{"id":37244,"date":"2018-11-20T17:35:32","date_gmt":"2018-11-20T12:05:32","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=37244"},"modified":"2018-11-21T13:11:53","modified_gmt":"2018-11-21T07:41:53","slug":"govt-rbi-call-truce-after-a-marathon-board-meeting","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/govt-rbi-call-truce-after-a-marathon-board-meeting\/","title":{"rendered":"Govt-RBI call truce after a marathon board meeting"},"content":{"rendered":"<p><a href=\"https:\/\/www.thehindu.com\/business\/Economy\/govt-rbi-call-truce-after-a-marathon-board-meeting\/article25541229.ece\">Govt-RBI call truce after a marathon board meeting<\/a><\/p>\n<p><strong>News:<\/strong><\/p>\n<ol>\n<li>The government and Reserve Bank of India have found a middle ground on the contentious issues between the two in the board meeting held recently.<\/li>\n<\/ol>\n<p><strong>Important Facts:<\/strong><\/p>\n<ol start=\"2\">\n<li>The Reserve Bank and the government have agreed to refer to an expert committee the following issues:<\/li>\n<\/ol>\n<ul>\n<li>The appropriate size of reserves that the RBI must hold and transfer of surplus reserves.<\/li>\n<li>Relaxing norms for weak banks with the government pushing for a review to allow a few state-run banks out of the \u00a0Prompt Corrective Action (PCA) .<\/li>\n<\/ul>\n<ol start=\"3\">\n<li><strong>About the committee:<\/strong> RBI has agreed for setting up of an expert committee on the economic capital framework (ECF) and its mandate is restricted to future earnings and not the existing reserves.<\/li>\n<\/ol>\n<ul>\n<li>The membership and terms of reference will be jointly determined by the Government of India and the RBI.<\/li>\n<\/ul>\n<ol start=\"4\">\n<li><strong>Decisions taken during meeting:<\/strong><\/li>\n<\/ol>\n<ul>\n<li>On the issue of capital adequacy ratio, after much deliberations to reduce it to 8%, it was finally retained at 9%.<\/li>\n<\/ul>\n<p><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-37238\" src=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/fixing.jpg?resize=628%2C162&#038;ssl=1\" alt=\"\" width=\"628\" height=\"162\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/fixing.jpg?w=628&amp;ssl=1 628w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/fixing.jpg?resize=150%2C39&amp;ssl=1 150w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/fixing.jpg?resize=300%2C77&amp;ssl=1 300w\" sizes=\"auto, (max-width: 628px) 100vw, 628px\" \/><\/p>\n<ul>\n<li>It also agreed to extend the transition period for implementing the last tranche of 0.625% under the Capital Conservation Buffer (CCB), by one year, i.e., up to March 31, 2020.<\/li>\n<li>On the PCA, Board for Financial Supervision (BFS) of RBI will review the norms and decide if some of the parameters like net non-performing asset (NPA) ratio could be relaxed so that some of the banks come out of the PCA.<\/li>\n<li>There are 11 public sector banks out of 21 that are on PCA. The BFS consists of governor, four deputy governors and few other board members.<\/li>\n<\/ul>\n<p><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-37236\" src=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/the-3.jpg?resize=628%2C138&#038;ssl=1\" alt=\"\" width=\"628\" height=\"138\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/the-3.jpg?w=628&amp;ssl=1 628w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/the-3.jpg?resize=150%2C33&amp;ssl=1 150w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/the-3.jpg?resize=300%2C66&amp;ssl=1 300w\" sizes=\"auto, (max-width: 628px) 100vw, 628px\" \/><\/p>\n<ul>\n<li>The Board also advised that the RBI should consider a scheme for restructuring of stressed standard assets of MSME borrowers with aggregate credit facilities of up to \u20b9250 million [\u20b925 crore] , subject to such conditions as are necessary for ensuring financial stability.<\/li>\n<\/ul>\n<ol start=\"5\">\n<li><strong>Unresolved Issues:<\/strong><\/li>\n<\/ol>\n<ul>\n<li>The liquidity shortage faced by NBFCs: The finance ministry believes NBFCs are facing an acute liquidity crisis, which was spilling over into the real estate sector and small businesses.<\/li>\n<li>RBI announced that it would inject \u20b98,000 crore liquidity through open market operations soon.<\/li>\n<\/ul>\n<ol start=\"6\">\n<li><strong> Background: <\/strong>The tension between RBI and the government was started with the latter referred to section 7 of the RBI Act for consultation on these issues. Section 7 gives the power to the government to issue direction to RBI.<\/li>\n<\/ol>\n<p><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-37235\" src=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/finding.jpg?resize=621%2C263&#038;ssl=1\" alt=\"\" width=\"621\" height=\"263\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/finding.jpg?w=621&amp;ssl=1 621w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/finding.jpg?resize=150%2C64&amp;ssl=1 150w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/finding.jpg?resize=300%2C127&amp;ssl=1 300w\" sizes=\"auto, (max-width: 621px) 100vw, 621px\" \/><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Govt-RBI call truce after a marathon board meeting News: The government and Reserve Bank of India have found a middle ground on the contentious issues between the two in the board meeting held recently. Important Facts: The Reserve Bank and the government have agreed to refer to an expert committee the following issues: The appropriate&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/govt-rbi-call-truce-after-a-marathon-board-meeting\/\">Continue reading <span class=\"screen-reader-text\">Govt-RBI call truce after a marathon board meeting<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[577,789,221,217,394],"class_list":["post-37244","post","type-post","status-publish","format-standard","hentry","category-test-1","tag-centre-rbi-conflict","tag-centre-rbi","tag-economy","tag-gs-3","tag-rbi","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704675599},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/37244","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=37244"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/37244\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=37244"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=37244"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=37244"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}