Finance Minister Piyush Goyal speaks in the Lok Sabha during the Monsoon session of Parliament | PTI
File image of Finance Minister Piyush Goyal speaking in the Lok Sabha during the Monsoon session of Parliament | PTI
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Union minister Piyush Goyal lashes out at move by RBI under Urjit Patel to change norms of the prompt corrective action for banks.

New Delhi: Ahead of the crucial Reserve Bank of India (RBI) board meeting Friday, Railways and Coal Minister Piyush Goyal lashed out at the central bank’s decision when under former governor Urjit Patel, to change the norms of the prompt corrective action (PCA) for banks.

The RBI board is set to hold its first meeting under governor Shaktikanta Das Friday, who was appointed governor within a day of Patel’s sudden resignation Monday.

Late Thursday, Goyal tweeted that institutions needed to be accountable. “We need to know whether all the people are able to get loans from the banks easily, what is the liquidity situation in the country today.”

Goyal, who was also in charge of the Finance Ministry earlier in the year, in a series of tweets also said that the government had never sought transfer of RBI’s surpluses but underlined that the money needed to be put to productive use.

He also said that the RBI unilaterally decided to change the PCA framework on April 1, 2017.

The RBI, however, did take the department of financial services into confidence before amending the norms. On its part, the Finance Ministry had agreed to the changes in the provisions of the PCA framework in a letter in March 2017 besides suggesting some other measures to the way the common tier 1 equity requirement should be factored in. The RBI subsequently notified the revised PCA norms in April 2017 after incorporating these suggestions.


Also read: Shaktikanta Das expected to play it safe at his first RBI board meeting tomorrow


Modi govt in hurry to ease lending norms

The Modi government is now in a hurry to ease lending norms, especially after the state election results and the slowdown in economic growth. The government has been insisting on easing lending norms and relaxing the PCA framework so that credit can take off.
But this had led to tension between the Modi government and the RBI under Patel.

In a speech in October, RBI deputy governor Viral Acharya had strongly defended the PCA framework arguing that these norms had helped weak banks strengthen their balance sheets by improving the provision coverage ratio and reducing the losses.

“Without the PCA imposition, some banks would have incurred even higher losses and required even more of taxpayer money for recapitalisation,” Acharya had said.

“Imposition of PCA can thus be seen as first, stabilising the banks at risk, and then, undertaking the deeper bank reforms needed for longterm viability of the business model of these banks. It is important, therefore, that the PCA framework to deal with financially weak banks is persisted with.”

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1 Comment Share Your Views

1 COMMENT

  1. Potli khali he, hame aur maje karne he, we need dhan form anywhere, this time RBI.

    Whats new in this ?
    we already have looted ELECTRICITY BOARDS, BANKS, LIC (ALMOST), NOW RBI IS LOOKING MOST MOTA BAKRA, ISE KATNA HEE HE

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