RBI, govt stand-off is 'not a happy thing at all', says S Gurumurthy

Most of the recent rise in RBI reserves has happened due to appreciation of the dollar

Ahead of Monday’s important meeting of the Reserve Bank of India (RBI) board, S Gurumurthy, its recently inducted non-official director, said the flow of credit to micro, small and medium enterprises (MSMEs) should be eased to push up growth.

Strict capital adequacy norms in India unnecessarily reduce the flow of credit, he said. The rule in question is meant to provide banks a stable resource to absorb losses from the risk in its business. The Basel norms ask for capital adequacy of 

8 per cent for banks which are internationally active and 4 per cent for those which are not.