Demonetisation, GST to transform India, NPAs key risk: RBI

Dated 29th December, 2016

Lauding the Goods and Services Tax (GST) and demonetisation initiative by the government, the Reserve Bank of India (RBI) on Thursday said these moves can transform the economy, inconvenience to public and momentary impact on growth notwithstanding. In a statement to the media on Thursday, RBI Governor Urjit Patel said withdrawal of specified bank notes will impart far reaching changes going forward, adding that demonetisation will significantly transform economy in due course. These observations were made in the Report on Trend and Progress of Banking in India 2015-16 (RTP) and the 14th issue of the Financial Stability Report (FSR).

Patel said that enhanced transparency has helped in reinforcing the stability of India’s financial system. He further added that the performance of corporate sector has improved though the risk of lower turnover remains. The Governor also cautioned that there is “little room” for complacency and it is important to guard against sporadic volatility in financial markets. RBI further said that the banking stability indicator shows that the risks to the banking sector remained elevated due to continuous deterioration in asset quality, low profitability and liquidity.

(This article is published in Indian Express on 29 December, 2016)