Shaktikanta Das said the country’s current account deficit will be manageable and the central bank has the ability to manage the gap
Shaktikanta Das said the country’s current account deficit will be manageable and the central bank has the ability to manage the gap
Reserve Bank of India Governor Shaktikanta Das said on August 5, 2022 that the country’s economy is an island of stability despite two black swan incidents and several setbacks.
“In a sea of high turbulence and uncertainty, the Indian economy is an island of macroeconomic and financial stability,” Mr Das told reporters during the Post Policy press conference.
He said that two black swan incidents are happening one after the other and there have been many setbacks, yet financial stability, macroeconomic stability and growth resilience are being observed.
Generally, the Black Swan event refers to an unforeseen event that has negative consequences.
Mr. Das did not list the two Black Swan incidents he mentioned.
In recent days, the coronavirus pandemic and the Russo-Ukraine war have significantly affected the global economy.
The Monetary Policy Committee (MPC) on Friday increased the repo rate by 50 basis points up to 5.40%. It also decided to focus on the return of housing to ensure that inflation remains within the target while supporting growth.
The Governor said that going forward the monetary policy would be calibrated, measured and agile.
He said inflation is at its peak and will moderate but it is at an unacceptably high level.
He also said that the country’s current account deficit will be manageable and the central bank has the capacity to manage the gap.
NRIs can pay utility bills using Bharat Bill Payment System
The Reserve Bank said that NRIs will soon be able to use the Bharat Bill Payment System to pay utility bills and education fees on behalf of their family members in India.
Bharat Bill Payment System (BBPS) is an interoperable platform for standardized bill payment. More than 20,000 billers are part of the system, and over 8 crore transactions are processed on a monthly basis.
Mr Das said that BBPS has transformed the bill payment experience for users in India and it is now proposed that the system can accept cross-border bill payments.
“It will enable Non-Resident Indians (NRIs) to make bill payments for utilities, education and other such payments on behalf of their families in India.
Announcing the bi-monthly monetary policy, he said, “It will be of great benefit especially to senior citizens.”
In a statement, RBI said that this decision will also benefit the payment of bills of any biller on the BBPS platform in an interoperable manner.
The central bank will soon issue necessary instructions in this regard.
The governor also announced a committee to study the possibility of an alternative benchmark for Mumbai Interbank Outright Rate (MIBOR) based overnight indexed swap (OIS) contracts, the most widely used interest rate in the onshore market. derivatives (IRDs).
The use of MIBOR-based derivative contracts has increased with the steps taken by the Reserve Bank to diversify the participant base and facilitate the introduction of new IRD instruments.
At the same time, the MIBOR benchmark rate, calculated on the basis of call money deals executed on the NDS-call platform in the first hour after market opening, is based on a narrow window of transactions, the central bank said.
Internationally, changes have been made to alternative benchmark rates with wider participant bases (beyond banks) and higher liquidity.
“Amidst these developments, it is proposed to constitute a committee to examine the issues thoroughly, including the need for transition to an alternative benchmark, and suggest the most appropriate way forward,” it said.
RBI also decided that Standalone Primary Dealers (SPDs), who are market-makers like banks, should also be allowed to conduct Foreign Currency Settled Overnight Indexed Swap (FCS-OIS) transactions directly with non-residents and other market-makers. will be allowed.
In February this year, banks in India were allowed to transact in the offshore FCS-OIS market with non-residents and other market makers.
This was allowed with a view to removing the divide between onshore and offshore OIS markets and improving the efficiency of price discovery.