Officiating RBI Governor To Decide On Next Board Meeting
The officiating Reserve Bank of India governor will decide whether to hold the next board meeting scheduled on Dec. 14 or call it off, a board member told BloombergQuint.
The senior-most deputy NS Vishwanathan should take charge as the acting RBI governor in the interim, the member quoted above said requesting anonymity. Vishwanathan joined the central bank in 1981 and was appointed deputy governor on July 4, 2016.
Finance Secretary AN Jha separately told reporters that an announcement regarding Urjit Patel’s successor is expected later in the day. This comes as Patel resigned as RBI governor after a standoff with the government over the central bank’s independence. The RBI board, governed by Patel, had last met on Nov. 19 amid intense scrutiny after differences between the government and the apex bank over surplus reserves and strict bad loan norms spilled out in the open.
The issues that could not be discussed in the previous board meeting such as liquidity in the financial markets were to be taken up at the Dec. 14 meeting, the member said.
The government had said a liquidity squeeze among non-bank lenders could have a spiral effect and impact growth if not addressed immediately. But the RBI had assured that it continues to be guided by the objective of ensuring adequate liquidity in the overall system.
“The RBI stands ready to be the lender of last resort but provided that conditions warrant that sort of an extreme measure,” Deputy Governor Viral Acharya had said after the monetary policy announcement. “In our assessment, there is no such necessity at present, given the sound health of our economy.”
Also, the RBI’s Feb. 12 circular—that directed banks to start resolution of accounts within a day of default—was likely to be taken up for discussion as the government feels the “RBI overstepped the boundary” by not consulting the Finance Ministry before deciding these norms, the person quoted above said.
Other issues pending for discussion included governance issues at the RBI, review of its prompt corrective action norms, economic capital framework and steps taken for restructuring of stressed standard assets of small borrowers with loans up to Rs 25 crore.
Another Panel May Review PCA Norms
Besides, the Board for Financial Supervision of RBI, which had to review the PCA norms for banks, the RBI and the government may collectively constitute another panel to look into the health of these banks, the board member said, adding the members of the sub-committee are to be decided by both the RBI and the government.