India Inc to face greater scrutiny from creditors going ahead: RBI

MUMBAI: Indian corporates face challenges from greater scrutiny of various institutions while borrowing funds in the future, including from the lenders and analysts in the current economic environment even though there may be adequate availability of funds, a top RBI official said.

"One challenge that corporates might face going ahead is in terms of raising resources, not in terms of non-availability of resources but because how the debtors expect commitments," said HR Khan, RBI deputy governor at a CII event in Mumbai. "It is very likely, in the days ahead, we will experience enhanced scrutiny of credit institutions, of banks by depositors and taxpayers, and of analysts and shareholders," he said.

Besides, there could be risk arising out of a volatile currency as well. With massive fluctuations in currency, there might be a case for even non-financial companies to undergo a stress test, according to Khan. "Going ahead non-financial companies might think of some kind of stress-test which financial firms do," he added.

Though the country’s forex kitty was at an all-time high of $330 billion, there should be no complacency as no amount of reserves may be enough to fight extreme volatility. "Foreign currency reserves have improved. Right now we’re at $330 billion, highest ever. But there is also a view that no amount of foreign exchange reserves can cushion when there is extreme volatility or external shocks," Khan said, days after weekly data showed an over $6 billion jump in forex reserves to an all-time high.

"We are much better placed. In terms of fool proofing our balance sheet we have done quite a few things," Khan said, referring to the jump in reserves adding that macro economic vulnerabilities in the country’s economy have "significantly receded" due to the high growth, contained current account deficit, lower inflation and high forex reserves.

"But one cannot be complacent. If another round of Quantitative Easing unwinding happens, we would be the last possibly to be affected.... (But we) can’t afford to be complacent and we should be prepared to face vulnerabilities," Khan said.

(With inputs from PTI)