Banks need to raise and conserve capital in COVID time: Former RBI Deputy Governor NS Vishwanathan
He said that raising resources at the moment is essential as it might not be available or become exorbitant when actually needed.
Commercial banks of the country are required to raise capital at this juncture even if it is not needed as the COVID-19 pandemic has made the future uncertain, former deputy governor of RBI N S Vishwanathan said. He said that raising resources at the moment is essential as it might not be available or become exorbitant when actually needed.
“Banks are required to raise capital at the moment. They need to raise and conserve capital. This is because when it is needed, capital may not be available or become highly expensive,” Vishwanathan said while speaking at a webinar organised by Enqube Collaboration. According to him, both the government and RBI have announced a slew of measures to limit the debilitating effect of COVID-19.
“However, the future is uncertain and the contraction of the economy is sure to happen,” he said. NPA levels of banks are sure to go up and the entire risk management mechanism will undergo a paradigm shift, Vishwanathan said. He said that banks are required to be adequately capitalised and the cost-to-income ratio has to be lowered. MD&CEO of Punjab National Bank, S S S Mallikarjuna Rao, said that it is needed to maintain the quality of assets and raising capital.
