Page 8 - BF Cover February 2019

RBI CORNER

RESERVE BANK

NEWS
NEWS
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NEWS

Nandan Nilekani to head RBI told to ease bank capital norms

RBI's panel on e-payments A parliamentary panel has asked Reserve
Bank of India to ease its rules on capital
Nandan Nilekani, has been ap-
pointed by the RBI to head a panel requirements for banks so that they can
increase lending. "Such stringent norms
on deepening digital payments. The
central bank also stipulated by the RBI for our banks ... is
announced unrealistic and unwarranted," said a report
norms that will tabled in parliament by the Parliamentary
allow third-party Committee on Finance.
service providers The report comes after the government and some of the board members of the
like Apple Pay and Google Pay to RBI have put pressure on the central bank to relax capital requirements for banks
store payment card data and allow as they seek to boost credit and economic growth. Former RBI governor Urjit
customers to make cardless pay- Patel, who quit last month, opposed the government's demand for lowering
ments in shops using their phones. capital requirements and warned about the need for a cushion to offset unex-
An earlier panel on digital payments pected risks.
appointed by the government,
Indian banks are required to maintain a minimum capital to risk weighted asset
which was headed by former finance
ratio (CRAR) at 9 percent, against the global Basel-III requirement of 8 percent.
secretary Ratan Wattal, had recom- On top of that, they have to keep a capital conservation buffer that is supposed
mended Aadhaar for eKYC and ex-
tensive use of Aadhaar-Enabled Pay- to climb to 2.5 percent by March 2019. The rollback of additional capital re-
quirements could release about 5.34 trillion rupees ($76 billion) into the economy
ment System (AEPS). However, lever-
aging Aadhaar in digital payments by releasing capital for lending.
received a setback with the Supreme Jalan to submit report on RBI reserve in April'19
Court restricting its use. Besides
Nilekani, the panel will have former A six-member panel led by former RBI governor Bimal Jalan has been entrusted
with the task of reviewing the best practices followed by central banks world-
RBI deputy governor H R Khan,
wide in making assessment and provisions for risks which a central bank world-
former Vijaya Bank CEO Kishore
Sansi, former IT ministry secretary wide in making assessment and provisions for risks which a central bank balance
Aruna Sharma, and Sanjay Jain, who sheets are subject to. The panel having former economic affairs secretary Rakesh
is the chief innovation officer at IIM- Mohan as its vice chairman will propose a suitable profit distribution policy tak-
Ahmedabad's centre for innovation, ing into account all the likely situations of RBI, including the situation of holding
incubation and entrepreneurship. more provisions than required.

8 | 2019 | FEBRUARY | BANKING FINANCE