The Reserve Bank of India’s board meeting on Monday that continued for a long nine-hour saw the RBI and the government getting closer vis-à-vis the ongoing tussle.
Tata Sons Chairman N Chandrashekharan and economic affairs secretary Subhash Chandra were among the top-notch officials who attended the meeting. According to officials, the meeting was concluded on a peaceful note amidst the public confrontation of the RBI and government.
Key points of the meeting:
1. A committee will be set up to examine the Central Bank’s Economic Capital Framework(ECF), the membership and terms of reference of which will be jointly determined by the Government of India and the RBI.
2. The RBI reached a conclusion that it will restructure small-scale loans and also set up a committee to discuss the issue of transfer of surplus serves to the government.
3. The central bank also decided to consider relaxation of lending norms for banks under the Prompt Corrective Action (PCA) regime, a key demand of the government.
4. Extending the full implementation of the Capital Conservation Buffer (CCB) under the Basel rules by one year, while maintaining the minimum capital requirement at 9 percent.
5. Restructuring of stressed standard assets of medium and small scale enterprises (MSME) borrowers with aggregate credit facilities of up to Rs 250 million, subject to such conditions as are necessary for ensuring financial stability.
6. The Board, while deciding to retain the capital to risk asset ratio (CRAR) at 9 per cent, agreed to extend the transition period for implementing the last tranche of 0.625 per cent under the Capital Conservation Buffer (CCB), by one year, that is, up to March 31, 2020.
Amidst the scuffle between the RBI and the centre, the meeting closely discussed the central bank’s strategies. Purportedly, another meeting is planned to take place to bridge the gap between the centre and RBI.