Garg said we must remember that fundamentally our savings and financial structure is secure, therefore money will keep on flowing into instruments.
Economic Affairs Secretary Subhash Chandra Garg, in an interview with CNBC-TV18, spoke about the non-banking financial companies' (NBFCs') liquidity problem, domestic debt market, capital requirements of PSU banks, among others.
"Some problems are temporary like oil prices, currency etc and those should be seen in that context. Oil prices have come down, currency is now stabilizing. Similarly, NBFC liquidity problems are also temporary," Garg said on Wednesday.
According to Garg, "A few events could happen but by and large our NBFCs, HFCs are very sound and most of them are in good health. The assets in their portfolio of loan is very sound. So, overreactions to some events can create problems but if we have mature reactions then it would not be a big problem."
He said we must remember that fundamentally our savings and financial structure is secure, therefore money will keep on flowing into instruments.
"The government is conscious of liquidity problem but is not worried because these are temporary and would more look at taking steps to resolve these problems," said Garg.
According to Garg, the Rserve Bank of India's (RBI’s) framework on prompt corrective action (PCA) is more conservative and not in-line with international standards so the point of discussion is on whether these over rigorous framework is required and not a question of relaxation.
“Government is not asking for any relaxation, it is asking for discussion on appropriate framework which is in line with global best practice,” he said.