India central bank to set up expert panel to examine RBI’s economic capital framework

NEW DELHI (Reuters) – The Reserve Bank of India said on Monday it has decided to set up an expert panel to examine the economic capital framework of the central bank, in a move that could prompt a rethink of what constitutes adequate capital reserves for the central bank.

For weeks, government officials have been pressuring the RBI to accede to a range of demands, from easing lending curbs to handing over surplus reserves to the government.

The government and the central bank will jointly decide on the members of the panel and the scope of the panel, the RBI said in a statement late on Monday.

In addition, the RBI said its financial supervision board will examine the issue around easing of the prompt corrective action plan for some banks – another key of contention between the government and the central bank.

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