rbi-s-guv-das-highlights-strong-govt-ties-economic-revival

Reserve Bank of India (RBI) Governor Shaktikanta Das emphasized the smooth relations between the central bank and the government during his nearly six-year tenure, attributing this close coordination to the rapid economic recovery following the pandemic. 

Speaking at an event organized by Financial Express, Das dispelled the notion that the RBI should act as a "cheerleader" for the government.

"From my experience, nobody expects the RBI to be a cheerleader. I have had no such experience," he said, responding to a query referencing a remark made by one of his predecessors in a recent book.

Regarding the possibility of continuing for another term, Das mentioned his commitment to his current role, stating, "I am very focused on the current assignment and do not think of anything outside that."

Das expressed optimism about achieving the RBI’s growth estimate of 7.2 percent for FY25. He stressed that with steady growth, the policy focus must remain "clearly and unambiguously" on inflation. He used the metaphor of the "inflation elephant," suggesting it is gradually moving towards the 4 percent target.

The Governor advised banks to be cautious of the lag between credit and deposit growth, warning that credit growth should not outpace deposit growth to avoid "structural liquidity issues."

Das addressed the issue of Mule accounts used by fraudsters, urging banks to enhance their customer onboarding and transaction monitoring systems.

He assured that the RBI is collaborating with banks and law enforcement agencies to combat digital frauds and misuse of Mule accounts.

Reassuring the stability of the banking system, Das clarified that recent actions taken by the RBI against certain entities should not be interpreted as indicative of broader systemic issues. He said, "The banking system remains very stable and healthy."

Addressing the potential for corporate entities to own or promote banks, Das stated that the RBI is not considering any proposals in this regard at present.

He highlighted the challenges of controlling related party transactions, emphasizing the need for well-governed and stable banking institutions over a mere increase in the number of banks.