Monday, November 19, 2018

No need for RBI to pay govt out of surplus funds: Keki Mistry - economic news of india - world economic news - economics news for students - indian economy news

No need for RBI to pay govt out of surplus funds: Keki Mistry
Money is there in the market for very big players but smaller players are struggling for liquidity, Keki Mistry, VC & CEO, 66689568 66688655 66688477 HDFC, tells ET Now.Edited excerpts: What is going to be on the agenda of the RBI board meeting?One should be about relaxing PCA. That will to some extent increase lending in the system but it will also add to more liquidity in the market because today liquidity is trapped in these PCA banks which does not enter the system. These PCA banks accept deposits but are not allowed to lend money. So they get money, they collect money, they have liquidity but that liquidity gets trapped and goes back to RBI. Some resolution around that would to my mind be useful. Fiscal deficit is something we all worry about. Do you think that transfer of surplus funds from the balance sheet of the RBI to the government coffers should be considered?I am not so sure of that. My sense is that the fiscal deficit target will be met. The finance minister would probably may even say that today that he expects that the fiscal target will be maintained. If the fiscal target is maintained then so it be and if historically RBI has not been paying out money, then I do not see why there should be a change. But that is my view.Do you see some respite from the challenges banks were going through? NBFCs are going through a liquidity crunch phase. Has there been any improvement of late?Undoubtedly. When this whole crisis started in the end of September, there was a tremendous amount of nervousness in the markets and that led to complete drying up of all credit lines. But I think a lot of that is now behind us. All the CPs that have matured in the last four-five weeks, have got honoured. They have all either got rolled over or got paid back on maturity. That has given confidence back to people. A fair bit of the crisis situation that one was seeing towards the end of September has now been resolved. But still liquidity remains reasonably tight. Having said that, money is available to very big players but the smaller players are struggling a bit for liquidity.
Source: ET