No differences between RBI, govt on MPC: Mundra

There are no differences between the Reserve Bank and the government on the proposed Monetary Policy Committee and discussions are on between the two over its structure, RBI Deputy Governor S S Mundra has said.

He also said that RBI would like to see as to how banks pass on the benefit of earlier rate cuts to customers before it goes in for another cut.

“There are no differences between the government and RBI regarding the proposed MPC. The proposal to set up this committee was given by RBI some time ago. Some countries already have such a committee functioning,” Mundra said on the sidelines of an event here last night.

The revised draft of the Indian Financial Code (IFC), which proposes that any decision on monetary policy be taken by majority by a seven-member committee without any veto power to the RBI chief, has created a furore and is seen as an attempt to curtail the central bank’s autonomy.

Mundra said the government and RBI have held discussions on the structure of the proposed committee earlier also and the talks are on.

Replying to a question of rate cut, he said: “We are not saying that there are no possibilities of rate cuts in near future, but before taking any step in this direction, we want to see how the banks are transmitting the benefits of the earlier rate cuts to the customers.”

The slashing of key rates will also depend on economic data of the country.

Mundra also expressed concern over non-performing assets (NPAs), or bad loans of state-owned banks.

“Especially in the public sector banks, the percentage of NPAs is higher and we are worried about that. We have announced few balanced steps in this regard in the past four five months. These include strict measures to control the NPAs of the PSBs. We are also looking that if an industry is actually facing financial stress, then how can we help it come out of the situation,” he said.

Asked about the government’s plans to introduce plastic currency notes in the country, Mundra said few government departments are looking into the issue.