Mumbai: Reserve Bank of India (RBI) Governor Urjit Patel has said the recent stock market crash is unlikely to cause any “major problem”, but regulators must still continue to be cognisant of associated risks.
“There has already been a correction not only globally but in India and therefore in a way it underscores how capital markets can change direction…. So far neither globally nor in India have we felt that this bubble could lead to a very major problem,” Patel said after the post-budget meeting of the central bank.
“However, as financial market regulators, both RBI and Sebi need to be cognizant of the risk going forward,” he added.
Referring to the recent rout in the domestic and global stock markets, the RBI chief said, “There has already been a correction not only globally but in India and therefore in a way it underscores how capital markets can change direction.”
“So far neither globally nor in India have we felt that this bubble could lead to a very major problem. However, as financial market regulators both RBI and Sebi need to be cognisant of the risk going forward,” he said.
Stock markets have been on a sharp downslide this week, barring just one session, amid a global rout in equities.
The benchmark indices fell by over 1 per cent on Friday to close at a one-month low level. While the Sensex had managed to gain 330 points on Thursday, it had lost more than 2,200 points in the preceding seven trading sessions amid negative domestic and global cues.
On the banks’ lending rates, Patel said one of the banks reduced its MCLR (Marginal Cost of funds-based Lending Rate) two days ago.
“In terms of transmission if you measure since the easing cycle started by the MPC (Monetary Policy Committee) and you compare the MCLR now, actually there has been good transmission.
“Actually what happened was that transmission came late and I must admit that some of the transmission came after demonetisation because we had a financial intermediation taking place in the system,” the governor said.