RBI facing challenges

This refers to ‘Liquidity management: A tightrope walk’ (February 28). Banks have been grappling with a prolonged liquidity crisis, prompting the RBI to implement various monetary measures, including a reduction in CRR, the use of VRR, buy-sell dollar swaps, and OMO operations. However, following the Budget, increased government spending is expected to ease the liquidity crunch. An unexpected twist emerged when, despite the liquidity strain, the RBI’s recent VRR auction failed due to a mismatch in expected interest rates and tenure. Meanwhile, geopolitical tensions — largely attributed to the US — and FPI withdrawals exerted downward pressure on the rupee. To counteract its depreciation against the dollar, the RBI had to resort to sell-buy swaps of dollars, underscoring the complex challenges it faces on both domestic and global fronts.

It remains to be seen how RBI tackles the dual challenge—managing the liquidity crunch while maintaining exchange rate stability

Srinivasan Velamur

Chennai

Credit flow

Apropos ‘Nimble on policy’ (February 28), as the economy is on the path to reaching growth goals, the central bank is ensuring a sufficient flow of credit to all segments, especially to the micro-credit consumers. The RBI has eased the risk weightage on exposure by banks to NBFCs and on personal loans. As a consequence, there will be easy flow of bank credit to the last-mile borrowers, at a time when the financial market is too volatile on account of the economic and administrative reforms being enforced by the Trump administration.

The rising market volatility and declining value of the rupee are potential threats to domestic economic activities, and the challenge of bank credit transforming into non-performing assets can’t be ruled out. Such a scenario may emerge and to prevent that credit delivery must be need-based and properly justified.

VSK Pillai

Changanacherry, Kerala

Upgrading teacher skills

As a teacher, I read the article ‘Re-imagining teacher education’ (February 28) with interest. There is absolutely no denying that teachers have to leverage technology to make students critically think on concepts, solve problems, etc., in classrooms, and are not found wanting in technology-driven environments anytime. Well-trained teachers in using appropriate teaching methods as well as handling technology will be invaluable assets for the institutions they work with and, of course, the nation too.

S Ramakrishnasayee

Chennai