Page 9 - Banking Finance September 2020

RBI CORNER

"By all indications, the recovery is likely and trying to get into the global sup- able but their cash flows are drying up.
to be gradual as efforts towards re- ply chain. Both the sides have to be matched
opening of the economy are con- While responding to requests from in- and, in fact, the revival of such busi-
fronted with rising infections." nesses will also ensure NPA levels are
dustry captains on whether norms re-
His remarks came days after the fi- garding the resolution of stressed ac- kept low and swift economic recovery
nance ministry said in its monthly re- counts could be liberalised further to takes place," he said during the ques-
port for August that the worst is over include more companies, the governor tion-answer round of his keynote ad-
for the Indian economy and that it's on was forthcoming. He said for the cen- dress. In this context, he praised the
the way to a V-shaped recovery. tral bank, protecting depositors' inter- Kamath committee for coming up with
Though there's uncertainty due to the est and preserving financial stability an exhaustive set of recommendations
pandemic, a positive development on would be a prime concern. "The pri- in just 30 days.
the vaccine front would end that and mary concern in the banking system is Das also said the RBI could not give the
bring discretionary spending back to the protection of depositors' money. same leeway to the non-banking finan-
pre-Covid levels, the ministry said. Ultimately, it is the depositors' money cial sector as it gave to banks because
Weeks before this, the government that is being lent out," Das said. NBFCs had enjoyed a light-touch regu-
unveiled GDP figures for the first quar- "Depositors run into crores in numbers, lation until now.
ter of FY21, showing the economy had whereas borrowers are in lakhs. There The loan-to-value ratio in the case of
contracted by 23.9%. are small depositors, middle-class de- gold loans for NBFCs is 75 per cent,
positors, there are retired people who whereas for banks it could go up to 90
RBI battle-ready to meet depend on bank deposits. So, the inter- per cent.
economy's needs: Das ests of depositors have to be pro-
tected. Also, the aspect of financial RBI: Positive pay system
Reserve Bank of India (RBI) Governor
Shaktikanta Das said, that the eco- stability of the banking sector needs to for cheque payments from
nomic recovery would be slow, but the be also kept in mind," he said, respond-
ing to various demands by industrial- January 1
central bank stood "fully prepared and
is battle-ready" for whatever mea- ists. In order to check banking fraud, the
sures were needed to prop up growth. The governor said banks had an impor- Reserve Bank of India has decided to
tant role in spurring economic devel- introduce from January 1, 2021, the
Das said while there had been some ‘positive pay system’ for cheque, under
recovery, it was "not yet fully en- opment in an emerging-market which re-confirmation of key details
trenched and moreover, in some sec- economy like India as they were in the
forefront of providing credit. may be needed for payments beyond
tors, upticks in June and July appear to Rs 50,000.
be levelling off". "By all indications, the "We don't want a repeat of the situa-
recovery is likely to be gradual as ef- tion which India experienced four-five Under the positive pay system, the is-
forts towards reopening the economy years ago where the non-performing suer of the cheque will be required to
are confronted with rising infections," assets (NPA) levels of banks had gone submit electronically, through SMS,
he said in an address streamed online. up very steeply. On the other hand, we mobile app, internet banking or ATM
The event was organised by the Fed- are also mindful of the fact that Covid- certain minimum details of that
eration of Indian Chambers of Com- 19 has adversely affected a large num- cheque like date, name of the benefi-
merce & Industry (FICCI). ber of businesses, particularly those ciary, payee, amount to the drawee
that took loans from banks. They also bank.
He said the immediate policy response
needed some relief," Das said.
to Covid-19 had been to prioritise the These details will be cross-checked
stabilisation of the economy and sup- Businesses that are otherwise viable before the cheque is presented for
port a quick recovery, but policies for but have genuine cash-flow problems payment. In case any discrepancy is
the medium term after the crisis would because of temporary disruptions in flagged by cheque truncation system
be equally important. He suggested activity have to be looked after too. (CTS) to the drawee bank and present-
five focus areas, including prioritising "So, the focus is to assess and enable ing bank, redressal measures would be
human capital, increasing productivity, such businesses that are otherwise vi- undertaken, the RBI said. T

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