Finance Minister Nirmala Sitharaman commended the Reserve Bank of India (RBI) for its adept handling of external challenges, stating that the professional management of the RBI has significantly bolstered India's ability to navigate financial uncertainties. Speaking on the occasion of the RBI's 90th anniversary, she praised the collaborative efforts between the government and the central bank in addressing issues such as external imbalances and balance sheet problems faced by banks.
Reflecting on the past, Sitharaman noted that a decade ago India grappled with balance sheet challenges, whereas today, there exists a balance sheet advantage, largely attributable to the cooperative endeavors between the government and the RBI. She highlighted the effective implementation of asset quality management and the prompt corrective action framework by the RBI, labeling it as the true regulator of banks in India.
Furthermore, Sitharaman underscored the stabilization of government bond yields despite inflationary pressures, attributing this stability to the RBI's efforts, which are crucial for the overall economy.
The Reserve Bank of India, the country's central bank, has a rich and varied history. During the unprecedented Covid-19 pandemic, the RBI employed both conventional and unconventional measures to ensure liquidity, foster growth, and maintain financial stability.
Finance Minister Sitharaman highlighted two key initiatives as prime examples: the loan payment moratorium and liquidity injections implemented during the pandemic. Subsequently, amidst the Russia-Ukraine conflict, the RBI's actions primarily targeted inflation and forex market stability. Notably, the RBI was among the first to acknowledge the enduring nature of inflation."
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