The Reserve Bank of India (RBI) has estimated that around four out of the 11 banks facing lending restrictions could come out of the prompt corrective action (PCA) framework with some capital infusion. This was indicated in the central bank’s board meet on Friday.After taking an activist stance in its previous two meetings, the RBI board took a step back on Friday, as newly-appointed governor Shaktikanta Das adopted a more consultative stance. In the meeting, Das is understood to have said that he will hold discussions with the government representatives on the issue of “economic capital framework” (ECF) and on governance. Economic affairs secretary S C Garg and department of financial services secretary Rajiv Kumar are the government representatives on the RBI board. Das will also hold talks with RBI’s internal team on the liquidity requirements.A terse statement issued after the meeting said that the board reviewed “the current economic situation, global and domestic challenges, matters relating to liquidity and credit delivery to the economy, and issues related to currency management and financial literacy”. The directors also discussed the draft report on ‘Trend and Progress of Banking in India (2017-18)’ — an annual document brought out by the central bank.67102537

The next board meeting is expected to take place mid-January, 2019. Before that, the RBI’s board for financial supervision will review the progress by banks that have been placed under PCA. The banks are expected to provide an indication of the extent of provisions they will need to make in the third and fourth quarters, based on which the government will determine the capital requirement.Besides the issue of governance for the RBI, the other topic discussed was that of an ECF for the central bank. The ECF is a formula to calculate the extent of capital reserves the RBI needs to maintain. The committee is being appointed against the backdrop of the government’s claims that the central bank is holding surplus reserves.Friday’s meeting, which started after 10am, concluded in a few hours by lunch time, compared to the previous two meetings that ran for over nine hours. In the previous meet, the board wanted a relook at the governance structure. This would be undertaken by sub-committees on the board taking regulatory decisions, which would curb some of the powers that the RBI enjoyed.The board meeting is understood to have touched on issues related to printing of currency notes as well.