Mumbai: With former Governor Urjit Patel out of the way, the board of the Reserve Bank of India is in no tearing hurry anymore. So, it had discussions on the central bank’s governance framework and decided the matter requires “further examination”.
‘Governance’ was at the top of the menu as the government is itching to have a greater say in the bank’s regulatory decisions through its board nominees. The meeting wound up in less than four hours on Friday, as against the previous two meetings which had lasted nine hours. This surely indicates the transition under new RBI Governor Shaktikanta Das will be without hiccups.
Das, who took charge on Wednesday, sought more time from the board to go through actual data before deciding on the need for more steps on government demands, including further liquidity for weak shadow banks, easy lending rules and a greater share in the RBI’s excess reserves, a source at the meeting said, reports Reuters,
“He assured that decisions would be taken based on ground level data and discussion with all stakeholders,” said the source, who declined to be identified. The board also reviewed global and domestic challenges, liquidity and credit delivery and currency management, the RBI said in the release without giving details. There were some expectations that the RBI might come up with measures to ease liquidity further following the government’s demands.
PM Modi’s government is keen to boost the economy ahead of general elections that must be held by May. According to one financial news portal, the “meeting failed to shed any new light on Governor Das’s stance on banking regulation and other issues.” It quoted Priyanka Kishore, head of India and South East Asia Economics at Oxford Economics, Singapore, as saying that “RBI is clearly trying to let matters cool before making any further decisions on these fronts.” Ahead of the meeting, Union Minister Piyush Goyal had accused the central bank of wielding power without accountability and acting unilaterally in dealing with banks burdened by bad loans.
