The Reserve Bank of India (RBI) is yet to see any “credible answers” to its serious questions on the potential impact of private cryptocurrencies on the Indian economy, governor Shaktikanta Das said on Thursday.
The central bank has “serious” and “major” concerns about cryptocurrencies and their impact on the country’s financial stability, Das said at an event organized by The Indian Express and Financial Times.
“We need more credible answers whether, going forward, what contribution will private cryptocurrencies make to the India economy. We need to be convinced about explanations and answers. It’s now for the government to take decisions,” Das said.
Speaking on the economy, Das said RBI is quite optimistic about its 9.5% gross domestic product (GDP) growth estimate for fiscal 2022. He said high-frequency indicators are showing an uptick, and economic growth will improve from the second quarter onwards on a sequential basis.
Das said RBI decided to lay more emphasis on growth because of the pandemic and operate within the inflation range of 2% to 6%. He added that the central bank would slowly move to the 4% mid-point, and that there is no evidence of inflation getting generalized.
“Operating within the band was the specific need. We are watchful of growth impulses taking deep roots. Going forward, our effort, being an inflation target institution, will be to gradually move to 4%. The timing has to be decided.”
Das said that bad loans in the banking system are “manageable” as of now, underlining that lenders also have adequate capital buffers.
To a question on large haircuts taken by banks in debt resolutions, he said there is scope for improvement in the functioning of the insolvency and bankruptcy process, including legislative changes and cutting the time taken for a case to be admitted in the courts.
“There is scope for improvement in the functioning of IBC. There is perhaps a need for legislative amendments. The time taken to admit a case needs to be reduced by simplifying procedures,” Das said.
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