‘Apex Bank must provide liquidity in IL and FS crisis’

IL&FS has defaulted on its debt repayment obligations and efforts are on to find a solution, which will focus on bolstering the financial situation of the company. “The contagion has to be contained...the regulator should not step in for solvency problem. For liquidity problem, regulator should step in,” he told PTI on the sidelines of a banking industry event here. In a bid to quell concerns over shortage of cash, the RBI Thursday morning said that there is surplus liquidity in the system, and it will ensure durable liquidity by using various available instruments depending on market conditions. Gandhi cited the RBI action on providing liquidity support as the right approach.

When asked about the regulatory and supervisory processes and if such a situation could have been avoided, he first said institutions should have the resilience to take the impact of a few bad commercial decisions and also pitched for allowing institutions to fail if required.