A New Tale of Reforms and Restructure Begins
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The conflict between the government and the RBI was seen reaching some resolution, thanks to the almost nine-hour meeting in Mumbai that took place on Monday. The meeting came up with several reformation plans including restructuring the loan structure for small and medium industries (SMEs). The central board has also decided to set up separate committees to break through the obstacles surrounding the nation and economic structure.
After weeks of turbulence, they reached a common focal point. A board member informed Reuters, “The meeting happened in a very cordial environment. Most of the issues were resolved in an amicable manner.”
Some Concrete Steps
The RBI and government also reached a settlement of raising credit facilities for MSMEs up to Rs 25 crore and set up a panel to deal with the surplus capital. A statement issued by the RBI said, “The board also advised that RBI should consider a scheme for the restructuring of stressed standard assets of MSME borrowers with aggregate credit facilities of up to Rs 250 million.” RBI headed by Urjit Patel met Finance Ministry to discuss a number of issues such as PCA (Prompt Corrective Action) which will be taken care of by the Board for Financial Supervision (BFS) of RBI and ECF (Economic Capital Framework).
The board has also decided to retain to retain the CRAR at 9per cent agreed to extend the transition period for implementing the last tranche of 0.625per cent under the Capital Conservation Buffer (CCB) by one year.
Among RBI’s 10 independent directors present was Tata Sons Chairman N Chandrasekaran. Among the government allies were Subhash Chandra Garg, Secretary, Department of Economic Affairs and Rajiv Kumar, Secretary, Department of Financial Services.
An Impactful Meeting
The next meeting is going to be held on December 14. However, the importance of this meeting cannot be emphasised any further. This meeting caught the great attention of the marketers and investors. It is a crucial time for the government as the May elections are due to surface next year. RBI, too, has been undergoing its share of ups and downs with the recent onslaughts. It is going to come as a sigh of relief for people in the commercial sector to see two most powerful institutions of the country coming together and becoming allies in solving the economic disturbances that are rocking the nation.