RBI Board to set up a committee to examine its Economic Capital Framework

The committee proposed by the RBI Board for examining the Economic Capital Framework (ECF) to determine the appropriate levels of reserve the central bank ought to hold will be constituted soon, an official source said on Tuesday.

After a day-long meeting, the Central Board of the RBI had decided on an expert committee to look into the ECF.

It was also agreed that the membership and terms of reference of the panel will be jointly determined by the government and the Reserve Bank of India.

Currently, the capital base of the RBI is Rs 9.69 trillion, an independent director and Swadeshi ideologue S Gurumurthy and the finance ministry have been wanting it to be lowered in line with global practices.

The sources further said that guidelines for the restructuring of loans for the medium, small and micro enterprises (MSME) will also be released shortly with a view to helping the cash-starved sector.

A decision in this regard too was taken at the Board meeting held in Mumbai yesterday.

The central board headed by RBI Governor Urjit Patel, which met amid the on-going tussle between the Finance Ministry and the central bank over various issues, also discussed the Basel regulatory capital framework, a restructuring scheme for stressed MSMEs, and bank health under Prompt Corrective Action (PCA) framework.