Reserve Bank of India’s board met for more than nine hours in Mumbai.
Government and RBI meet middle of an unprecedented power tussle. Sources say the meeting, which brought RBI chief Urjit Patel face-to-face with several nominees of the government, ended on a conciliatory note, with the central bank agreeing to set up a panel on sharing surplus reserves and restructure loans of small businesses up to Rs. 25 crore.
The RBI announced that it would inject Rs. 8,000 crore worth of liquidity into the system through open market operations on November 22.
To provide relief to the Micro, Small and Medium Enterprises — which employ 12 crore people — the board advised the bank to consider a scheme for “restructuring of stressed standard assets” of borrowers with aggregate credit facilities of up to Rs. 25 crore, the RBI said. Under this, MSMEs in financial difficulties will get concessions from the bank.
Lending to non-banking financial companies and MSMEs was one of the key differences between the central bank and the government. While the bank took a hard line on the defaulters, the government wanted the bank to lend more to these sectors in view of the difficulties they faced during demonetization and the implementation of the Goods and Services Tax.