MUMBAI: The Reserve Bank will not be found wanting in its job to support those sectors of the economy which may be hit hard because of the punitive tariffs that the US has imposed on Indian goods from Wednesday, governor Sanjay Malhotra said.
Malhotra, however, noted that the overall impact on the economy would be minimal, expressing confidence that negotiations for lower duties would eventually bear fruit.
“As you are aware the Reserve Bank has been on an easing cycle since February and have reduced the repro rate by 100 bps so far. We have provided ample liquidity to banks, and whatever else is required to support growth, and including those sectors which may be impacted more by higher tariffs in the US; If it were to remain high, we will not be wanting in our job) to support those sectors which would bear the maximum brunt),” he said in response to a question after addressing the national banking summit organised by industry lobbies IBA and Ficci here Monday.
The governor also said he is hopeful that the ongoing trade negotiations will lead to better rates and at the moment he sees “only minimal impact” from the higher tariffs on the overall economy.
"We are hopeful that negotiations on tariffs will play out and there will be minimal impact," he said, adding “of course some sector like gems & jewellery, textiles, apparel, shrimps, MSMEs etc., are in higher tariff regime... there can be a potential impact on them.”
The government has set up a committee to assess the impact, and based on the report of this committee, supportive measures will be taken, he added.
Malhotra further said the central bank will continue to conduct its monetary policy with the objective of price stability and economic growth.
"We will continue to strengthen financial stability, this is our primary objective," the governor said.
The governor also said that the foreign exchange reserves of the country are sufficient to cover 11 months of imports. "We have very robust foreign exchange reserves of $695 billion, sufficient to cover 11 months of merchandise exports. Generations of freedom fighters gave us a free India, and now we must work for a prosperous India," he said in his inaugural speech.
Further, the governor said that the central bank will continue to strengthen financial stability and review bank credit norms. "As much as 73% of the credit needs of the economy is met by entities that are regulated by the RBI," he said adding the central bank is examining measures to further deepen bank credit.
Malhotra revealed that that the proposed expected credit loss norms will be issued soon.