RBI Governor Ask Banks To Strengthen Lending Capacity By Raising Capital
RBI governor Shaktikanta Das at the central bank in Mumbai, on March 3, 2020. (Photographer: Kanishka Sonthalia/Bloomberg)

RBI Governor Ask Banks To Strengthen Lending Capacity By Raising Capital

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Reserve Bank of India Governor Shaktikanta Das has asked banks to take proactive measures to strengthen their resilience and lending capacity by raising capital, the central bank said in a statement on Wednesday.

During a two-day meeting with heads of banks, including the private sector lenders, the governor emphasised on the need to remain vigilant and make provisions against bad loans proactively.

Das had held similar meetings in May as well. He had also met with representatives of other financial institutions like NBFCs and microfinance lenders.

The RBI, in its statement, said Das held meetings with the managing directors and chief executives of public sector banks and select private sector lenders on Tuesday and Wednesday, respectively, through video conferencing.

The meetings were also attended by the RBI's deputy governors.

During the meetings, Das touched upon the current economic situation and emphasised on the importance of the banking sector in supporting the ongoing revival in economic activities, RBI said.

With specific reference to the financial sector, he highlighted the measures taken by the central bank since the onset of the pandemic to stabilise the economy and ensure financial stability.

"With regard to the banking sector, he reiterated the need for banks to remain vigilant and take proactive measures to strengthen their resilience and lending capacity by raising capital and making provisions proactively," the RBI said.

Also read: RBI Issues A Second Warning Against Aggressive Digital Lending Practices

Assessment of the current economic situation and outlook; and monetary policy transmission and liquidity situation too came up for deliberations.

The release further said credit flow to different sectors, including stressed segments and MSMEs, was also discussed.

Other issues which came up for discussion included progress in the implementation of resolution framework for Covid-related stressed assets, progress in making the identified districts 100% digitally enabled, strengthening and enhancing the capacity and efficiency of IT infrastructure and systems, and improving grievance redresssal mechanisms.

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