The RBI’s central board, in a meeting on Friday, deliberated on the contentious issue of the banking regulator’s governance framework, and decided that the matter required further examination.
Under its previous Governor Urjit Patel, the RBI had stonewalled any move to let the government have a greater say in its affairs. However, under newly appointed Governor Shaktikanta Das, it seems to have taken a conciliatory approach.
Unlike the marathon nine-hour central board meeting on November 19, Friday’s meeting was wrapped up in six hours. The 18-member board took up various issues at hand in a businesslike manner.
The RBI said in a statement that besides discussing the governance framework, the central board reviewed, inter alia, the current economic situation, and global and domestic challenges. It also spoke about matters relating to liquidity and credit delivery to the economy, and issues around currency management and financial literacy.
Underscoring that liquidity and credit delivery to the economy come hand in hand, a source familiar with the developments at the meeting said: “While liquidity per se is not an issue, the fact remains that 11 weak PSBs are constrained in their lending activity as they are under the Prompt Corrective Action framework. These banks need to be unshackled for supporting growth in the economy.”