Why the haste to repair RBI, asks Congress

Former Union finance minister, P. Chidambaram, on Sunday questioned the Union government on its "hurry" to repair the capital framework of the Reserve Bank of India (RBI) while the government led by Prime Minister Narendra Modi "only" takes office.

"The NDA government competed for four years and six months of its mandate. It remains effectively six months. What is the rush to "fix" the RBI's capital framework? Asked the former finance minister.

In a series of tweets, Chidambaram accused the Center of putting more and more pressure on the RBI.

The former minister asked whether the Modi government's budget calculations were on track and that he claimed to have surrendered a loan of 70 trillion rubles for 2018-2019, so why does he need money from RBI's reserves? this year?

On Friday, the Secretary of State for Economic Affairs, Subhash Chandra Garg, was set to twitter to make it clear that the government did not have an urgent need for funds and that it was not necessary. There was no proposal to transfer funds from the RBI's reserves.

The Ministry of Finance has indicated, however, that it is considering "fixing" the central bank's economic capital framework, which refers to venture capital that the RBI maintains to take into account different risks.

At present, the RBI has crore reserves of 9.59 lakhs; reports indicated that the Union government wanted some of this money to be transferred to him, a charge denied by the Ministry of Finance.

Loan directives flouted

At a separate press conference, Congress asserted that the Center had violated the RBI's guidelines in the new loan system launched – psbloansin59.com – for micro, small and medium enterprises (MSMEs) by administering allegedly the program through the intermediary of a private company.

"MSMEs register by thinking that they are public sector banks, but registration is done by a private company where SIDBI [a government undertaking] is only a stakeholder, "Congress spokesman Gaurav Vallabh told an official briefing.

Congress spokesman pointed out that the RBI has repeatedly raised three issues: bad debts, cybersecurity and bank fraud. "There are 12 banks that are under PCA (Prompt Corrective Action) and announce they are ready to lend to MSMEs. Is not this a contradiction since the RBI order lines say that as long as a bank is not under the PCA, it can not grant new loans, "said Mr Vallabh.