Why the RBI had to blink in its confrontation with the finance ministry

The first lesson to learn from this brinkmanship is that the RBI and the govt must always talk their differences out, and it is the RBI's job to convince the govt that it is doing the right thing

As expected, it is the Reserve Bank of India (RBI) that has had to blink — and blink hard — in its wholly unnecessary confrontation with the finance ministry.

After a marathon meeting of the RBI board on Monday, the Governor has agreed to consider a scheme to restructure the stressed assets of small and medium companies with aggregate loans of upto Rs 250 million set up a joint committee to figure out the appropriate level of capital for the RBI and possibly transfer some of the surplus to the government, relax the capital buffer deadline for banks by one