{"id":37332,"date":"2018-11-21T17:14:47","date_gmt":"2018-11-21T11:44:47","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=37332"},"modified":"2018-11-21T17:14:47","modified_gmt":"2018-11-21T11:44:47","slug":"board-committees-to-assist-rbi","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/board-committees-to-assist-rbi\/","title":{"rendered":"Board committees to assist RBI"},"content":{"rendered":"<p><a href=\"https:\/\/www.thehindu.com\/business\/Economy\/board-committees-to-assist-rbi\/article25551571.ece\">Board committees to assist RBI<\/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 Prompt 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> Key aspects during meeting:<\/strong><\/li>\n<\/ol>\n<ul>\n<li>Forming a committee on RBI\u2019s economic capital framework<\/li>\n<li>Debt recast scheme for micro, small and medium-sized enterprises<\/li>\n<li>Extending the deadline for last tranche of capital conservation buffer by one year<\/li>\n<li>Review of banks under prompt corrective action by the Board for Financial Supervision (BFS).<\/li>\n<\/ul>\n<ol start=\"5\">\n<li><strong>Decisions taken during the 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-37322\" src=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/fixing-1.jpg?resize=569%2C159&#038;ssl=1\" alt=\"\" width=\"569\" height=\"159\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/fixing-1.jpg?w=569&amp;ssl=1 569w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/fixing-1.jpg?resize=150%2C42&amp;ssl=1 150w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/fixing-1.jpg?resize=300%2C84&amp;ssl=1 300w\" sizes=\"auto, (max-width: 569px) 100vw, 569px\" \/><\/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-37321\" src=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/PCA.jpg?resize=560%2C123&#038;ssl=1\" alt=\"\" width=\"560\" height=\"123\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/PCA.jpg?w=560&amp;ssl=1 560w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/PCA.jpg?resize=150%2C33&amp;ssl=1 150w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/PCA.jpg?resize=300%2C66&amp;ssl=1 300w\" sizes=\"auto, (max-width: 560px) 100vw, 560px\" \/><\/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> Significance:<\/strong><\/li>\n<\/ol>\n<ul>\n<li>The move is in<strong> line with its global counterpart<\/strong>s, as several board committees are being formed on various aspects like technology, risk management, banking regulation, supervision, among others, to assist the central bank in its operations.<\/li>\n<li>The move is also seen to make the <strong>RBI management accountable<\/strong> to the board and making the board more hands-on.<\/li>\n<li>Till now, the board has not been involved in any policy-related matters but is engaged in providing a broader vision to the regulator.<\/li>\n<\/ul>\n<ol start=\"7\">\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-37320\" src=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/finding-1.jpg?resize=558%2C247&#038;ssl=1\" alt=\"\" width=\"558\" height=\"247\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/finding-1.jpg?w=558&amp;ssl=1 558w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/finding-1.jpg?resize=150%2C66&amp;ssl=1 150w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/11\/finding-1.jpg?resize=300%2C133&amp;ssl=1 300w\" sizes=\"auto, (max-width: 558px) 100vw, 558px\" \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Board committees to assist RBI 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 size of reserves&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/board-committees-to-assist-rbi\/\">Continue reading <span class=\"screen-reader-text\">Board committees to assist RBI<\/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":[],"class_list":["post-37332","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704738189},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/37332","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=37332"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/37332\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=37332"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=37332"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=37332"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}