“Climate proofing our infrastructure has also been a priority,” the governor said. (File)
Kochi, Kerala: Reserve Bank of India Governor Shaktikanta has said that India is “the highest ranked G20 country according to the Climate Change Performance Index 2023” and is also the “5th best performing country globally”.
Addressing the 17th KP Hormis Commemorative Lecture by the RBI Governor, Shaktikanta Das said on Friday, “Given that India is widely expected to remain one of the fastest growing economies in the world, our energy demand may increase manifold. The challenge for us is twofold: one, to meet the expected increase in energy demand; and two, for a rapid transition from fossil fuels to renewable energy.”
“Climate proofing our infrastructure has also been a priority, more so in light of the large investments in infrastructure in recent years,” the governor said. “Through global forums such as the Coalition for Disaster Resilient Infrastructure (CDRI)4, India is providing leadership to global efforts to address these challenges,” the RBI governor said.
The governor said the ongoing global crisis was both an opportunity and a major test for the G20, which represents 85 percent of world GDP and 75 percent of global trade. “Following the 1997 East Asian financial crisis, the G20 was founded in 1999 as a forum for finance ministers and central bank governors to discuss global issues and policy options,” he added.
“After the 2008 global financial crisis, the G20 was upgraded to the level of heads of state/government in 2009,” the RBI governor said, adding, “In an interconnected world, national policies may not be fully effective when the nature of the shocks. is global and persistent.”
The governor said: “Of the many risks facing the world community, the rise in inflation has posed a complex monetary policy dilemma in any economy between raising interest rates enough to tame inflation while minimizing growth stimulus to avoid a hard landing.”
He said that the aggressive monetary policy tightening by systemic central banks since early 2022 and the resulting appreciation of the US dollar has led to several economies with a high share of external debt becoming highly vulnerable to debt problems.
Regarding recent developments in the US banking system, he said this had brought to the fore the criticality of banking sector regulation and supervision. “These are areas that have a significant impact on maintaining the financial stability of each country.”
He said this development in the United States underscores the importance of ensuring prudent asset liability management, robust risk management and sustainable growth in liabilities and assets; performing periodic stress tests; and building capital buffers for any unforeseen future stress. “They also highlight that cryptocurrencies/assets or similar can be a real danger to banks, either directly or indirectly,” he added.
The governor said the RBI had taken necessary steps in all these areas and the regulation and supervision of the financial sector and the regulated entities has been sufficiently strengthened.
Shaktikanta Das said the regulatory steps included, among others, the implementation of leverage ratio (June 2019), framework for large exposures (June 2019), guidelines for governance in commercial banks (April 2021), guidelines for securitization of default assets (September 2021) ), scale-based regulatory (SBR) framework for NBFCs (October 2021), revised regulatory framework for microfinance (April 2022), revised regulatory framework (July 2022) for urban cooperative banks (UCBs) and digital lending guidelines (September 2022) .
According to the governor, RBI’s supervisory systems have been strengthened significantly in recent years through measures that include a unified and harmonized supervisory approach for commercial banks, non-banking finance companies and urban cooperative banks.
(With the exception of the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)