Future insurance policies have to be tailor-made to assist financial system amid Covid-19: RBI Executive Director

New Delhi, July 18

Future financial insurance policies have to be tailor-made in direction of supporting the financial system, relying on how results of pandemic play out, RBI Executive Director M Rajeshwar Rao stated on Friday.

He stated the primary set of responses from the Reserve Bank of India was to make sure that the markets proceed to perform and guarantee solvency within the monetary sector.

Several measures, together with discount in Cash Reserve Ratio, particular finance facility, Long Term Repo Operations (LTRO) and Targeted Long Term Repo Operations (TLTRO) had been introduced, he stated at a webinar organised by Assocham.

As a results of varied measures, he stated, the RBI injected round Rs 6.5 lakh crore liquidity within the banking system in the course of the pandemic.

Going ahead, he stated, “We need to see how the impact is going to be there on the economic activities of the various players, and once we get a fix on this issue perhaps the policy responses could be appropriately tailored. We have to see how the situation evolves and based on evolving situation the policies could be suitably modified to address concerns”.

Emphasising that the world and India is not going to stay within the grip of COVID-19 endlessly, he stated, “not in a distinct future this pandemic will end through combination treatment, vaccination and achievement of herd immunity. Further, future economic policies need to be tailored towards supporting the economy as and when the effects of pandemic play”.

Rao stated as soon as the instant precedence of addressing the well being points is sorted out, the second step could possibly be to make sure sustainability of current companies.

“We need to approach stage-by-stage, so the first priority at this juncture is going to be the health and protection of the people, once we get a certain degree of comfort on that aspect, the second segment will come into play,” he stated.

With the coverage interventions, he stated, the rate of interest on business and authorities borrowing have hit lowest within the decade.

RBI’s benchmark coverage fee or repo fee has been introduced all the way down to four per cent, the bottom ever.

“The policy repo rates which were lowered by 135 bps between February and December 2019 were further reduced by another 115 bps since March 2020 taking the cumulative rate cuts to about 250 bps and at four per cent, the policy rate is at one of its lowest ever levels,” Rao stated. PTI

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