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RBI-govt row not a happy situation, should stick to Basel norms: Gurumurthy

RBI board member S Gurumurthy made a case for enhancing credit for the MSME sector

Press Trust of India  |  New Delhi 

Swaminathan Gurumurthy
Swaminathan Gurumurthy. Illustration: Ajay Mohanty

Ahead of the much talked about board meeting of the central bank, RBI board member on Thursday said the stand-off between the government and the Reserve Bank was not a happy situation.   

The comment comes amid the ongoing rift between the Ministry and the RBI over several issues, including capital framework of the central bank and easing of lending norms for the NBFC sector.

Delivering a lecture on 'State of the Economy: India and the World' at the Vivekananda International Foundation (VIF) here, Gurumurthy also said imposition of tight provisioning norms for bad loans in one go created problems for the banking system.

The stand-off between the government and the RBI is not a happy thing at all, he said.

Gurumurthy further said India should not go beyond what has been prescribed in the Basel capital adequacy norms and made a case for enhancing credit for the MSME sector.  

Tensions between the RBI and the government have escalated recently, with the Ministry initiating discussion under the never-used-before Section 7 of the RBI Act which empowers the government to issue directions to the RBI Governor.

The RBI's board is meeting on November 19. 

First Published: Thu, November 15 2018. 19:25 IST