Page 8 - BANKING FINANCE February 2024

RBI CORNER

Reserve Bank

News

Patra reappointed as RBI ated in Ankleshwar, District Bharuch, guarantees issued during a year at 5
Gujarat, by imposing a monetary pen- per cent of Revenue Receipts or 0.5
Deputy Governor for 1 alty of Rs 7.00 lakh. per cent of Gross State Domestic Prod-
year According to RBI, this penalty, enacted uct, whichever is less," the RBI panel

Michael Patra has been reappointed as through an order dated December 14, in its report.
RBI governor for one year. He was ini- 2023, has been imposed due to the "State governments may consider
tially appointed in January 2020 for a bank's non-compliance with RBI direc- charging a minimum guarantee fee for
three-year tenure, which concludes on tives on 'Placement of Deposits with guarantees extended and additional
January 14. Patra was appointed Other Banks by Primary (Urban) Co- risk premium may be charged based on
deputy governor in place of Viral operative Banks (UCBs),' 'Reserve Bank the risk category and the tenor of the
Acharya who quit in July 2019, six of India (Know Your Customer (KYC)) underlying loan," the panel said.
months ahead of his tenure. Prior to Directions, 2016,' and the contraven-
being appointed deputy governor, tion of 'Section 26A (2) read with Sec- Insolvency rules in need of
Patra was the executive director in tion 56 of the Banking Regulation Act,
charge of the monetary policy and was 1949 (BR Act).' course correction: Das
a member of the monetary policy com- RBI governor Shaktikanta Das called
The penalty is a result of the powers
mittee. for a 'course correction' in the Insol-
conferred on RBI under the provisions
He played a key role in developing the of Section 47A(1)(c) read with Sections vency and Bankruptcy Code, citing the
inflation-targeting and liquidity frame- 46(4)(i) and 56 of the BR Act. time taken for resolution and the ex-
works of the RBI. tent of haircuts vis-a-vis the admitted
claims. He stressed the need to assign
A PhD in economics from the Indian RBI panel proposes frame- varying degrees of weightage to differ-
Institute of Technology, Mumbai, work for state guarantees ent categories of creditors based on
Patra, served in various capacities in the level of risk they have borne since
the RBI, which he joined in 1985. He is The Reserve Bank of India's working the outset.
also a fellow of Harvard University, group on state government guarantees
has proposed that the word 'guaran- "If we have to take stock of the imple-
where he undertook post-doctoral re-
tee' should include all instruments, mentation journey of the IBC and its
search in financial stability.
which create an obligation, contingent impact so far, there are significant
or otherwise, on the part of the state positive indications as well as learn-
RBI levies penalty on co-op government. ings, suggesting the need for some
banks for non-compliance "The purpose for which Government course correction," said Das.

The Reserve Bank of India (RBI) has guarantees are issued should be clearly He was speaking at an event organised
taken an action against Navsarjan In- defined. State governments may con- by the Centre for Advanced Financial
dustrial Co-operative Bank Ltd., situ- sider fixing a ceiling for incremental Learning (CAFRAL) here.

BANKING FINANCE | FEBRUARY | 2024 | 7