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RBI central board reviews impact of current global geopolitical crises

The board also discussed various areas of operations of the RBI including the functioning of the local boards and activities of select central office departments, according to a release

August 26, 2022 / 04:39 PM IST

The Reserve Bank of India's board on August 26 reviewed the current economic situation against the backdrop of global and domestic challenges in the wake of the ongoing geopolitical crises.

“The board in its meeting reviewed the current economic situation, global and domestic challenges including the overall impact of current global geopolitical crises,” the RBI said in a press release on August 26.

The board also discussed various areas of operations of the RBI including the functioning of the local boards and activities of select central office departments, the release showed.

Also read: Upside risks to inflation remain, says RBI Deputy Governor Michael Patra

The meeting was chaired by RBI Governor Shaktikanta Das. Deputy Governors Mahesh Kumar Jain, Michael Debabrata Patra, M. Rajeshwar Rao, T. Rabi Sankar and other directors of the central board attended the meeting. Sanjay Malhotra, the secretary of department of financial services, was also present at the meeting, according to the release.

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The board, the apex body in the RBI’s organisational structure, is primarily responsible for the oversight of the central bank. The board is appointed by the government under the provisions of the Reserve Bank of India Act, 1934. The board has 15 seats, of which five are official directors and 10 are non-official directors.

The RBI central board’s mandate is, among other things, to have a modern monetary policy framework to meet the challenge of an increasingly complex economy, to maintain price stability while keeping in mind the objective of growth.

Russia’s invasion on Ukraine had sent global financial markets into a tizzy, raising worries of high inflation. Global central banks have raised interest rates and scaled back pandemic-era surplus to quell inflationary pressures raising risks of stagflation.

Michael Patra, a deputy governor of the RBI, had said in a recent speech that the “dark shadow” of stagflation looms over South Asian Association for Regional Cooperation (SAARC) member countries. According to the deputy governor, SAARC now faces a “tremendous developmental challenge.”

SAARC’s member states include Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. The last of these, Sri Lanka, is currently facing an acute economic and political crisis thanks to a pile up of foreign currency denominated debt and a hit to growth from a slump in tourist visits due to the coronavirus pandemic. Other countries, such as Pakistan, are in trouble too.
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