Cleaning up of the balance sheets of banks remains the top priority for the Reserve Bank of India (RBI), its Deputy Governor Viral Acharya said on Saturday, according to an Economic Times report.
Asked if the cleaning up the books of banks would take precedence over the rate cut for the central bank, Acharya, who speaking at the Delhi Economics Conclave, said, "That (addressing NPAs) is certainly our number one priority."
Gross NPAs of banks touched as high as Rs 7.11 lakh crore as of April, with most concentrated in public-sector banks, according to Capitaline data.
The central bank will review monetary policy on August 2. With inflation falling to record low, there are expectations that RBI will cut rates.
He said demonetisation has changed the perspective of some people towards black money, and preference for financial products is on the rise.
Acharya said the note ban has changed the perspective of some sections of the society towards black money. "One observation I had about the recent Indian experiment has been that there is something interesting going on in terms of financialisation of savings.... this (savings) seems to have had a pretty non-linear shift since November and December," he said.
The flows that are going domestically into mutual funds, structured investment programmes as a form of savings, insurance premia collections — these are on the rise, he said.
