Hyderabad: A day after global credit rating agency S&P cut India’s outlook to ‘negative’, RBI said the country’s financial system was strong and sometimes these ratings were discounted by markets.
RBI Deputy Governor K C Chakrabarty said the central bank will come out in June with its next financial stability report, which showcases the country’s financial strength, and it will reflect the position of the economy.
“Indian financial system is strong as per our internal assessment which our financial stability report reflect,” Chakrabarty told reporters on the sidelines of an event, adding RBI is examining the situation.
“Without examination and diagnosis I cannot comment. Let me complete the testing and diagnosis.
After that let me understand what is happening,” he said, observing “our currency intervention depends on volatility in the market. Not based on the ratings. Because of the rating if there is a
volatility, if there is need to intervene, then RBI will intervene.”
Replying to query, Chakrabarty said RBI has no role to fix or remove charge on the services offered by banks and it is the customer who has to decide where to open account. “We cannot interfere in value added services provided by banks. It is commerce,” he said.
The government was already under pressure and was trying to contain deficit. “If the government is unable to do it there are many compulsions,” he added.
Further, the RBI deputy governor said there can’t be high growth without low inflation. “High inflation is always inimical to growth. This tussle between inflation and growth will continue anywhere in the world.