SME Times News Bureau | 07 Jan, 2020
RBI Governor Shaktikanta Das on Tuesday said that the
central bank is working on creating a robust framework of financial stability
where banks and NBFCs are able to fulfil the expectations of society for high
growth with financial stability.
"The mandate given to the RBI on maintaining price stability, financial
stability and economic growth is not only important from a macroeconomic
perspective, but also for the objective of inclusive growth. Persistently high
inflation adversely impacts the economy's allocative efficiency and impedes
growth. It also contributes to a worsening of income distribution by depreciating
the real income of the poor,” Das said, speaking at the Third Suresh Tendulkar
Memorial Lecture.
"In the backdrop of very high domestic inflation as compared to G20
countries, we adopted a flexible inflation targeting (FIT) framework in 2016
under which primacy has been accorded to the objective of price stability,
while simultaneously focusing on growth when inflation is under control,” the
RBI chief added.
"Similarly, high growth with financial stability augurs well for inclusive
growth. High growth can bring inclusiveness in the process of wealth creation
and its spread effect. I need not elaborate, but higher growth also improves
tax-GDP ratio which enhances the resource availability with the government to
undertake social and infrastructure expenditure. Again, a sound financial
system with healthy banks and NBFCs can play an important role in meeting the
credit requirements of the bottom of the pyramid. Therefore, we have been
focusing on strengthening regulation and supervision to develop a robust
framework of financial stability where the banks and the NBFCs are able to
fulfil the expectations of the society," he said in his remarks at the
Third Suresh Tendulkar Memorial Lecture, hosted by the central bank.
Singapore's Senior Minister Tharman Shanmugaratnam delivered the address.