RBI under Das reiterates its intent to remain accommodative for as long as required

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New Delhi: All eyes will be on Reserve Bank of India (RBI) governor Shaktikanta Das as he delivers the keynote address at the 13th Mint Annual Banking Conclave (ABC) on Monday and sets the tone for monetary policy in 2020-21.

The theme of this year’s ABC, “Indian Banking Sector: The $5-Trillion Challenge”, focuses on the financial sector’s role in helping the Indian economy realise its ambitions, despite myriad domestic hurdles and global uncertainties. Das and an ensemble of industry experts will discuss these issues threadbare.

The central bank has, under the leadership of Das, reiterated its intent to remain accommodative for as long as required and has lowered its key policy rates by 135 basis points between February and October last year. Even when the monetary policy committee (MPC) decided to hold rates in the last two bimonthly meetings, the central bank introduced direct measures to increase credit flow to certain sectors of the economy, apart from ensuring adequate liquidity in the system and hastening the pace of rate transmission to the eventual borrower.

RBI is faced with the twin challenges of rising inflation and a slowing economy and, as MPC’s three members highlighted in the last meeting, structural reforms are now inescapable. The government’s advance estimates have pegged FY20 gross domestic product (GDP) growth at 5%, the slowest in 11 years. Meanwhile, India’s retail inflation accelerated to 7.59% in January, beyond RBI’s targeted range. In February, the rate-setting committee had to revise its inflation expectations as measured by the consumer price index (CPI) upwards to 6.5% for the fourth quarter of FY20, higher than its mandated corridor of 2-6%.

Das said in the MPC meeting that while demand remains weak, there is uncertainty about the likely behaviour of inflation excluding food and fuel. Voting for a pause in the February policy, Das cited the prevailing uncertainty on the inflation front and said MPC should prudently await “more clarity based on incoming data”. “Barring the intensification of global risks, there is policy space that needs to be timed optimally and opportunistically to maximise its impact on growth,” said Das.

Apart from the governor, Mint ABC will have four panel discussions on opportunities in bad loans, fintech challenges for banks, developing loan markets, and a final star-studded panel of bank chief executives.

The panel on bad loans will feature Rajiv Anand, executive director for wholesale banking at Axis Bank; Rahul Chawla, MD and head of global credit trading at Deutsche Bank India; CS Setty, MD of State Bank of India; and Nikhil Shah, managing director of Alvarez and Marsal.

The second panel, on digital transformation, will have S Ganesh Kumar, executive director of RBI; Nitin Chugh, chief executive of Ujjivan Small Finance Bank; Sharad Saxena, chief technology officer of the Bank of Baroda, among others.

The next panel, on loan markets, will feature Rajat Verma, head of commercial banking at HSBC India; Jayesh Mehta, India country treasurer for Bank of America; K Balasubramanian, head of corporate bank at Citi (South Asia); Nilang Desai, partner at AZB and Partners; and Sanjay Singh, deputy CEO of BNP Paribas India.

The final panel discussion will have Aditya Puri, managing director of HDFC Bank; Ashu Khullar, chief executive of Citi India; Zarin Daruwala, chief executive of Standard Chartered Bank (India); Amitabh Chaudhry, chief executive of Axis Bank; Arijit Basu, managing director of State Bank of India; Sanjiv Chadha, chief executive of Bank of Baroda; and V. Vaidyanathan, chief executive of IDFC First Bank.

 

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