Tackling inflation is the Reserve Bank of India's top priority, and it will try to minimise the impact on growth while doing the same, the central bank's Governor Shaktikanta Das said in an interview with a media company on Friday.
He said that global factors impact inflation and growth, and global inflation and slowdown also impact India. Das also said that domestic economic activity is resilient.
India's gross domestic product (GDP) grew 13.5 percent in the April-June quarter, according to data released by the National Statistical Office (NSO) on August 31. It was down from the 20.1 percent recorded in the corresponding quarter last year and up from 4.1 percent sequentially, the data showed.
On the recent June quarter GDP data, the governor told Zee Business that the central bank was studying why the April to June GDP growth was lower than RBI's projection.
Das added that he would discuss the GDP growth at the next Monetary Policy Committee meeting.
Das said that RBI constantly monitors the credit growth of all banks, and cautions them when they see excessive credit growth in any area.
Talking about RBI's new digital rules, he said the "consumer-centric" norms were well-received by all segments of lenders. He said the digital rules focus on transparency, risk assessment, management and mitigation.
"Our high forex reserves are a strong buffer for the Indian economy," he said, adding that the high forex reserves keep the rupee stable. He said the high forex reserves also make India better placed to negotiate a global crisis.
Also Read: Fall in rupee due to dollar strength and not weak macro fundamentals: RBI Guv Shaktikanta Das
Talking about the rate hikes, he said they had not been transferred to lending rates completely yet. He added that the gap between lending, and deposit rates are narrowing.
Last month, the Das-led MPC raised the repo rate by 50 basis points (bps) to 5.40 percent in a bid to tame persisting high inflation.
He said that Indian banks are adequately capitalised, and the RBI will exhort all banks to raise more capital to be prepared for the worst. He believes Indian banks need to raise more capital if credit growth has to be sustained.
He also mentioned that there is no predetermined mindset about preferring small bank mergers. "India is at a threshold of a great opportunity, given the demographic dividend and global situation," he concluded.
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