: Covid impact less than expected, economic recovery uneven, says RBI Governor Shaktikanta Das
The Reserve Bank of India Governor Shaktikanta Das on Thursday has said that the economic activity has started regaining momentum from May-end post the dent caused by the second wave of COVID-19, moreover its impact on the overall asset quality has been less than expected.
The Reserve Bank of India Governor Shaktikanta Das on Thursday has said that the economic activity has started regaining momentum from May-end post the dent caused by the second wave of COVID-19, moreover its impact on the overall asset quality has been less than expected.
In the Financial Stability Report (FSR) of July 2021, the RBI Governor said, monetary, regulatory and fiscal policy measures have helped curtail the solvency risk of financial entities, stabilise markets, and maintain financial stability amid the second wave of coronavirus in the last few months.
Terming the second wave a ‘grievous toll’, the Governor said, “The recovery that had commenced in the second half of 2020-21 was dented in April-May 2021, but with the wave of infections abating as rapidly as it had set in, economic activity has started to look up in late May and early June.”
He mentioned that sustained policy support, benign financial conditions, and the gathering momentum of vaccination are nurturing an uneven global recovery.
The governor said the dent on balance sheets and performance of financial institutions in India has been much less than what was projected earlier.
In the last FSR, the RBI had projected the GNPA (gross non-performing assets) ratio of banks rising to 13.5 per cent in a year by September from 7.5 per cent.
While the latest issue of FSR suggests that the GNPAs remained flat at 7.5 per cent in March 2021 as well, and are expected to rise to only 9.8 per cent as per the baseline estimate.
He added capital and liquidity buffers at financial institutions are ‘reasonably resilient’ to withstand any future shocks.
The Governor also flagged rising data breaches and cyber-attacks as among the risks for the recovering economy, along with others like firming global commodity prices.
He said, we have witnessed attempts to target the payment ecosystem of the country by adopting multiple modus operandi, including the theft of payment card credentials and compromise of ATM infrastructure.
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