In order to support investment and inclusive growth agenda, the International Monetary Fund (IMF) has said it is import for India to address ongoing banking crisis. It also said that the authorities have made progress in addressing the stock of non-performing assets (NPAs) and were taking further measures to deal with the flow problem. These steps include the recognition of these NPAs, the resolution framework under the Insolvency and Bankruptcy Code.
IMF further stated that to identify and closely monitor asset quality issues, it was a positive step as a more proactive approach was being taken, and added that these needs to be complemented by further governance reforms in this area, especially regarding the public-sector banks to materially improve risk management and operations.
Besides, in the view of rising inflation and additional upside risks to the forecasts on account of higher oil prices, exchange rate depreciation and other domestic factors, the IMF welcomed the decision of the Reserve Bank of India (RBI) to increase rate. The RBI increased the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points (bps) to 6.25%, the first increase since January 2014.
