Shaktikanta Das, RBI Governor | Post Monetary Policy Press Conference, June 08, 2023 | Goodreturns

Good afternoon. Yes, thanks for correcting. Good afternoon. It's just two minutes past, yeah. Yeah, we can start. Sorry, oh, you take the photographs? You're taking the photographs, okay. Please.

Thank you. Socially, yeah, please. Policy press conference with us today. We have Governor Shri Shaktikanta Das, Deputy Governor Shri Michael Patra, along with my colleague Munish Kapoor. I welcome all of you for this press conference. And without much ado, let me begin by inviting Governor to make opening remarks, and then we will go by, you know, taking your questions one by one.

Thank you, sir. I will begin the press conference by inviting Shri Jeevan for asking his question.

Here from Akashi CBDC Public Lodge. I think Deputy Governor Ravi Shankar Agrawal. Thank you, Governor.

Moving the Supreme Court seeking clarification on fraud classification. The Supreme Court had issued some notice regarding that. So is the RBI, because some of the banks have stopped marking accounts as fraud, they are waiting for more clarity from the RBI. So is that we are going to issue a detailed circular in this regard on fraud classification? Separately, sir, you had said that, you know, the foreign countries with excess rupee can invest in G-Sec, T-bills. So actually what is the amount that has been invested by foreign account, you know, the international settlement of trade in rupee through the arrangement of rupee Vostro accounts?

Thanks, Governor. As you are aware, the Supreme Court has given its judgment that natural justice has to be provided to the borrower before declaring the fraud. And subsequently, SBI filed the review petition, and basically, the Supreme Court has clarified that there is no need for giving a personal hearing while they are allowing to file a review petition for the remaining part of the SBI. So we are reviewing the entire guidelines on the fraud in consultation with various stakeholders, and we will come out with our guidelines very shortly. But nevertheless, the Supreme Court judgment is applicable to all the regulated entities irrespective of RBI's guidelines.

So why, when can we expect the circular to come up?

Very shortly. Thank you, sir. I'll move on to Miss Latha Venkatesh from CNBC TV18.

Yogesh said everybody had one question, so don't count that in my quota. Is all the details on 2000 rupee notes? How much has come back so far? How much of it was exchanged and how much of it came as deposits? Then I'll ask my MPC question.

So my question is on liquidity. The way the Reserve Bank, you know, there seems to be a greater willingness to do VRRRs, that is removal of liquidity, and a slight hesitation in doing reverse repo auctions, which is giving liquidity. So from that, should we understand that RBI would be happier if the weighted average call rate lay between 6.5 and 6.75? I mean, the comfort is more if it is higher and not as much when it is lower. And considering that banks also have been hesitant to, I mean, you say that they are very cautious about giving you money in VRRR, will you look for more enduring ways like, you know, an OMO purchase or something like that?

It seems, you know, in the VRR, the large banks have been cautious. Will you look for others?

From Economic Times. So there is a feeling that the entire liquidity dynamics has changed in the last few months. Otherwise, because of the 24x7 payments, so there's that 1 percent of NDTL that used to be a case that it certainly may have to be revised. And you also mentioned in your speech that banks are cautious. So there seems to be a kind of a...

To take that question, yeah. It's true that there are payments transactions going through till the middle of the night. But as banks get used to this, the liquidity is balancing out. If you saw, there was a lot of tightness till the middle of May, but after that there has been an easing of liquidity. So banks are slowly getting used to that, to that transactions coming in late. And in any case, after 5:30, we have standing windows open and an assistive facility which will sweep in and sweep out. So banks are not inconvenienced by it.

Just on that, like, so because the banks are getting used to it, there's also that neutral liquidity, the kind of a surplus of 60,000 or 70,000 crores, the definition of neutral itself is getting so redefined. Is that the case?

No, we abandon that quantitative ceiling right now. We look at the call money rate and look at it to get aligned with the repo rate. As soon as it gets aligned, we feel its liquidity is balanced out.

Thank you, sir. I'll move on to Mr. Manojit Saha from Business Standard.

Thank you. Last evening also RBI released the list of forex, online forex platforms which are unauthorized. Earlier there was a list also, but those applications are still there in the Google Play Store and at all. So is there any further steps RBI is contemplating to curb those issues?

