‘Inflation key, but growth sacrifice to be minimum’

MUMBAI: RBI governor Shaktikanta Das said that the central bank will ensure that “the growth sacrifice” will be minimum in its battle against inflation.
In an interview with Zee Business on Friday, Das said that the RBI has stated that inflation takes priority over growth. “We have to keep in mind growth while taking any decision on inflation. Our priority will always be to ensure that growth sacrifice is as little as possible,” said Das. He said that while growth in the first quarter of FY23 has been below RBI estimates, the economic activity has revived.
The governor said that banks have been again asked to raise adequate capital to meet the requirements following high credit growth during the current fiscal. The central bank is also doing a risk assessment of sectors that are witnessing high growth and asking lenders to ensure their sustainability
This is the second time that the governor is calling for additional capital to be raised by banks. In the early stage of the pandemic, Das had asked banks to raise capital to prepare for the impact of the pandemic on businesses. Now, two years on when credit growth is bouncing back, the governor has asked banks to raise capital again.
The governor said that the public sector and private banks have done a good job in raising capital over the last two years and at a systemic level, there was adequate capital. The RBI’s latest financial stability report placed the banking systems capital adequacy ratio at 16.7% as of March 2022.
“The credit growth that we are seeing has to be viewed against the low base of 5.5-6%,” said Das responding to a question on whether he was concerned over the pace of credit growth. He said that the RBI was using its supervision and surveillance tools to analysethe sectors that are showing high growth. “If any sub-sector is witnessing excessive growth we analyse it and caution the lending institutions and ask them to assess the sustainability of credit and review it internally,” said Das.

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