DAINIK NATION BUREAU
The Reserve Bank of India (RBI) will set up an expert committee comprising members appointed jointly with the Union Government, the bank said after a nine-hour board meeting on Monday. The committee will look into the “excess” capital supposed to be held by the central bank.
The government claims that the RBI holds Rs 3,60,000 crore by way of excess capital which should be transferred to it. But RBI officials, including Governor Urjit Patel, have been defending the need for the bank to hold a strong balance sheet to enable the country withstand financial crises and external shocks.
In a statement, RBI said its Board of Directors discussed the Basel regulatory capital framework which define the need for capital reserves to be held by the central bank and individual financial institutions.
The board also discussed the health of banks, mostly those in the public sector, which have been put under the Prompt Corrective Action (PCA) framework.
Under this framework, major banks with burgeoning non-performing assets (NPAs) have been forbidden to lend money. The government blames strict norms for the reduction in liquidity.