Omicron a threat to growth, banks fit to face hurdles: RBI

Mumbai: though the economy has steadily gained momentum and remained resilient since the second quarter of the current fiscal, the Omicron variant of coronavirus remains the major challenge along with rising inflation pressures, says the Reserve Bank in its second financial stability report.

In the foreword to the report released on Wednesday, RBI Governor Shaktikanta Das notes that after the destructive second wave in April-May 2021, the growth outlook has progressively improved, though there are headwinds from global developments and more recently from the Omicron virus.

A stronger and sustainable recovery hinges on the revival of private investment and shoring up private consumption, which unfortunately still remain below their pre-pandemic levels, he notes.

Admitting that inflation remains a concern as it is by the build-up of cost-push pressures, Das has called for stronger supply-side measures to contain food and

energy prices. PTI

Noting that the financial institutions have remained resilient amidst the pandemic and stability prevails in the financial markets cushioned by policy and regulatory support, the governor is

confident that the strong balance sheets of banks with higher capital and liquidity buffers will help mitigate future shocks.

Quoting the stress tests on banks, the governor has also warned that gross NPAs may jump to 8.1-9.5 per cent by September 2022 from 6.9 per cent in September 2021.

The governor concluded by reiterating the Reserve Bank's resolute commitment to ensure a robust and efficient financial system that supports strong, sustainable and inclusive growth with macroeconomic and financial stability.

Moreover, Reserve Bank announced that NRIs and Overseas Citizens of India do not require its prior approval for acquisition and transfer of immovable property in India, other than agricultural land, farm house and plantation property.

The clarification has been issued by Reserve Bank of India (RBI) following queries received at its various offices with regard to acquisition of immovable properties by Overseas Citizens of India (OCIs) in the wake of a Supreme Court judgment relating to Foreign Exchange Regulation Act (FERA).

"It is hereby clarified that the concerned Supreme Court Judgment dated February 26, 2021 in Civil Appeal 9546 of 2010 was related to provisions of FERA, 1973, which has been repealed under Section 49 of FEMA, 1999," RBI said in a release.

At present, the central bank said "NRIs/OCIs are governed by provisions of FEMA 1999 and do not require prior approval of RBI for acquisition and transfer of immovable property in India, other than agricultural land/ farm house/ plantation property..."

NRIs are Non-Resident Indians.