LIVE TV DownloadNews18 App
News18 English
»
4-min read

RBI Board Meeting Underway Amid Rumours of Urjit Patel's Resignation; Surplus Reserves, Bad Loans in Focus

The RBI board meeting is more about one institution's autonomy versus the other's allegation of tardy work.

News18.com

Updated:November 19, 2018, 11:36 AM IST
facebookTwittergoogleskypewhatsapp
Loading...
Mumbai: The board meeting of the Reserve Bank of India has begun in Mumbai amid a public spat between the central bank and the Centre. The meeting is more about one institution's autonomy versus the other's allegation of tardy work.

Coupled with the above, the meeting comes at a time when talks of RBI governor Urjit Patel's resignation have been doing the rounds.

The heated exchange of words between the apex bank and the Centre came to an end with the government issuing a statement assuring RBI’s autonomy. In a statement on October 31, the Finance Ministry had said, “Autonomy for the central bank, within the framework of the RBI Act, is an essential and accepted governance requirement.”

The board that meets on Monday will have a total of 18 members. Five, including the governor, belong to the RBI and the rest are government nominees. It is expected that the central bank will have a tough time coming to a conclusion with the government nominees.

The government is expected to push for easing of norms for lending to the MSME sector, relaxing the Prompt Corrective Action (PCA) framework for weak banks and appropriate size of reserve to be maintained by the central bank, among others.

Patel had earlier this month also met Prime Minister Narendra Modi and Finance Minister Arun Jaitley to discuss some of these contentious issues.

It is also reported that the government is likely to evoke Section 7 of the RBI Act, wherein it can issue orders to the otherwise independent body.

Attacking the government for seeking greater involvement in the RBI’s decision-making process, former finance minister P Chidambaram, a day before the meeting, said that the Centre is determined to “capture” the central bank in order to gain control over its reserves.

“Government is determined to ‘capture’ RBI in order to gain control over the reserves. The other so-called disagreements are only a smokescreen,” he tweeted.

“Nowhere in the world is the central bank a Board-managed Company. To suggest that private business persons will direct the Governor is a preposterous idea,” he added.







If not in this board meeting, the issue of relaxation of PCA framework which the Finance Ministry has been pitching for, would be reached in the next few weeks, PTI quoted sources as saying.

The RBI is also likely to agree to easing of lending norms for MSMEs, including strict rating criteria, to improve credit flow to this sector, sources said.

Besides, the central bank is expected to consider special dispensation for the MSME sector and non-banking financial companies (NBFCs) that have been facing liquidity issues.

The government feels that MSMEs, which employ about 12 crore people, play a critical role in the economy, and the sector, which was hit by demonetisation and implementation of the Goods and Services Tax (GST), needs some support.

However, the central bank has been averse to the government’s demand for special dispensation for MSME and NBFC sectors as it considers them to be vulnerable.

The criticism of the RBI was made vocal Swaminathan Gurumurthy, the RBI’s board member who was recently appointed by the government. Gurumurthy has close association with the BJP’s ideological parent, the Rashtriya Swayamsevak Sangh (RSS). Gurumurthy’s recent comments had challenged the central bank on multiple issues.

The RBI’s approach of liquidity management had come under severe criticism from the government in the recent past. Gurumurthy believes that if the right to print currency is entrusted to the government and not the central bank, the ongoing liquidity issues could have been handled better.

"Government of India has given up the right to print rupee in 2002 so that it cannot print money to infuse liquidity," Gurumurthy said on Thursday, delivering a lecture at an event organised by Vivekananda International Foundation in New Delhi.

Another highlight of the meeting is expected to be Viral Acharya, the deputy governor, who openly launched an attack on the government in the recent past. Sources said government nominees would be raising the issue in the meeting, questioning the rationale behind the allegation.


Catch the Biggest Newsmakers and the Biggest Newsbreaks on CNN-News18, your favourite English TV news channel. Keep watching CNN-News18 at just 50 Paise per Month. Contact your cable /DTH operator Now!
*Rental / capacity fee of Rs.130/- as charged by cable / DTH operator may apply. **GST extra.

| Edited by: Nitya Thirumalai
Read full article
Loading...
Next Story
Next Story

Also Watch

facebookTwittergoogleskypewhatsapp
Most Active
Company Price Change %Gain
Yes Bank 219.00 -1.02
Dr Reddys Labs 2,563.35 -3.90
Reliance 1,244.45 1.65
ITC 280.10 0.79
Axis Bank 686.60 -1.21
Company Price Change %Gain
Yes Bank 218.70 -1.04
Dr Reddys Labs 2,556.90 -4.21
Reliance 1,243.50 1.47
Jet Airways 232.55 2.99
GRUH Finance 239.30 -3.22
Top Gainers
Company Price Change %Gain
BPCL 327.85 3.87
NTPC 136.25 3.81
Power Grid Corp 181.50 3.74
Bharti Infratel 306.90 3.26
GAIL 317.75 3.18
Company Price Change %Gain
NTPC 136.20 4.13
Power Grid Corp 181.50 3.80
ONGC 135.10 2.27
Reliance 1,243.50 1.47
Larsen 1,243.25 1.31
Top Losers
Company Price Change %Gain
JSW Steel 266.90 -4.90
Sun Pharma 422.90 -4.08
Dr Reddys Labs 2,563.35 -3.90
Tata Steel 467.50 -3.12
Vedanta 147.30 -2.93
Company Price Change %Gain
Sun Pharma 423.30 -3.94
Tata Steel 467.45 -3.12
Vedanta 147.45 -2.87
Hero Motocorp 2,702.30 -2.75
Bajaj Finance 2,557.50 -1.90

Live TV

Loading...
Countdown To Elections Results
  • 01 d
  • 12 h
  • 38 m
  • 09 s
To Assembly Elections 2018 Results