Banks should ensure credit flow to stressed sectors: RBI to bankers

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

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

Other issues being discussed include progress in the implementation of Covid restructuring framework under which banks can do a one-time restructuring for entities facing financial stress on account of the pandemic. Governor Das also discussed the outlook on stressed assets amid concerns of the second wave of the pandemic and also the need for capital augmentation. The bankers also discussed the current liquidity scenario & the need for monetary transmission to customers.

Following the monetary policy meeting, RBI last week had announced a ₹1 trillion bond-buying plan to keep a lid on long-term interest rates amid a massive government borrowing programme. As part of the government security acquisition programme (G-SAP 1.0), RBI will buy ₹1 trillion worth of bonds from the secondary market in the three months to 30 June, with the first purchase of ₹25,000 crore on 15 April. 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.