According to the RBI Governor Shaktikanta Das, the Indian economy has started indicating the recovery with ease in lockdown restrictions across the country and said a very careful trajectory has to be followed for an orderly unwinding of countercyclical regulatory measures.

“Indian economy has started showing signs of going back to normalcy after easing of restrictions,” Governor Das said at the 7th SBI Banking and Economics Conclave.

While the multi-pronged approach of the Reserve Bank has provided a cushion from the immediate impact of the pandemic on banks, the medium-term outlook is uncertain and depends on the COVID-19 curve, he said.

The financial sector should return to normal functioning without relying on regulatory relaxation as the new norm, he added.

“Policy action in medium-term would require a careful assessment of how the crisis unfolds,” he said, adding that building buffers and raising capital will be crucial not only to ensure credit flows but also to build resilience in the financial system.