Deeper Issues Are Involved With Cryptocurrencies: RBI Governor

Days after stating that new-age currencies pose serious threat to the macro-economic and financial stability of the country, Reserve Bank of India (RBI) governor Shaktikanta Das on Tuesday reiterated his concerns on cryptocurrencies, saying that deeper issues are involved with it.

Addressing a banking conclave organised by the State Bank of India (SBI), where he said that economic parameters were showing a possible uptick, Mr Das while commenting on cryptocurrencies noted that "when the RBI, after due internal deliberation, says that there are serious concerns on macro economic and financial stability, there are deeper issues, which need much deeper discussions and much more well informed discussions”.

The RBI governor doubted the current trading numbers in crypto currencies and said the investors are being lured to open accounts by offering credit.

"We have received a lot of feedback that credit has been provided to open accounts and various other kinds of incentives are being provided to open accounts, but the total account balance is just about Rs 500, Rs 1,000 or Rs 2,000, and that covers about 70 per cent to 80 per cent of the accounts," he said.

He added though that the value of transactions and trading in virtual currencies has gone up, the number of accounts is exaggerated.

Last week, Mr Das had said that new-age currencies pose serious threats to the macroeconomic and financial stability of the country and also doubted the number of investors trading on them as well their claimed market value.

Meanwhile commenting on the economic scenario, the RBI governor said that signs of economy recovery were now visible.

"There are signs that consumption demand, triggered by the festive season, is making a strong comeback. This should encourage firms to expand capacity and boost employment as well as investment amid congenial financial conditions," he noted.

Mr Das added that the gross non-performing assets (NPAs) of banks have shown improvement in September 2021 compared to June 2021 levels and called upon financial institutions to shore up their capital management process.

He further noted that public expenditure will play a major role in pushing investment-led recovery, while expressing hope that the country has the potential to grow at a steadier pace in the post-Coronavirus pandemic scenario.

“India's remarkable progress on vaccines is a shining example of scientific capabilities,” the RBI governor said, though adding at the same time that contact-intensive services still need to get back lost momentum.

Mr Das said that the first quarter GDP data has shown that there is a significant gap in private consumption and investment and greater push is needed to exceed the growth levels of the pre-pandemic times.