System has more than surplus liquidity: RBI Guv

''Since June 1, this year, the system has more than adequate surplus capital liquidity. We have identified large NBFCs and have been monitoring their operations at regular intervals. The problem of liquidity in Non Banking Financial Companies has been resolved,'' Das affirmed.

Addressing reporters along with Sitharaman after the meeting of Central Board of Directors of Reserve Bank of India here, Das said the central bank had always welcomed steps to maintain fiscal deficit.

''It is something very positive to bring down fiscal deficit to 3.3 per cent from 3.4 per cent this year. In last five years, the government has brought down the fiscal deficit from 4.5 per cent to 3.3. Overall it is good for macroeconomic situation.''

Regarding the budget provision of Rs 70,000 crore recapitalisation to banks, Das said this would enable lenders to maintain the capital they require to step up lending and credit disbursement.

Interest rate

On interest rate transmission, the RBI Governor said the process has been halved from the earlier six months.
 
Of the 50 basis points cut in interest rate announced by the central bank prior to the June monetary policy, about 21 basis points had been transmitted, he said. ''Now, they expected better transmission of interest rate cuts in the weeks ahead.''

Asked about the impact of increase in petrol and diesel prices on inflation, he said they would not see the effect immediately. There is a meeting of Monetary Policy Committee in the first week of August. ''Our internal team will assess it. It's not as if it will get reflected in inflation the next day. There is a time lag,'' he added.

Fiscal coordination

Earlier, Sitharaman said the government believed that RBI is capable to fulfil the responsibility to regulate the housing finance sector. It has been proposed in the budget only after discussions with the government and RBI.

Addressing the RBI officials, Sitharaman outlined the thought process behind the Union Budget 2019 and the focus areas of the Government. The Finance Minister also highlighted the importance of coordination between the RBI and Government.

The Finance Minister was accompanied by Ajay Bhushan Pandey, Revenue Secretary, Atanu Chakraborty, Secretary (Investment and Public Asset Management) and Krishnamurthy Subramanian, Chief Economic Advisor.