New Delhi: New Reserve Bank of India (RBI) Governor Shaktikanta Das would chair his first bank board meeting on Friday. The directors of the board are likely to push for many decisions of the central bank when they meet. (Also read: ‘Successor of Urjit Patel Will Have Task of Restoring Credibility, Autonomy of RBI’)
This scheduled meeting comes in the backdrop of the sudden resignation by Urjit Patel earlier this week citing personal reasons. Sources said one of the key agendas for the board meeting will be governance issue _ the role of the central board in the decision-making of the RBI.
The meeting is also expected to focus on the liquidity situation in the financial system, especially related to non-banking financial companies (NBFCs). The Government has petitioned the RBI to take measures to boost liquidity for NBFCs but the RBI is not in favour of an intervention at present.
Reports suggested the Centre’s proposal to call for governance reform in the RBI could also take a back seat for the time being. “The governance issue (in the RBI) no longer holds immediate importance,” a daily quoted a source as saying.
With a new Governor in the saddle, the Government may adopt a wait-and-watch approach before pushing for governance reforms in RBI. The Government was upset with the way RBI took certain decisions, during former Governor Urjit Patel’s tenure, in “closed door” meetings, including new norms for resolution of stressed assets set by the central bank in February, popularly known as the February 12 circular, sources said.
For the last few weeks, the RBI has been at loggerheads with the finance ministry on matters ranging from the appropriate size of the reserves the central bank must hold to the easing of lending norms for sectors such as small and medium enterprises.
The board will be apprised of a recent decision taken by Finance Minister Arun Jaitley and Patel on the structure and the mandate of a committee to review the RBI’s economic capital framework.
Sources said former RBI governor Bimal Jalan would head the panel and former RBI deputy governor Rakesh Mohan would be the co-chair. After the panel is constituted, it is expected to submit its report in 90 days, the source said.