Feels it is being left out on key issues
The government wants greater involvement in the RBI’s decision-making as it feels the current practice leaves it out on many critical issues such as single-day default turning a loan into an NPA, sources said ahead of the crucial board meeting of the central bank.
The Centre feels that as the representative of the people, it should be involved in critical policy decisions made by the Reserve Bank of India (RBI), they added.
To buttress its point, the government cites that quorum for some of the sub-committees is completed by the presence of the Governor and four Deputy Governors and not requiring any other directors to be present.
However, the central board of the RBI is headed by the Governor and includes two government nominee directors and 11 independent directors. Currently, the central board has 18 members, with the provision of it going up to 21. The board will meet on Monday where the government is expected to push for easing of norms for lending to the MSME sector, relaxing the Prompt Corrective Action (PCA) framework for weak banks and appropriate size of reserve to be maintained by the central bank, among others. The Centre and the RBI seem to be veering around to reach a solution, particulary with respect to relaxation of PCA framework and easing of lending norms for the MSMEs, sources added.

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