The Reserve Bank of India's (RBI) Board meeting concluded on a cordial note. In the high profile meeting, which came amid the differences between the government and the RBI, the board agreed to ease liquidity for the financial sector and increase credit to small businesses. The RBI's board decided to set up an expert committee to examine the central bank's Economic Capital Framework (ECF). The membership and terms of reference of the ECF committee will be ‘jointly determined’ by the government and the RBI.
Further, it also decided that the central bank's Board for Financial Supervision (BFS) will examine the issues concerning the banks that are under the Prompt Corrective Action framework. The Board also advised RBI to consider scheme for restructuring of stressed assets of MSME with aggregate credit facilities of up to Rs 25 crore. There will be a board for Financial Supervision of RBI to examine framework for banks under Prompt Corrective Action (PCA). RBI board also decided to set up a high-powered committee to examine issues related to 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.
Besides, 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. With regard to banks under PCA, it was decided that the matter will be examined by the Board for Financial Supervision (BFS) of RBI.
The Reserve Bank of India’s (RBI) Central Board met and discussed the Basel regulatory capital framework, a restructuring scheme for stressed MSMEs, bank health under PCA framework and the ECF of RBI.
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