RBI Central Board Meeting chaired by Governor Shaktikanta Das ends. Here's what happened

RBI Board Meet: The Central Board of Reserve Bank of India (RBI) met today to discuss contentious issues including a new economic capital framework (ECF) for the central bank and relaxation in the prompt corrective action norms for at least some of 12 state-run banks. This was the first board meet chaired by the newly-appointed governor Shaktikanta Das. He took over as the 25th governor on Wednesday.

In a statement, RBI said, "The Reserve Bank of India’s (RBI) Central Board met today in Mumbai under the Chairmanship of Shri Shaktikanta Das, Governor, Reserve Bank of India. The Central Board placed on record its appreciation of the valuable services rendered by Dr. Urjit R. Patel during his tenure as Governor and Deputy Governor of the Bank. The Board deliberated on the Governance Framework of the Reserve Bank and it was decided that the matter required further examination."

"The Board reviewed, inter alia, the current economic situation, global and domestic challenges, matters relating to liquidity and credit delivery to the economy, and issues related to currency management and financial literacy. The draft report on Trend and Progress of Banking in India (2017-18) was also discussed," it added.

In the previous board meeting on November 19, the board decided to constitute a committee of experts to fix the appropriate level of economic capital framework (ECF) that the central bank should hold at any given time and the membership and terms of reference of which will be jointly determined by government and RBI, PTI reported.

The issue of transfer of RBI's excess reserves, which stood at Rs 9.43 lakh crore as of June 2018, to the government has been one of the contentious issues between the government and the central bank for a long time and also one of the key reasons for the sudden resignation of Urjit Patel.

Of the 21 state-owned banks, 11 are under the PCA framework, which imposes lending and other restrictions on weak lenders. These are Allahabad Bank, United Bank of India, Corporation Bank, IDBI Bank, UCO Bank, Bank of India, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, Dena Bank and Bank of Maharashtra.

On Thursday, Das met the chiefs of a few state-run banks to discuss their concerns. Lenders requested the governor to ease the PCA norms and also sought relaxation in the one-day default norm announced in the February 12 RBI circular on reclassification of NPAs. 

At the November 19 meeting, the RBI board had also decided to refer the issue of relaxing PCA framework to the Board of Financial Supervision (BFS) of the central bank. 

(With PTI inputs)