Yeah, so yeah, right, that we issued a list yesterday. So there is actually a two-pronged approach to this. One is to build up levels of awareness. And for that purpose, we not only issue those lists which say unauthorized, but we also give you a list of authorized platforms. The other thing that we do is we interact very closely with the enforcement agencies, the ministries like Information Technology and Finance, and they are taking action on an ongoing basis. You know, already we are hearing of various platforms being raided and the assets seized. So action is taking place there. The third line of action should be the tech companies which are uploading these mobile apps should apply caution and ensure that what they are uploading is by the laws of the land.

Thank you, sir. We'll move on to Miss Anshika from Z Business.

Thank you again. Of course, a big move, everybody was taken by surprise. Of course, a lot of our consumers are people who watch us. 500 rupees, again, it's a valid question. So people have that in their minds. What is your response?

The comments are still being evaluated. Some more refinements and work is done. So as at this point in time, I don't think it's correct to infer that 30th June would be the date when it's going to be launched. That is an absolutely incorrect assumption. I will stop it with that.

I'll move on to Mr. Anup Roy from Bloomberg.

Thank you, sir. Sir, why not change the stance to neutral? And have you pivoted? Because last time you stressed that this is a pause, not a pivot, but this time you didn't mention that. So interpret it as people...

Mike, Michael.

Thank you. Okay, sir. Good afternoon, Governor. I want to ask regarding the same question only, regarding the stance. That, you know, often it is said that, you know, in the end it becomes little difficult. And hence you have mentioned that future actions will be based on evolving situations. But as per your assessment only, you have said the situation has improved from last time, be it indicators or other things. So again, how should we infer that, you know, not mentioning of exact word of pivot, it's not we, I mean, you have mentioned, but you believe that we are much closer to the change in stance than we were last time?

Reuters. Thank you. Okay, so I had a two-part question. I mean, one is, apart from a slowdown in growth, what would be the other factors that would, you know, prompt the MPC to start cutting rates? Is there a level of real rate which will make it restrictive for the economy to keep growing? That's one. And there are expectations that the Fed could continue to keep hiking rates. So is RBI comfortable with a rising interest rate differential with the Fed? Thank you.

So we have described to you what exactly is our comfort zone, and that is that when inflation aligns with the target and growth returns to potential after the shock it received from the pandemic. Both are work in progress. There is a little better progress on the growth front. Inflation is also progressing towards the goal but not as fast as growth is normalizing. So we'll look at both to take the next step.

Thank you, sir. I'll move on to Mr. Mayur Shetty from Times of India.

Thank you, Governor. Recently the Kanungo committee had submitted its recommendation on customer service standards. So I don't know when, how would these standards be enforced? And in that context, there were two incidents, videos which were circulating in social media. One was of a bank manager pushing the staff to sell insurance policies instead of the need-based selling that RBI requires. And the other is of regulated entities saying that if people do not want to be disturbed, they should not, if they want to opt out of our calls, then they should not come back for loans in future. So whether such issues would get addressed?

Let me respond about the Kanungo committee report. We have put it out on our website for public comments. By and large, this committee basically has focused on adequacy of regulatory and institutional framework, the customer experience, efficacy of grievance redressal, extent of customer education and awareness. These are the five areas where they have focused. And we will wait for the public comments and then we will decide what can be implemented, what cannot be implemented. On the calls, basically, as far as recovery agents is concerned, we have already issued our guidelines and we have put out our code that what they have to follow for the recovery agents. For the marketing calls, this is the decision of the individual banks and the RBI has to really look into if there is a do-not-disturb registry done by any customers. But nevertheless, this issue which you have brought out, we will examine it separately.

I'll move to Miss Anshika.

So again, a two-part question. First is on the liquidity. At the time of, do you think that is required at this point in time? And secondly, do you think after SEBI, will RBI also come out with regulations on financial influencers?

So I'll invite I hear from there.

