Issues between RBI and Government: Government wants to ease lending norms for facilitating MSMEs. RBI want to continue banks clean-up efforts instead. Government wants to setup an independent Payments Regulatory Board. RBI wants it under its own purview. Government and RBI differ on classification of NPAs. Payments Regulatory Board issue: Reserve Bank of India (RBI) …
What is the leadership framework of RBI? The Reserve Bank’s affairs are governed by a central board of directors. The board is appointed by the Government of India as per the Reserve Bank of India Act. Appointed/nominated for a period of four years There is a Governor and not more than four Deputy Governors There …
Monetary Policy Committee: Now, MPC will decide monetary policy instead of RBI Governor doing it single handily there by bringing more accountability and thought into it. Amendment to RBI Act removed the governor’s powers to singularly set monetary policy vesting them in a six-member Monetary Policy Committee Background: Last year, the government and the Reserve …
What is Inflation Targeting? Inflation targeting is a monetary policy in which a central bank has an explicit target inflation rate for the medium term and announces this inflation target to the public. It will have price stability as the main goal of monetary policy Inflation Targeting in India: The central government confirmed the continuance …
Background: Long-pending proposal to set up an independent agency to manage Central government borrowings. Setting up of Public Debt Management Agency (PDMA) will require amendments to the RBI Act. The need for an independent debt manager for the Centre is becoming more underlined as its borrowings cross over Rs 6 lakh crore and it is …
What is a Currency Swap? A currency swap involves exchange of principal and interest in one currency for the same in another currency. It is considered to be a foreign exchange transaction. For example: Suppose a Foreign company needs to acquire Indian Rupees and India-based company needs to acquire US dollars. Then these two companies …