New Delhi: Due to the covid 19 epidemic, the value of assets in books of accounts in banks may decrease and there may be a shortage of capital. This was said by Reserve Bank of India (RBI) Governor Shaktikanta Das. The central bank said that this risk could happen especially with the withdrawal of regulatory reliefs. Das wrote in the role of the Half Yearly Financial Stability Report (FSR) that the financial parameters of banks have improved due to easing of cash position and better financial position. However, it also said that the data available at the level of accounting does not show a clear picture of pressure in banks.
Das asked banks to use the current situation to increase capital. Also asked to change the business model which will be beneficial in future. The RBI had implemented a loan moratorium for six months to repay loans to provide relief to the people in the midst of the Kovid-19 crisis, which ended in August. Later announced a one-time debt restructuring to give relief to the borrowers. Many banks, especially private sector banks, raised capital in the early days of the epidemic.
Das said that the fiscal authorities are facing revenue shortage and consequently the market borrowing program has expanded. This has put additional pressure on banks. The gap between some sectors of financial markets and the real economy has widened in recent times. He also cautioned that the increased value of financial assets poses a risk to financial stability. Banks and financial intermediaries need to take cognizance of this. Das said that we have suffered due to the pandemic, further economic growth and livelihood work has to be done and financial stability is the pre-condition for this.
