India is 'at doorstep of revival'; lenders must have capital: RBI governor

India is “at the doorstep of the revival process” from the coronavirus pandemic and lenders must ensure they have capital to help the economy, said Reserve Bank of India governor Shaktikanta Das on Wednesday.

“We are today at the doorstep of the revival process from the Covid crisis. We have told banks and NBFCs that as soon as the crisis settles, they must do stress tests," Das said at a panel discussion in Mumbai, referring to the disease caused in the pandemic.

“I have myself appealed and impressed upon them to proactively build capital buffers, not only to strengthen their inherent resilience, but also to have adequate capital to ensure that the credit flow is maintained in a phase when the economy comes for a revival,” Das said. He was speaking at a panel discussion on the launch of 15th Finance Commission Chairman N K Singh’s book 'Portraits of Power'.

Das said governance reforms in banks and NBFCs should be regarded as an ownership issue alone. “When we talk of reforms in banking, people mix it up with ownership reforms. The governance reforms in banks and NBFCs are ownership neutral.

“Banks that have robust financial practices, internal practices--those who don’t undertake smart accounting practices, they survive and grow in every crisis. Governance reforms are ownership agnostic.”

After the crisis caused by the pandemic is over, the government "certainly will have to roll out a fiscal roadmap” to ensure it gets back to the debt-to-GDP path that the 15th Finance Commission has set in. Fiscal and monetary policies are presently counter cyclical and the general government debt exceeds targets earmarked.

Still, the measures taken by the government have been fiscally prudent and have helped sustain the financial sector, Das said. The RBI is in a monetary expansion mode, deploying several tools that were earlier not in its kit.

External Affairs Minister S Jaishankar said multilateralism is in a serious danger, as every country, especially the bigger ones, are “really very much focused on their own interests.” To preserve multilateralism, other countries need to step forward. There is diversity in the world and differing opinions, and democratising multilateralism can ensure its survival.

India has entered the United Nations Security Council as a non-permanent member, and is pushing for multilateralism, partly to further its own interest, but also because it is good for the institutions.

India is keenly watching US election debates on trade, immigration, and security and how America views other nations to gauge the possible impact on the economic, political and cultural rebalancing, Jaishankar said.

Lawrence Summers, the former US Treasury Secretary, told the panel he expects a new administration in the US, and that "Covid should bring mankind together not pull apart, and the same can be said about the climate change issue.”