There's a big difference between the earlier policy statements and this one in the fact that earlier policy statement spoke predominantly about the flexibility of the inflation target. Today you have been very clear that 4 percent is the target. I think it's been a while since we heard that. And I think I would like to know a bit more about that. Also, while talking about the stance, we have quoted Mahatma Gandhi. Put together, does the market now take it that a rate cut potentially or a stance change is on the table only when inflation reaches 4 percent?

So I'll invite to Mr. Prime.

Governor, a quick question. I'm coming back to the liquidity question because that's all that is important here at this point in time. You're talking about a 1.5 lakh crore mop up from system because of every VRRR, but your auctions were like four and a half lakh crore, we put all the auctions together. So I'm just trying to understand what is the reason for this caution amongst banks firstly. And secondly, if you look at the way the interest rates, lending rates and deposit rates are panning out of the system, the RBI's data says that in April, fresh loan and fresh deposit rates have actually fallen 12-20 basis points. It's a marginal fall, but still, you know, at a time when you're talking about status quo, rates falling may not go well for transmission.

The reason for caution among banks is that there is an imminent advanced tax outflow, which is always sizable, that will happen in the next week. So they are holding back money for that purpose. But as you saw, we were persevering in our efforts, and the fact that we repeated our auctions indicated our purpose, which is what we wanted to convey. It was important therefore to withdraw that excess liquidity so that the deposit rate, lending rate suffering that was happening was more aligned with what the interest rate cycle is. And that is why we have withdrawn 1 lakh 50,000 so far.

Thank you, sir. I'll move on to Miss Anshika from Hindu Business Line.

You know, it is necessary that any segment of the market does not preempt, you know, does not prematurely assume certain things and then start cutting rates or both, whether in the asset side or deposit side. Whether it is interest rates or in the deposit side, it's a commercial decision. I mean, as you know, that interest rates and both deposit rates as well as interest rates for loans are all deregulated. Banks are free to do it. But if they are doing it on the assumption of a certain action which is likely to be taken by RBI, I think that would be wrong. And just hold a moment. And as Deputy Governor clarified very clearly, our liquidity action also should be seen in the context that our monetary policy stance and our policy rate are well aligned with the interest rates which are prevailing in the market, including banks.

Thank you, sir. Because Anshika, to go ahead.

Of the decision to issue a framework being triggered by the huge amount of write-offs that we saw post-COVID? And is the RBI concerned because the recoveries from written-off accounts has been underwhelming so far? And a second very quick question, the RBI is looking to issue FLDG guidelines, but to understand what were the points of contention till now and what is the direction that the RBI is looking in now?

Now, this, I don't think it is correct to infer that the write-offs has actually triggered the issue of compromise settlement. Essentially, what we have done is rationalize the existing framework for compromise settlement. These instructions were issued across several circulars at different points in time, and they have now been actually brought in one place and enabled. That is one. And the most significant factor is this has been extended to the urban cooperative banks also. It was not there either too. So this is the basic change, and that is what has actually been done. Nothing more than that.

Quicker credit history. The first-time borrowers, they should not depend on the credit history, should not be a factor while taking a credit decision. It's one of the best practices recommended by RBI way back in 2014. August last year, the credit information companies... Ombudsman, internal...

Take one. Okay, yeah. We got the God name is predator yesterday. And we find that the average increase across all crops is about seven and a half to eight percent. So over and above our projections, this will impact to the extent of 10 to 12 basis points. And part of the hike was already, you know, it's already built into our projections going by the past, you know, years, the kind of increase that is already built into our projections. So therefore, it will be another, you know, whatever DG says, you are saying another 10 or 12 basis points. That is what, you know, the quick calculations which we have done overnight, that shows.

You mentioned that your target is to bring inflation at 4 percent. So given this, is it safe to assume that now there will be no rate cut in the current fiscal? And secondly, it's regarding 2000 rupee notes. There are many NRIs which are outside, so and which they may not be able to come back in the deadline. So you have some thinking to extend that date or so that their problem can be addressed?

Yeah, so you, but you can put in your language. I think Governor was very categorical on what will the future look like. But I think one thing he has kept on stressing is that we are looking at inflation aligning with the target, not with inflation at target.

Thank you, sirs. I'll move on to Mr. Ben Jews from PTA.

