Banks should raise capital proactively: RBI Governor Shaktikanta Das

As per the latest Financial Stability Report (FSR) released by the Reserve Bank, gross non-performing assets of all banks may jump to 12.5 percent by the end of this fiscal under the baseline scenario, from 8.5 percent in March 2020.

PTI

July 27, 2020 / 21:57 IST

RBI Governor Shaktikanta Das on Monday advised banks to proactively raise capital and not wait for a difficult situation to arise amid the COVID-19 pandemic. Banks are staring at a risk of soaring bad loans due to the coronavirus crisis and would therefore require capital to survive.

"In fact, I have already advised banks and the NBFCs to undertake COVID stress tests and raise capital ahead of the curve rather than waiting for a situation to arise, and these are the issues which we are constantly working on in RBI," Das said at a CII event.

As per the latest Financial Stability Report (FSR) released by the Reserve Bank, gross non-performing assets of all banks may jump to 12.5 percent by the end of this fiscal under the baseline scenario, from 8.5 percent in March 2020.

"If the macroeconomic environment worsens further, the ratio may escalate to 14.7 percent under the very severely stressed scenario," the report released last week said.

The resilience of Indian banking in the face of macroeconomic shocks was tested through macro stress tests which attempt to assess the impact of cumulative shocks on banks' balance sheet and generate projections of gross non-performing asset (GNPA) ratios and capital to risk-weighted assets ratio (CRARs) over a one-year horizon under a baseline and three adverse -- medium, severe and very severe -- scenarios, the report said.

COVID-19 Vaccine

Frequently Asked Questions

How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

Show