Tue. Mar 19th, 2024
RBI

After the nine-hour board meeting- the longest meeting according to recent years, the reserve Bank of India (RBI) on Monday, agreed to provide relief and ease lending to small and medium enterprises (SMEs) by working out a loan restructuring scheme up to Rs 25 crore and to ease liquidity for the financial sector. Even the RBI agreed to ease lending restrictions on some of the state-owned banks.

The shield the banks from the future losses and to fix the capital framework, the board has also decided to create and form an expert committee regarding the issue.

The board also advised that the scheme should be considered as a subject in such cases in order to ensure financial stability. Earlier, the RBI was against the proposal of considering any loans to small units because of the impact of a huge loan seen on the banking sector.

Now the Prompt Corrective Action (PCA) framework will be reviewed by the Board for Financial Supervision (BFS) and the RBI, which rejects the help banks which are debt-ridden due to huge bad loans and have weak capital. 11 PSU banks has been placed under this framework. BFS might release some of the banks, if improved their operations, from the PCA framework.

Hence, top levels government’s effort has worked out in a way which has led tension dropped, after the government cited the Section 7 of RBI law appealing for an open formal discussion with Governor Urjit Patel, regarding these issues.

Leave a Reply

Your email address will not be published. Required fields are marked *