RBI meeting highlights: Panel to look at ECF; RBI to consider easing PCA

RBI board decides to constitute expert committee to examine ECF; membership and terms of reference of the committee will be jointly determined by govt and RBI

The Reserve Bank of India (RBI) board on Monday decided to set up a high-powered committee to examine issues related to surplus capital of Rs 9.69 trillion with the central bank and advised it to consider a scheme for restructuring stressed assets in the MSME sector.

At a nine-hour-long meeting of the board, it was also decided that the Board for Financial Supervision (BFS) of the RBI would examine the issues concerning the banks that are under the Prompt Corrective Action framework, according to a release.

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"The Board decided to constitute an expert committee to examine the Economic Capital Framework, the membership and terms of reference of which will be jointly determined by the Government of India and the RBI," the central bank said.

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Further, the apex bank has been advised to consider a scheme for restructuring of stressed standard assets of MSME borrowers with aggregate credit facilities of up to Rs 250 million, subject to such conditions as are necessary for ensuring financial stability, it added.     

8:59 PM

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. 

8:59 PM

On PCA 

 

With regard to banks under PCA, it was decided that the matter will be examined by the Board for Financial Supervision (BFS) of RBI.

8:58 PM

On MSMEs 

 

The board also advised that the RBI should consider a scheme for restructuring of stressed standard assets of MSME borrowers with aggregate credit facilities of up to 250 million, subject to such conditions as are necessary for ensuring financial stability.

8:56 PM

On RBI capital framework

 

The board decided to constitute an expert committee to examine the Economic Capital Framework (ECF)

 

The membership and terms of reference of which will be jointly determined by the Government of India and the RBI  

8:53 PM

RBI issues its official release on what transpired during the board meeting. 

8:37 PM

The Finance Ministry and the RBI, together, will decide on the composition of the committee to look into the RBI capital reserves framework, reports CNBC-TV18's Shereen Bhan.

8:34 PM

Existing committee of the RBI to look at the PCA framework to see if certain banks under the PCA should be given some relaxation, reports CNBC-TV18's Shereen Bhan, citing unnamed sources. 

8:31 PM

The RBI will allow loan restructuring for MSMEs, reports CNBC-TV18, citing what unnamed sources told news agency Reuters.

 

8:27 PM

The RBI board meeting ended on a 'cordial note', reports CNBC-TV18, citing what unnamed sources told news agency Reuters. 

8:26 PM

RBI will form a panel to review its surplus funds and transfer to the government, reports CNBC-TV18, citing what unnamed sources told news agency Reuters.

8:24 PM

RBI will take measures on improving liquidity and ease restrictions on select state-run banks' reserve ratio, reports CNBC-TV18, citing what unnamed sources told news agency Reuters.

8:17 PM

What we know at the moment

 

1) There are indications that the RBI may be willing to ease lending norms for MSMEs but liquidity to NBFCs remains a sticking point, reports PTI.  

 

2) It may also be open to injecting liquidity through open market purchases of bonds but is resisting relaxing capital buffers for banks, reports PTI.

 

3) Discussions in the meeting may also have focused on the massive Rs 9.69 trillion reserves of the RBI, with Gurumurthy and the finance ministry wanting it to be lowered in line with global practices, reports PTI.

7:33 PM

The RBI board meeting has just concluded. A statement from the central bank is expected soon.  

7:32 PM

All board members are leaving the RBI headquarters, reports CNBC-TV18.  

7:30 PM

Two RBI board members -- Sudhir Mankad, an independent board member, and Sachin C -- leave from the RBI board meeting, reports CNBC-TV18.