Image Source : PTI RBI chief asserted Indian banking system is much stronger to be impacted by Adani row
Amid growing political outrage over Adani row, Reserve Bank Governor Shaktikanta Das on Wednesday said the strength, size and resilience of the Indian banking system now are much stronger and larger “to be affected by a case like this.
Reserve Bank of India (RBI) has made its own assessment to come out with the statement on Friday, where it termed the banking sector as strong and resilient, he added.
“The strength, size and the resilience of the Indian banking system now are much stronger and larger to be affected by a case like this,” Das said without directly mentioning about the Adani Group.
His reaction came to a query on whether the RBI will be giving any guidance to domestic banks about their exposure to the Adani Group companies in the context of rating agencies’ reports related to banks’ exposure to the Group.
Briefing reporters after the monetary policy announcement, Das said that when banks do lend, they take their calls on the fundamentals of a company and the expected cash flows from projects.
He also made it clear that the market capitalisation of the company does not have any role to play there.
What Deputy Governor MK Jain
Deputy Governor MK Jain said domestic banks’ exposure is “not very significant” to the Adani Group and the exposure against shares is “insignificant”.
Meanwhile, Das said that over the years, the appraisal methods of the banks have significantly improved.
In the last three-four years, the RBI has taken several steps to strengthen the resilience of banks, including guidelines on governance, audit committees, and risk management committees, making it mandatory to appoint chief risk officers and chief compliance officers.
Concerns have been raised in various quarters about Adani Group companies, including about the exposure of lenders to the conglomerate, in the wake of an adverse report by US-based short seller Hindenburg Research that also triggered a massive sell-off in the shares of the companies.
RBI hikes interest rate by 25 BPS to 6.5%
RBI on Wednesday, announced to hike the interest rate by 25 BPS to 6.5%, citing sluggish core inflation. The hike in the repo rate is also set to further increase home, car loans and EMIs. The RBI has increased interest rates six times since May 2022, for a total increase of 250 basis points.
Das, who also announced the bi-monthly monetary policy, said that the Monetary Policy Committee (MPC) unanimously resolved to hike the policy repo rate by 25 basis points and keep a “strong surveillance” on the inflation outlook.
Also Read: RBI commences Monetary Policy Committee meeting amid expectations of lower rate hike
Global economic outlook not very bleak: RBI
Meanwhile, the RBI Governor also said that the global economic outlook does not look as grim as it was a few months ago. According to him, the growth prospects in major economies improved while inflation is on a descent.
“The Real GDP growth for 2023-24 is projected at 6.4% with Q1 at 7.8%, Q2 at 6.2%, Q3 at 6% & Q4 at 5.8%. The Indian economy remains resilient,” the RBI governor added. In the latest Economic Survey of the finance ministry, the growth projection was 6-6.8% for 2023-24.
(With inputs from agencies)
Also Read: 8 Adani Group firms shine, two underperform; Adani Enterprises jumps 13 per cent
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