Liquidity, economy figure in FSDC meet

RBI reassures: Governor Urjit Patel stressed that the RBI would ensure adequate liquidity in the system.   | Photo Credit: PTI

Finance Minister Arun Jaitley and Reserve Bank of India Governor Urjit Patel on Tuesday met face-to-face — at the Financial Stability and Development Council (FSDC) meeting — for the first time after the tension between the government and the central bank became public.

The council discussed at length the issue of real interest rate, current liquidity situation, including segmental liquidity position in NBFCs and the mutual fund space, an official statement said.

The panel also decided that the regulators and the government will keep a close watch on developments and take all necessary measures.

‘Crisis not severe’

The FSDC is headed by the Finance Minister and comprises the RBI Governor, the SEBI Chairman, and heads of regulators such as PFRDA, IRDAI and the Chairman of the Insolvency and Bankruptcy Board.

Sources present at the meeting said that Dr. Patel said the liquidity scenario among NBFCs was not as severe as it was being made out to be, but also assured the government that the RBI would ensure adequate liquidity in the system.

PFRDA chairman Hemant Contractor later told reporters the FSDC also discussed the health of the economy, both domestic and global and issues due to rising oil prices.

The meeting assumes significance for various reasons, including the perceived liquidity shortage being felt by NBFCs as also because it was the first time the RBI Governor met Mr. Jaitley following RBI Deputy Governor Viral Acharya’s comments on Friday about how the government was undermining RBI’s autonomy.

Dr. Acharya’s comments sparked off speculation on relations between the RBI and the Centre, with several former officials of both saying that communication between the two had completely broken down.

Unlike in the past, all four RBI deputy governors attended the FSDC meeting along with Dr. Patel.

(With PTI inputs)

This article is closed for comments.
Please Email the Editor

Printable version | May 15, 2021 9:18:44 PM |

Next Story