After Weeks Of Turbulence, RBI Board To Take Off On Key Issues In Today’s Meeting

The Reserve Bank of India (RBI) board is scheduled to hold a meeting today where several important issues including governance matters are likely to be discussed, Indian Express has reported.

Other important issues that might be discussed include issues related to prompt corrective action (PCA) framework for public sector banks, liquidity and credit to medium and small enterprises (MSMEs) and Non-Banking Finance Companies (NBFCs), and additional surplus from the RBI to the government. PCA is initiated by RBI when the financial conditions of banks deteriorate. Currently, eleven banks are under the PCA framework.

The RBI is trying to find solutions for the government’s concerns over PCA and liquidity for MSMEs and NBFCs. According to sources which spoke to the Indian Express, the government believes that RBI has been taking several important decisions that affect the economy with less accountability.

Another issue that has created differences between the government and RBI is regarding the share of the government in RBI’s surplus. Some of the directors opine that RBI has been holding excess reserves, while RBI considers it as a necessity to deal with future losses. Current reserves of the RBI are at 26 per cent of its total assets in comparison to the global average of 14 per cent.