Saturday, April 1, 2023

RBI: Impact of US, European bank crisis in India limited, ‘our financial system safe’: Former RBI governor Subbarao – Usky News

HYDERABAD: The impact of the ongoing banking crisis in the United States and Europe is likely to be quite limited in India as our banks and financial system are safe, former Reserve Bank of India (RBI)reserve Bank of India) Governor Duvuri Subbarao said here on Saturday.
“The retail deposit base of our banks is quite diverse. Good credit quality. There is sufficient liquidity. In our banks, in particular, SLR (Statutory Liquidity Ratio) is required which is another safety buffer. We have to be careful and cautious, but like (what happened) during the global financial crisis of 2008-09, the chances are quite limited,” he said.
He also said that he does not see any possibility of a repeat of the taper tantrums of 2013, when foreign institutional investors pulled money out of equities and bonds, causing the rupee to depreciate by 15% between May 22 and August 30, 2013. RBI was forced to increase the interest rates. 1% during his tenure as its head. The Indian taper tantrum was a result of US investors’ reaction to the Fed’s announcement in May 2013 on reducing bond purchases in the near future.
“The situation today is very different from the situation in 2013. Then there was a lot of pressure on the exchange rate of the rupee. Our foreign exchange reserves were very limited. Fiscal deficit was huge but today the situation is different G Kumaraswamy ReddyHis autobiography is ‘A Life in the Civil Service’.
He said that the rupee is more or less tracking the fundamentals. “Fiscal deficit is under control. Current account deficit, we were worried about it going beyond the safety limit, but now we believe that this year also it will be within a very safe limit. From what we experienced in the last few years Slightly higher but definitely within safe limits. We have huge forex reserves, so I believe a repeat of 2013 taper tantrum pressure is unlikely to happen today,” he said.


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