SME Times News Bureau | 17 Jun, 2019
Reserve Bank of India Governor Shaktikanta Das on Monday
said the central bank will not hesitate to take any required measure to
maintain the financial stability of the economy.
In a lecture at the Lal Bahadur Shastri National Academy of Administration,
Mussoorie, on the "evolving role of central banks", Das also said
that financial stability is major factor considered in the RBI's monetary
policy.
"In the non-banking sector, the Reserve Bank has recently come out with
draft guidelines for a robust liquidity framework for the NBFCs. We are also
giving a fresh look at their regulatory and supervisory framework. It is our
endeavour to have an optimal level of regulation and supervision so that the
NBFC sector is financially resilient and robust," he said.
"The Reserve Bank will continue to monitor the activity and performance of
this sector with a focus on major entities and their inter-linkages with other
sectors. The Reserve Bank will not hesitate to take any required steps to
maintain financial stability," he added.
Das further said that in a flexible inflation targeting framework, a delicate
balance needs to be maintained between inflation and growth objectives.
"Post global financial crisis, it has been recognised that price stability
may not be sufficient for financial stability and therefore financial stability
has emerged as another key consideration for monetary policy, though jury is
still out as to whether it should be added as an explicit objective of monetary
policy.
"The fact remains that though the focus of monetary policy is mainly on
inflation and growth, the underlying theme has always been financial
stability," the Governor said.
The liquidity crisis in the non-banking financial
companies (NBFC) came to light when IL&FS defaulted on a commercial paper
in September.