RBI, Sebi need to be cognizant of market risks: RBI Governor Urjit Patel

NEW DELHI: Even though RBI Governor Urjit Patel ruled out any systematic risk due to stock market volatility on Saturday, he warned that financial market regulators like the RBI and Sebi need to be cognizant of the risk going forward. “So far neither globally nor in India have we felt that this bubble could lead to a very major problem. However, as financial market regulators, both RBI and Sebi need to be cognizant of the risk going forward,” Patel said.

Referring to the recent downward slide in domestic and global stock markets, Patel said, “there has already been a correction, not only globally but in India, and therefore in a way it underscores how capital markets can change direction.” He was addressing the media along with Finance Minister Arun Jaitley and Sebi Chief Ajay Tyagi. His concern was backed by Tyagi, who added that volatility in the Indian markets may continue for some time due to global reasons. However, he added that there were no issues of concern for investors in terms of safety and security of the Indian marketplace. 

Urjit Patel also defended his policy stance of keeping the repo rate unchanged, stating that the decisions have been “forward-looking rather than backward-looking”. However, he warned that the RBI needs to be prepared for the movement of crude oil prices either way.“In the MPC (Monetary Policy Committee) resolution, we had put forth the downside risks and mitigating factors.

We had observed, that in recent days, oil prices had a two-way movement... we need to be prepared for movements either way,” Patel said. In June last year, Patel pointed out, it was widely predicted that oil prices would not touch $40-$45 per barrel, and some of the advice based on that “turned out to be wrong in a major way”. On credit growth, Patel said that it was currently at 11 per cent and that there are indications of the pick-up in the credit growth in future.

Fortis under Sebi scanner
Market regulator Securities and Exchange Board of India (SEBI) on Saturday said it is examining related party transactions and alleged corporate governance lapses in Fortis Healthcare promoted by Malvinder Mohan Singh and Shivinder Mohan Singh, Sebi chairman Ajay Tyagi said after a board meeting of the regulatory body. “We have also received a reference on Religare. It will be looked into,” said Tyagi. Religare Enterprises Ltd. is another firm promoted by the Singh brothers and others.