International Monetary Fund (IMF) Chief Economist Gita Gopinath today said that the country needs to strengthen its financial sector and fix the credit supply problem to reverse the ongoing economic downturn. Speaking at FICCI's 92nd Annual Convention on the theme 'India: Roadmap to a $5 Trillion Economy', Gopinath said that there has been a sharp decline in private investment in the last two quarters and the core problem lies with the financial sector.
The stress associated with the finance sector, the banks and the NBFCs, is more persistent and is deeper than many projected. The first place to address is the accelerated clean-up of the banks. This will require more institutional infrastructure. So that the insolvency and bankruptcy code, resolution process can happen rapidly. It's important for banks to be well capitalised, she noted.
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