Page 14 - Banking Finance August 2021

RBI CORNER

Act, 1934, according to the RBI's Demand-side factors, Payment Infra- Nobel laureate Abhijit Banerjee and
website. structure - Supply-side factors, Pay- former finance minister P.
ment Performance and Consumer Chidambaram had suggested that
With regard to directors from local
Centricity. Each of these parameters printing money was an appropriate
boards, eastern area is represented
has sub-parameters which, in turn, way to support rising expenditure
by Sachin Chaturvedi and northern
area by RevathyIyer, while nomination consist of various measurable indica- during the pandemic.
of two directors is awaited.. tors. While Banerjee said the government
RBI March digital pay- Centre has no plan to ask should print money to support direct
cash transfers to the poor,
ments shows significant RBI to print money to fi- Chidambaram wanted the Centre to
growth nance deficit "act boldly and spend" by borrowing
or printing more money.
The Reserve Bank of India (RBI) The Centre has no plan to ask the Re-
March digital payments index (DPI) serve Bank of India to print money to "This is not the time to worry about
rose to 270.59 as against 207.84 for finance its deficit for the current fiscal the fiscal deficit. So what if the deficit
March 2020 indicating significant even as the interest rates on govern- widens to 6.5 per cent. We can't lose
growth in digital transactions. The in- ment paper show little signs of soften- another year like we lost the last
dex for September stood at 217.74. ing with those on the benchmark 10- year. My advice to the government is
year paper at 6.16 per cent at close. to act boldly and spend. Borrow or
The RBI announced the construction print money and spend,"
of a composite Reserve Bank of India "The fundamentals of the economy re- Chidambaram said.
- Digital Payments Index (RBI-DPI) main strong as the gradual scaling
with March 2018 as base to capture back of lockdowns, along with the as-
the extent of digitisation of payments tute support of the Atmanirbhar RBI eyes transparency on
across the country. Bharat Mission (stimulus package) has foreign exchange deals
placed the economy firmly on the
The RBI-DPI index has demonstrated A plan broached by the regulator has
path of recovery from the second half
significant growth in the index repre- of 2020-21," finance minister Nirmala caught banks by surprise: the Reserve
senting the rapid adoption and deep- Bank of India (RBI) wants banks to dis-
Sitharaman said in the Lok Sabha. She
ening of digital payments across the was replying to a question by Lok close the money made on foreign ex-
country in recent years, the RBI said.
Sabha member Mala Roy of the change deals to clients.
The RBI-DPI comprises five broad pa- Trinamul Congress on the state of the The central bank believes this would
rameters that enable the measure- economy during the coronavirus pan- prevent banks from taking customers
ment of deepening and penetration of demic. for a ride and enable businesses to
digital payments in the country over
When asked "whether there is any fish for better exchange rates when
different time periods.
plan to print currency to tide over the they enter into forward contracts with
These parameters are Payment crisis", the finance minister, in her banks, or buy or sell foreign currency
Enablers, Payment Infrastructure - written statement, replied "no". in the spot market. T

Reforms help banks recover Rs 5.5 lakh crore of bad debt: Govt

The steps taken by the government over the last few years - from enacting Insolvency & Bankruptcy Code (IBC) and
strengthening other laws to administrative measures - have helped banks recover around Rs 5.5 lakh crore of bad
debt, including close to Rs 1 lakh crore from accounts that had been technically written off, top officials said. And,
with indications that the build-up of non-performing assets (NPAs) is lower than anticipated, especially among large
companies, the government believes that state-run lenders are well poised to meet the credit requirements, given
that they are adequately capitalised. Besides, government sources argued that with provision coverage ratio of 83.7%,
public sector banks were adequately protected against any potential hit.

14 | 2021 | AUGUST | BANKING FINANCE