RBI to form committee to study surplus funds transfer to govt, Next board meet on 14 Dec

The Reserve Bank of India board met for more than nine hours in Mumbai on Monday, November 19,in the middle of an deadlock between the government and the RBI.

According to some sources, the meeting, which brought RBI Governor Urjit Patel face-to-face with several nominees of the government, ended on a conciliatory note with the central bank agreeing to set up a panel on sharing surplus reserves and restructure loans of small businesses up to Rs. 25 crore.

RBI in the board meet also decided to improve liquidity. The RBI is also likely to ease curbs on some state run banks’ reserve ratio.The RBI announced that it would inject Rs. 8,000 worth of liquidity into the system through open market operations on November 22.

RBI board will meet next on December 14.

Here are the some major 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.