RBI won’t allow loose money in banking system; monitoring liquidity: Das

(UNI) Reserve Bank of India Governor Shaktikanta Das on Monday said the central bank would not allow prevailing “loose money” scenario in the banking system and would infuse capital whenever there is liquidity crunch in the sector.
“The RBI will infuse the need-based liquidity in banking system and will not want a loose money situation,” Mr Das told reporters after meeting micro, small and medium size enterprises’ representatives here.
He said the bank has been constantly monitoring the liquidity conditions in the banking sector. “I will meet non-banking financial company (NBFC) representatives in Mumbai tomorrow. We will discuss the liquidity issue of NBFCs. Liquidity conditions are being monitored constantly,” he added on capital crunch in NBFCs after the IL&FS fallout.
Asked about NPAs, he said there was considerable improvement in bringing down the NPAs and the government has not given them any target.
“There are many issues on which the government and the RBI hold discussions, but the final decision is of the RBI, on matters that are under its domain.
“NPAs and health of banking sector our top focus. Improvements on NPAs have to be sustained,” he added.
The central bank has also constituted a committee to look into the issues of the micro, small and medium enterprises (MSMEs) and the panel was tasked to suggest ways what kind of governance reforms can be brought about in the functioning of the banks on the other hand banks were asked to look into viability aspect and monitoring of restructured kind of MSMEs.
“I had a meeting with MSME associations to figure impact of restructuring scheme,” he maintained.
Mr Das said farm loan waivers are related to states’ fiscal space. Any generalised farm loan waiver would derail credit culture of the banking system.
The RBI Governor added that they would announce any decision taken on sharing of dividend with the government.