Kolkata, Aug 06 (UNI) SBI Chairman Rajnish Kumar today said the Reserve Bank of India’s monetary policy statement draws a fine balance between the challenges posed due to COVID-19 pandemic shock and the need to support growth and financial stability.

In a statement, he said, "On the macroeconomic front, the outlook to growth continues to be negative with RBI refraining to give any number to the extent of GDP contraction on account of COVID-19."

"The asymmetric recovery across rural and urban areas poses challenge in policy formulation. The outlook on inflation is equally uncertain as supply shock has limited the scope of monetary policy in containing risk, " he noted.

"On the balance, demand shock appears to net out the supply shock on price levels. On the regulatory and development policy front, the RBI has carefully addressed the concerns emanating from the wider market participants," he opined.

"Notably, the RBI has addressed the need to offer some form of restructuring facility for standard accounts that are facing difficulty in debt restructuring. We welcome the fact that a new Resolution Framework for COVID-19-related Stress facility has been extended to large corporate, SME and personal loans with necessary safeguards in each segment," he added.

"The announcement on CRR, mechanism to check and track multiple operating accounts by large borrowers will benefit the industry at large. Harmonising the capital charge for market risk for debt and equity mutual funds is also a good move towards capital conservation given the volatility has increased after COVID-19 pandemic," he said.

"In conclusion, the decision to hold the policy rate is a prudent one in the prevailing circumstances as the trajectory of economic growth, inflation and external demand continues to remain uncertain. RBI’s calibrated approach is in perfect consonance with evolving situation while keeping enough headroom for the future,” he stated.

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