Bhubaneswar, December 14 (IANS): The RBI central board on Friday discussed policy framework for cooperative banks, NBFCs, current economic situation and domestic and global challenges.
The board's discussions focussed on issues related to urban cooperative banks, extension of enforcement policy and framework to cooperative banks and NBFCs, the RBI said in a statement.
The central board of the Reserve Bank of India discussed the policy for cooperative banks and non-banking financial companies during its meeting.
The matter was taken up at the 580th meeting of RBI's central board here. The meeting was chaired by RBI Governor Shaktikanta Das.
The NBFC sector has been under pressure since Infrastructure Leasing and Financial Services (IL&FS) went burst in 2018. This created a liquidity crunch for the banking sector as it affected banks that lend to NBFCs.
The RBI central board also reviewed the current economic situation and domestic and global challenges. The economic troubles are not subsiding as evident in the macroeconomic figures.
India's economic growth slumped to its lowest in six-and-a-half years during the September quarter.
Meanwhile, retail inflation of the country in November rose to over a three-year high on the back of higher vegetable prices, while industrial output slumped for the third month in a row in October due to poor performance of eight core industries.
Notably, the RBI looks at retail inflation while deciding its policy rates.
To make NEFT system 24x7
The Reserve Bank of India (RBI) has decided to provide an additional collateralised intra-day liquidity facility for smooth operation of payment system National Electronic Funds Transfer (NEFT) on a round-the-clock basis from December 16, the central bank said.
The move will aid the payment system become operational on a 24x7 basis.
The facility is used to electronically transfer funds from one account to another of banks which are members of this system.
"... In order to facilitate smooth settlement of NEFT transactions in the accounts of the member banks maintained with the Reserve Bank in a 24x7 environment, it has been decided to provide an additional collateralised intra-day liquidity facility, to be called Liquidity Support (LS)," RBI said in a notification.
"The LS facility will be available for facilitating NEFT settlements on 24x7 basis. The LS facility will operate as per the same terms and conditions as the Intra-Day Liquidity (IDL) facility," the notification said.