Mumbai: Reserve Bank of India Governor Shaktikanta Das has emphasized the developing disconnect between financial markets and the real sector. In an interview, Das indicated an up and coming remedy in the light securities exchanges.
“There is so much liquidity in the system, in the global economy. That’s why the stock market is very buoyant and it is definitely disconnected with the real economy,” Das said. “There will definitely be a correction but we can’t say when.”
“It is important to keep our arsenal dry and use it judiciously,” the governor said
Recently delivered minutes of the monetary policy committee Das had contended that it is judicious to hold back to see the effect of rate slices leak through.
“I also feel that we should wait for some more time for the cumulative 250 basis points reduction in policy rate since February 2019 to seep into the financial system and further reduce interest rates and spreads,” Das had said.
Remarking on the half-year loan moratorium which is set to end on August 31, Das said that it was a brief answer to tackle pressure exuding from eventual outcomes of the pandemic.
“Bank moratorium was a temporary solution to respond to coronavirus lockdown but resolution framework is a permanent solution,” he said.
“RBI formed the COVID-19-related resolution framework after taking into consideration the financial health of banks as well as depositors. Businesses are in a lot of stress due to COVID-19 and if they fail, it will lead to financial instability. However, if businesses are saved, they will repay loans and, subsequently, save jobs.”
The controller had as of late declared one-time rebuilding for credits which are stressed because of the pandemic.
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