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Updated November 19th, 2018 at 11:27 IST

Agenda of crucial RBI board meeting accessed: Here's what's up for discussion

With the key meeting of the RBI board ongoing, Republic TV has accessed details of the meeting's agenda.

Reported by: Ankit Prasad
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With the key meeting of the RBI board ongoing, Republic TV has accessed details of the meeting's agenda.

READ | RBI Holds Critical Board Meeting; Matters Of Contention With Government To Be Taken Up : LIVE UPDATES

As per sources, here are the points that are under discussion: 

  1. More authority sought for RBI's central board
  2. Course correction in "prompt corrective action" (PCA) norms to ease lending by affected Public sector banks.
  3. Easing of NBFC financing norms by RBI
  4. A New formula for cash reserves of RBI
  5. Restructuring of MSME sector loans up to Rs 2.5 crore
  6. The approval of a new Rs 100 note that would have a varnish paint to prevent its soiling.

READ | Ahead Of Crucial RBI Board Meeting, All Eyes On RBI Governor Urjit Patel: 10 Things To Know

Breaking down the agenda items:

  • The first point, regarding seeking more authority for RBI's central board pertains to:
    • Recommending amendments in RBI act
    • Deciding on risk management policies
    • How much of RBI reserves to be shared with the government
  • The prompt corrective action framework mentioned in point 2 refers to limitations that have been placed on 11 of 21 PSBs regarding lending, as a result of them being burdened by NPAs. 
  • Easing of NBFC financing norms likely refers to the creation of debt markets for non-banking financial services which have had liquidity concerns of late, and especially in light of IL&FS' high-profile default.
  • The cash reserves of the RBI have also come under discussion. While the government owns the RBI's equity and hence, its reserves, there are limitations on the amount of 'surplus capital' that can be transferred to the government. 
  • India's key MSME sector, which provides employment to almost 12 crore people, has come under stress on account of banks' limitations in extending credit to it. It is believed that a workaround to remedy this may be in the offing.

The board meeting comes on the back of weeks of speculation over an ongoing impasse between India's central bank and the union government, which came to light after an explosive speech by RBI Deputy Governor Viral Acharya regarding the importance of the central bank's independence.  

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Published November 19th, 2018 at 11:08 IST

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