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Mumbai: Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday said banks and non-banking financial companies (NBFCs) need to strengthen their capital position as there could be stress due to the second wave of Covid-19.

Das also said he was confident that the non-performing loans of banks will be within the projections made in its Financial Stability Report (FSR) in January this year.

“Banks and NBFCS need to augment their capital because there could be stress arising out of the second wave,” Das told reporters post the monetary policy announcement. He, however, added that in response to the RBI’s call and based on their own assessment, private and public sector banks raised capital from the market throughout last year and so their overall capital position is at a very stable level currently.

“They are all hitting our regulatory requirements. Some of them are even much higher,” Das said.    The Financial Stability Report in January had projected the banks’ gross non-performing assets (GNPAs) rising to 13.5% by September 2021, under a baseline stress scenario.

And if the macroeconomic environment worsens to a severe stress scenario, the GNPA ratio may escalate to 14.8%, the report had said.    Asked whether the NPAs would remain within the range indicated in the FSR, Das said, “Our expectation is that whatever projection we have given earlier in the last FSR, it will be within that.” The next FSR is due at the end of the current month.

The RBI on Friday left the repo rate unchanged at 4% and maintained an accommodative stance to revive and sustain growth on a durable basis.