RBI to set up expert panel to look into issues on capital surplus

Mumbai, November 20: The RBI board on Monday decided to set up a high-powered committee to examine issues related to the surplus capital of Rs 9.69 lakh crore with the central bank and advised it to consider a scheme for restructuring stressed assets in the MSME sector.

 

At the crucial meeting of the board, concluded in Mumbai this evening, it was also decided that the Board for Financial Supervision (BFS) of the RBI would examine the issues concerning the banks' health under Prompt Corrective Action (PCA) framework and the Economic Capital Framework - ECF of RBI.

On the capital framework issue, RBI will form an expert panel to study if RBI has surplus reserves and whether the same should be transferred to the government. The Reserve Bank and the Finance Ministry will decide the committee’s composition. The board decided that the said committee will look into the future and not dwell on past instances.

According to the statement issued by RBI, the Board has advised the apex bank to consider a scheme for the restructuring of stressed standard assets of Small and Medium Enterprises borrowers with aggregate credit facilities of up to 250 million, subject to such conditions as are necessary for ensuring financial stability.

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.

The nine-hour-long meeting took place with the government seeking more consultation from the Reserve Bank in decision making and thus paving way for higher economic growth. The RBI board includes four deputy governors, Department of Economic Affairs secretary S C Garg, financial services secretary Rajiv Kumar, besides non-official director including experts like S Gurumurthy and Satish Marathe. RBI's next board meeting is likely to take place on 14th December.

Meanwhile, RBI has announced to inject Rs 8,000 crore into the system through the purchase of government securities on November 22. In a statement, RBI said the open market operation will be carried on the assessment of durable liquidity needs going forward.