BJP-led NDA is all set to form a new government at the centre bagging 353 seats in the 543 member Lok Sabha elections. BJP alone has won absolute majority and heading for a landslide victory. It has secured 303 seats.
Brokerage and research firm Bernstein has sent an open letter to the Prime Minister Narendra Modi suggesting changes in the financial sector and their expectations from him. Venugopal Garre, director, Bernstein, discussed this in an interview to CNBC-TV18.
“I think it is a great mandate for NDA. One of the reports that we released yesterday (Thursday) was titled as ‘with great power comes great responsibility’. So essentially the responsibility is to get us out of this weak economic patch and I would say that there are not many quick fixes that one can think about but essentially, a couple of areas which we think the government could look at improve the rate of growth of the economy is the financial sector," said Garre.
"I think that is a big constraint that India has at this juncture and to resolve the financial sector, we need to primarily look at ways and means of recapitalising some of the public sector (PSU) banks and for that we need to see how the Reserve Bank of India (RBI) committee, which has been put in place for resolving the excess reserves as to what the conclusions on that are,” he said.
A high-level panel led by former RBI governor Bimal Jalan, set up to decide the appropriate capital reserves that the central bank should maintain, is likely to submit its report by June.
“More importantly, I would say that improving liquidity in the banking system as well as looking at ways and means of accelerating the process of stressed assets clean up which started about 18 months back more through the insolvency and bankruptcy code (IBC) as well as various negotiations that are going on, need to be accelerated," Garre added.
"We cannot wait for these things to go on for another five years. An improved financing system eventually will help us to also bring down rates in the economy, which is going to be also helping demand,” he said.