Bankable | Axis Bank's Rajiv Anand On Impact Of Regulatory Tightening | NDTV Profit - video Dailymotion

NDTV Profit

Bankable | In the latest episode, Axis Bank's Rajiv Anand answers whether regulatory tightening is a cause of concern and how it will impact the banks and the economy.   Watch the whole conversation: https://bit.ly/3tBkmrb

Transcript

00:00 We've seen monetary tightening start May last year and then still continue.

00:04 But regulatory tightening over the last two months, you've had action on unsecured loans

00:08 and you've had action recently on the alternative investment fund situation.

00:14 Is the regulator tightening screws for a better system or are they seeing something which

00:20 is probably worrying them and they see a need for this?

00:25 First and foremost, if you look at on the unsecured side, the increase in risk weights

00:31 is actually just a normalization.

00:33 You know, through COVID, they cut the risk weights.

00:37 It used to be 125, they've just brought it back at this point in time.

00:42 So therefore, it is a normalization at one level.

00:45 And I think it also shows confidence of the RBI in the underlying economic situation that

00:53 the economy will quite comfortably be able to absorb the higher risk weights at this

00:59 point in time, because the point I'm making there is as soon as you start to increase

01:03 these weights, it is inevitable that cost of money to adjust for that, the capital charge

01:10 will automatically start to go up.

01:13 And I think to that extent, RBI is quite comfortable.

01:18 I think RBI is concerned about certain pockets of perhaps risk playing out.

01:28 And so therefore, on the unsecured side and within that, lower ticket loans is something

01:38 that they are certainly concerned about and counter cyclical measures like this is always

01:45 welcome.

01:48 Similarly, and I think you spoke about the AIF issue as well.

01:53 And I think they are trying to contain the whole sort of evergreening issue that perhaps

02:01 they have seen in few cases, and therefore, you know, trying to address, don't want to

02:08 leave the door open for such practices.

02:11 And I think I like the proactivity that RBI has shown on each of these measures to be

02:18 able to nip some of these issues at the bud before they become potentially systemic.

02:23 I mean, you can always argue that, hey, why did RBI act so soon?

02:26 Is the problem that big that they need to come in so quickly?

02:31 But I think it is better for them to nip many of these things at the bud rather than become

02:36 system systemic issues and perhaps then some of the measures that they would need to bring

02:44 could have even more impact and have potentially destabilizing impact either for the markets

02:49 or for the economy.

02:50 Okay.

02:50 Thank you.

02:51 (upbeat music)

02:53 [BLANK_AUDIO]

Bankable | Axis Bank's Rajiv Anand On Impact Of Regulatory Tightening | NDTV Profit

Category

Transcript

Recommended