New RBI Governor completes consultations with state-run banks

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Mumbai, Dec 20 (IANS) New RBI Governor Shaktikanta Das has completed his consultations with heads of state-run banks, he said on Wednesday.

Das, who had earlier served in the government as Economic Affairs Secretary, took charge at the Reserve Bank of India (RBI) last week almost immediately after the abrupt resignation of Urjit Patel as the RBI Governor, a rare phenomenon in the banking world.

“Meetings with public sector banks completed. Shall meet representatives of private sector banks and cooperative banks next week,” Das said in a tweet.

Briefing media after taking charge, Das had said that consultations with stakeholders have become fundamental to the central bank’s functioning in view of the complexity of modern day decision-making and that he would start this process with meeting the heads of public sector banks (PSBs).

Patel’s resignation followed the most significant crisis in government-RBI relations provoked by the liquidity crunch in the economy.

The government’s “differences” with the RBI centres on four issues – the former wanted liquidity support to head off any credit freeze risk, a relaxation in capital requirements for lenders, relaxing the prompt corrective action (PCA) rules for banks struggling with accumulated non-performing assets (NPAs or bad loans) that have reached the staggering level of over Rs 12 lakh crore, and support for MSMEs.

Earlier on Thursday, the government presented in the Lok Sabha the second Supplementary Demands for Grants for 2018-19 for gross additional expenditure of Rs 85,948.86 crore which includes Rs 41,000 crore for recapitalisation of the PSBs that have been hit hard by NPAs.

Currently, 11 banks with high bad debts are under the PCA framework that prohibits them from further lending. On the insistence of the Central government, the RBI’s Board for Financial Supervision is expected to meet soon.

–IANS

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