On the banking sector, he said public and private lenders have raised additional capital in recent quarters.
The Reserve Bank of India will provide abundant liquidity in the market for the credit system to function normally, Governor Shaktikanta Das said Monday.
He stressed that even as the RBI withdraws the liquidity provided over the past two years to support various sectors, there will be enough liquidity to meet the productive needs of the economy.
“I want to make it very clear with great emphasis that, even in the future, we will ensure that there is abundant liquidity in the market for the credit system to function normally and we will ensure that there is no scarcity of liquidity,” he said. he. while addressing the meeting of the CII National Council.
He said most of the liquidity that RBI injected had an expiration date, and much of it has even come back.
In the past two years, RBI had provided total liquidity support of about Rs 17 lakh crore. Of these, banks and small financial banks were making use of about Rs 12 lakh crore, he said.
“As I speak today, Rs 5 lakh crore has already come back and the rest will ripen at the end of the third year and some of it will come back in the intervening period as well,” he said.
“When you inject liquidity, you enter what people call a Chakravyuh – many people know how to get in, but few know how to get out. It is therefore necessary to have sunset dates. At RBI, the day we announced we were entering that Chakravyuh, we also planned an exit route and we were going to come out smoothly,” he said.
Das said RBI’s efforts have been that the whole process of liquidity injection and withdrawal is done in a non-disruptive manner.
On the banking sector, he said public and private lenders have raised additional capital in recent quarters. At the system level, the capital adequacy of banks is 16 percent.
The governor said the combined gross non-performing assets of all banks are at an all-time low of 6.5 percent. The facility coverage ratio also stands at 69 percent, which is a robust figure.
Das noted that RBI has supported growth over the past two years.
“We have resisted all temptations and expectations to reverse our monetary policy and move away from our accommodative stance and move from our support to growth to some sort of tightening regime,” he added.
This post Will provide abundant liquidity for the credit system to function normally, says RBI governor
was original published at “https://www.financialexpress.com/industry/banking-finance/will-ensure-abundant-liquidity-for-credit-system-to-function-normally-rbi-governor-says/2467195/”