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The combined public debt of the Centre and states will reach around 90% of the GDP by March 2022, RBI Deputy Governor Michael Patra said.
However, the economic growth will continue to be higher than interest rate that the government pays on debt, Patra added. “Since that condition is fulfilled, RBI assesses that the public debt of India remains sustainable.”
There is no change in the Reserve Bank of India’s position on cryptocurrencies, RBI Governor Shaktikanta Das said.
The central bank was, however "surprised” that some banks were still citing the 2018 circular that the Supreme Court set aside.
"We have major concerns around cryptocurrencies which we have conveyed to the government,” Das said. “Each investor should take careful and prudent call on their investments.”
The Monetary Policy Committee’s view is that inflation is not persistent, it will become so when it is backed by demand-pull, RBI Deputy Governor Michael Patra said.
The Reserve Bank of India’s forex operations are driven by consideration of stability of exchange rate, Das said.
The governor had, in his earlier statement, said that “there are indications that India’s foreign exchange reserves have already crossed $600 billion.” He added that it gives the central bank “great confidence” to combat challenges from global spillovers.
“Emerging market economies have to build their own buffers, RBI is no exception,” Das said.
He added that the surplus transfer to the government -- Rs 99,122 crore for the nine months ended March 31, 2021 -- is purely an accounting issue.
RBI Deputy Governor T Rabi Shankar attributed the the higher than expected surplus to the decrease in risk capital provisioning.
Balance sheet increase in FY20 was Rs 12.37 lakh crore, so the increase in provision for risk was higher, Shakar said. In FY21 on the other hand, the increase was just Rs 3.64 lakh crore, so transfer of surplus funds to contingent funds has also gone down, he said.
The monetary policy committee is not thinking of normalising the stance, RBI Governor Shaktikanta Das said.
RBI is focused on the entire yield curve, across maturities, RBI Governor Shaktikanta Das said in response to a query.
In a relief for borrowers, the RBI expanded the coverage of Resolution Framework 2.0 that was announced on May 5.
Maximum aggregate exposure threshold under Resolution Framework 2.0 has been increased to Rs 50 crore from Rs 25 crore for MSMEs, non-MSMEs and in case of loans to individuals for business purposes.
The central bank will also extend a special liquidity facility of Rs 16,000 crore to SIDBI for on-lending and refinancing, Das said. The facility will be available at prevailing repo rate for a period of 1 year.
RBI had earlier provided Rs 50,000 crore to all-India financial institutions, which included Rs 15,000 crore to SIDBI.
RBI has decided to provide a separate liquidity window worth Rs 15,000 crore for contact-intensive sectors. Th facility will be available at the repo rate till March 2022 with a tenor of up to 3 years.
Under this programme, banks can provide support to hotels and restaurants, tourism, aviation support services and other services including bus operators, rent-a-car services, spa clinics and beauty parlours and saloons.
Banks will be allowed to park surplus liquidity to the level of these loans with the RBI at a rate 40 basis points higher than the reverse repo.
With second wave intensifying, RBI’s attention has moved from systemic liquidity to its equitable distribution. Shall continue with proactive and pre-emptive approach of transmission.Shaktikanta Das, Governor, RBI
Inflation print for April at 4.3% has brought with it some relief and policy elbow room.Shaktikanta Das, Governor, RBI
The Monetary Policy Committee voted unanimously to keep repo rate unchanged at 4%, RBI Governor Shaktikanta Das said.
The second wave of Covid-19 has been ravaging across several states since April. MPC was of the view that at this juncture, policy support from all sides is required, Das said. “Accordingly it was decided to maintain status quo and continue with an accommodative stance as long as necessary.”
Underwriters Save Another India Bond Auction Ahead of RBI Policy
Monetary Policy: RBI’s Firefight Redux
Watch out for the Monetary Policy statement of the RBI Governor @DasShaktikanta at 10:00 am on June 04, 2021
— ReserveBankOfIndia (@RBI) June 3, 2021
YouTube: https://t.co/c4TBWlvv8D
Post policy press conference telecast at 12:00 noon on the same day
YouTube: https://t.co/hBcQU0soRJ#rbipolicy #rbigovernor
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