HomeEconomy NewsEach bank has been asked to undertake 'COVID stress test': RBI Governor Shaktikanta Das

Each bank has been asked to undertake 'COVID stress test': RBI Governor Shaktikanta Das

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By CNBC-TV18 July 11, 2020, 2:32:41 PM IST (Updated)

Each bank has been asked to undertake 'COVID stress test': RBI Governor Shaktikanta Das
RBI Governor Shaktikanta Das on Saturday said that each bank in the country has been asked to undertake a COVID stress test, identify vulnerabilities and raise capital in time. While addressing media on the plan ahead to deal with the COVID-19 crisis, Das said building capital buffers is very important at this time.


"Banks, FIs have been asked to analyse impact of COVID-19 for FY21 and FY22 through stress testing," said Das. He added that it is important that banks, FIs are even more watchful of emerging vulnerabilities.

Recapitalisation of PSBs has become absolutely necessary, Das said, while maintaining that the medium-term outlook looks uncertain.

Das said the Indian economy has started showing signs of normalcy with ease in lockdown restrictions across the country. He added that post containment of COVID-19, a very careful trajectory has to be followed in orderly unwinding of countercyclical regulatory measures.

The financial sector should return to normal functioning without relying on regulatory relaxation as the new norm, he added.

While the multi-pronged approach of the Reserve Bank has provided a cushion from the immediate impact of the pandemic on banks, the medium-term outlook is uncertain and depends on the COVID-19 curve, he said.

"Policy action in medium-term would require a careful assessment of how the crisis unfolds," he said, adding that building buffers and raising capital will be crucial not only to ensure credit flows but also to build resilience in the financial system.

The country's banking and financial system is capable of rising to the occasion in meeting this challenge, he asserted. In these challenging times, banks have to improve their governance and sharpen their risk management, he said.

Banks will also have to raise capital in an anticipatory basis instead of waiting for a situation to arise, Das noted.
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