In his first interview since the onset of the coronavirus crisis, Reserve Bank of India Governor Shaktikanta Das said he would not shy away from taking “conventional” or “unconventional” steps to further help the economy, following a 115 basis points rate cut.

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The governor added that thanks to the COVID relief offered by RBI -- which allows banks to not classify businesses that defaulted after the start of pandemic, to not be considered as NPAs – will help contain financial stability.

Earlier, the RBI had forecast the banking sector NPAs may go up from 8.5 percent currently to 12.5 percent in base case and 14.7 percent in worst case.

“Now I am hopeful that a large number of borrowers will benefit from loan resolution framework and banks will be able to contain NPAs,” he said, adding that the KV Kamath panel report on guidelines relating to this will be out by September 6.

He added the relief is intended only for businesses that were affected by COVID, instead of making it a broad regulatory forbearance.

Commenting on the lack of growth and inflation projections put out by the RBI, Das said there was a high amount of uncertainty in the data and that the central bank will put it out when it comes down.

“When RBI shares a number, it should be solid.”

He added that inflation hadn’t reached a point where it had become a primary concern.

Among other things, Das said the RBI was working on an internal review of PSU banks governance and ownership. “This report is likely to be ready by end September. It is likely to play a critical role in planned privatization of certain Public sector Banks as any prospective buyer will have to pass the fit-and-proper criteria to acquire and run a bank.”

On the state of the markets, Das said he sees a disconnect between stock markets and the real economy, not only in India but in global markets. “A correction should happen but it is difficult to say when,” he said.

First Published:Aug 21, 2020 7:46 PM IST