RBI To Study Surplus Funds Transfer to Govt, Next Meet on 14 Dec

The meeting between Urjit Patel and PM Modi comes before the RBI’s crucial board meeting on 19 November.

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The key meeting of the Reserve Bank of India’s board of directors concluded in Mumbai on Monday, 19 November after over 9 hours of discussions.

The CIC held a hearing on the show cause notice issued to RBI governor Urjit Patel at 1 pm on Friday, 16 November.

Ahead of the RBI board meeting today, the rift between the government and RBI has healed to some extent, with the central bank’s Governor Urjit Patel unlikely to step down, reported Reuters, quoting sources.

• The CIC had issued a show-cause notice to Urjit Patel on 4 November for “dishonouring” an SC judgment on disclosure of wilful defaulters’ list
• The government is said to have sought consultations under Section 7 of the RBI Act, which empowers it to give directions to the central bank in public interest, after consultation with the Governor
• On 31 October, the Finance Ministry had issued a statement clarifying that the government nurtures and respects the autonomy of RBI

• Patel is serving as the 24th Governor of RBI since September 2016
  

Glad that Centre Stepped Back, Tweets Chidambaram

Former finance minister P Chidambaram tweeted that he was “glad” that the Centre “grudgingly” acknowledged the independence of the RBI.

My guess is that the independent directors (at least most of them) realized that the government was on a perilous course and refused to go beyond giving advice to the RBI

— P. Chidambaram (@PChidambaram_IN) November 19, 2018

RBI Board Meet: Key Takeaways

• The board decided to constitute an expert committee to examine the ECF, the membership and terms of reference of which will be jointly determined by the Government of India and the RBI.
• The board advised that the RBI should consider a scheme for restructuring of stressed standard assets of MSME borrowers with aggregate credit facilities of up to Rs 250 million, subject to such conditions as are necessary for ensuring financial stability.
• The board, while deciding to retain the CRAR at 9%, agreed to extend the transition period for implementing the last tranche of 0.625% under the Capital Conservation Buffer, by one year, i.e, up to 31 March, 2020.
• With regard to the banks under PCA, it was decided that the matter will be examined by the Board for Financial Supervision of RBI.

RBI to Form Panel To Study Surplus Funds Transfer to Govt

The RBI will form a panel to study the transfer of surplus funds to the government, the BloombergQuint reports quoting Board Member Sachin Chaturvedi.

The RBI board will meet next on 14 December, Chaturvedi says.

RBI To Take Measures on Improving Liquidity

The RBI in the board meet decided to improve liquidity, Reuters reported. The RBI is also likely to ease curbs on some state run banks’ reserve ratio.