RBI meeting highlights: Panel to look at ECF; RBI to consider easing PCA
RBI board decides to constitute expert committee to examine ECF; membership and terms of reference of the committee will be jointly determined by govt and RBI
 "RBI")
Reserve Bank of India
The Reserve Bank of India (RBI) board on Monday decided to set up a high-powered committee to examine issues related to surplus capital of Rs 9.69 trillion with the central bank and advised it to consider a scheme for restructuring stressed assets in the MSME sector.
At a nine-hour-long meeting of the board, it was also decided that the Board for Financial Supervision (BFS) of the RBI would examine the issues concerning the banks that are under the Prompt Corrective Action framework, according to a release.
"The Board decided to constitute an expert committee to examine the Economic Capital Framework, the membership and terms of reference of which will be jointly determined by the Government of India and the RBI," the central bank said.
Further, the apex bank has been advised to consider a scheme for restructuring of stressed standard assets of MSME borrowers with aggregate credit facilities of up to Rs 250 million, subject to such conditions as are necessary for ensuring financial stability, it added.
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The board, while deciding to retain the CRAR at 9%, agreed to extend the transition period for implementing the last tranche of 0.625% under the Capital Conservation Buffer (CCB), by one year, i.e., up to March 31, 2020.
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On PCA
With regard to banks under PCA, it was decided that the matter will be examined by the Board for Financial Supervision (BFS) of RBI.
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On MSMEs
The board also advised that the RBI should consider a scheme for restructuring of stressed standard assets of MSME borrowers with aggregate credit facilities of up to 250 million, subject to such conditions as are necessary for ensuring financial stability.
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On RBI capital framework
The board decided to constitute an expert committee to examine the Economic Capital Framework (ECF)
The membership and terms of reference of which will be jointly determined by the Government of India and the RBI
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RBI issues its official release on what transpired during the board meeting.
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The RBI board meeting ended on a 'cordial note', reports CNBC-TV18, citing what unnamed sources told news agency Reuters.
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What we know at the moment
1) There are indications that the RBI may be willing to ease lending norms for MSMEs but liquidity to NBFCs remains a sticking point, reports PTI.
2) It may also be open to injecting liquidity through open market purchases of bonds but is resisting relaxing capital buffers for banks, reports PTI.
3) Discussions in the meeting may also have focused on the massive Rs 9.69 trillion reserves of the RBI, with Gurumurthy and the finance ministry wanting it to be lowered in line with global practices, reports PTI.
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The RBI board meeting has just concluded. A statement from the central bank is expected soon.
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All board members are leaving the RBI headquarters, reports CNBC-TV18.
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First Published: Nov 19 2018 | 11:38 AM IST
