RBI MPC meeting: Central bank to issue guidelines on technical write-offs for all regulated entities

RBI MPC MEET

The Reserve Bank of India (RBI) will issue guidelines on technical write-offs for all regulated entities, including co-operative banks, Governor Shaktikanta Das said on June 8 as he shared the outcome of the monetary policy committee (MPC) meeting.

“The RBI proposes to issue comprehensive guidelines on compromise settlements and technical write-offs which will now be applicable to all regulated entities including co-operative banks,” Das said.

The RBI also proposes to rationalise the existing prudential norms on the restructuring of borrower accounts affected by natural calamities.

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The new guidelines will also include co-operative banks in the resolution mechanism of the non-performing assets (NPA) under the Prudential Framework. At present, only scheduled commercial banks and non-banking financial companies (NBFCs) function under the framework.

The MPC retained the repo rate, the key short-term lending rate, at 6.5 percent in line with the expectations but suggested about an uptick in the inflation print.

Das signalled the central bank’s readiness to act in keeping with the incoming data. Since May 2022, the regulator has hiked the repo rate by 250 basis points to counter the inflationary pressure.

One basis point is one-hundredth of a percentage point.

Also read: RBI Policy: MPC retains repo rate at 6.5%, sounds caution on inflation

High inflation, which has remained a key concern for policymakers, has begun cooling off in recent months. The retail inflation rate dropped sharply for the second straight month, hitting an 18-month low of 4.7 percent in April, but still stays above the RBI's target of 4 percent.

Economic growth is picking up, with the March quarter GDP reading of 6.1 percent beating economist consensus by a wide margin and signalling that the recovery is on track.