This is regarding some problem customers, many customers face in Kerala. The issue was that when one makes a petty amount, say 100 rupees or 200 rupees payment, you pay payment, their account gets immediately blocked. Kerala, there were reports, not in the mainstream but only in media and then some TV channels also, there were reports that hundreds of customers were facing, mostly from Federal Bank customers, are facing problem wherein after UPI payments, maybe a small amount, even a chai amount, paying for a tea, their account gets completely blocked. And when they walk into the bank, the bank refuses an answer why their accounts are blocked. What do you think? The answer they get is that the police from say Bihar or Chhattisgarh or Haryana, they ask the banker to block their code.

From Moneycontrol. Thank you. Good afternoon. So my question is, do you think that repo rate of 6.5 is appropriate to sustain growth in the long run? And second is on other, what is the status of that RBI central portal for unclaimed deposits?

The rate of 6.5 percent is judged to be appropriate at this point of time. As and when we have new information or new outlook on the goal variables, we will take a new view on the rate.

The work is going on. Development, software development, etc., is going on. And as soon as it's ready, we will launch it.

I mean, the market wanted to know why, I mean, after all the last two numbers came down because of a fall in core inflation. You don't see that momentum in the second half because the reduction in the forecast was a little less than what others arithmetically arrived at. So you're not confident that the way core fell in the second half, you could expect a lower inflation?

Thank you, sir. With this, we... Will the RBI recommend to the government to withdraw the legal status of 2000 rupees note after the 30th September? With this, we come to... I thank the top management of RBI Bank led by respective Governor Shri Shaktikanta Das and Deputy Governors along with executive directors. And thank you all media friends for making it here and a very conducive, cordial press conference. Till next time, thank you so much and take care. Thank you, thank you.

What I wanted to do was also really to take the opportunity to highlight really how strong team MEA has been. Not just the people who are sitting on the table, you know, if you think back at these nine years, other people learned to work from home, in MEA we learned to live from office. So we kept MEA going through this whole period. You know, when you look at the Vande Bharat Mission, the vaccine maitri, the Operation Ganga, Operation Kaveri, I must tell you there were people who took personal risks to make it happen. So I also would like, I think it's only fair that at the end of the report card, a little bit also should be said to the people who actually make it happen. And the press conference would not be complete without that. Thank you again. So thank you very much.

To all of you, thank you very much for joining us for this special briefing on nine years of Modi government. We have the privilege of having with us Honorable External Affairs Minister Dr. S. Jaishankar to do the briefing on this occasion and take your questions. I'd also like to thank the presence of Honorable Ministers of State, she would be remotely, as well as Special Secretary ER and DPA Shri Prabhat Kumar. So may I request you to make opening remarks, after which I will bring you can do it from there also, so it's convenient.

I don't need that. A very good morning to all of you. My namaskar. Ministers of State, Secretaries, and friends of the media. It's really very great pleasure to talk to all of you today as we mark the completion of nine years of the Modi government. I think most of you would not dispute that among the many areas where there's been a significant transformation, foreign policy would surely be among them. It's reflected in the country's higher standing, greater influence, bigger footprint, new concepts, and stronger delivery. Now, there are many ways by which one can judge how foreign policy has changed, how it has delivered, where has it made its deepest impact. I would like to pick two broad themes today as the metrics by which you can evaluate Indian foreign policy over the last nine years. The first theme is how does the world see India today? And the second is really how has foreign policy affected the lives of the common citizen. So those are really the two perspectives from which I would like to present to you the foreign policy of the last nine years. Now, in terms of how the world sees India today, I think you can't get a better set of people than those sitting on the podium to give you that view because we travel out, we engage people on behalf of India, we talk to the leaderships in different places, we, you know, since we travel around, we mix with many sections of society. So what in a sense I present to you is an accumulation of our collective experiences. And if I were to pick them, probably the one which I would start off with is how much today the world, especially the Global South, perceives India as a development partner, as a credible, effective development partner with delivery on the ground. And I actually, I'm just reminded of my last visit. I came back yesterday morning from Namibia, and I inaugurated formally a center of excellence in IT which has been functioning there for about a year and a half. And the impact on the technology university of...