Mumbai: The Reserve Bank of India (RBI) on Monday disclosed the minutes of its central board meeting on 11 October to the public, as part of its intent to lift the veil of secrecy shrouding its operations. This is the first time RBI has revealed the proceedings of its central board to the public, even though key portions remain redacted.
The minutes of the 579th meeting, released as part of RBI’s transparency initiative, show the central board deliberated on the state of the financial sector along with the supervision of entities, both banks and non-banks. So far, the regulator only shared the minutes of board meetings in response to queries under the Right to Information (RTI) Act.
“The board discussed in detail the current state of the financial sector with special focus on the regulatory and supervisory architecture of commercial and cooperative banks as also non-banking financial companies (NBFCs)," the minutes said.
In reply to queries from some directors, the framework of supervision of banks and other financial entities regulated and supervised by RBI were explained at the meeting.
The central board, the document said, also discussed the specific case of the failed Punjab and Maharashtra Co-operative Bank Ltd (PMC Bank).
“It was informed that RBI has taken/initiated several measures to strengthen supervision and regulation of these entities. It was also informed that the formation of a separate department of regulation and supervision, that was approved by the Central Board in its meeting on 21 May 2019," it said.
Over the last couple of months, the regulator has been strengthening the oversight of cooperative banks following last year’s PMC crisis. On 5 December, the central bank had announced a slew of measures related to urban cooperative banks (UCBs), including exposure norms, a credit repository and cybersecurity norms. The Central Repository of Information on Large Credits (CRILC) database is used by banks and other financial institutions to share, among themselves and with RBI, the classification status of borrowers.
RBI has also restricted urban cooperative banks from offering large corporate loans through several changes to lending norms last month. The regulator slashed single and connected borrower exposure for UCBs, hiked the priority sector lending target and specified a portfolio mix for at least half of their loan books.
The central bank also said that henceforth, minutes of board meetings will be placed on RBI’s website within two weeks from the date of its confirmation in the next meeting of the central board and on being signed by the chairman.
“The Reserve Bank of India (RBI) has been, over the years, taking steps to enhance transparency with regard to its functioning," the central bank said.
The minutes released on Monday have been redacted in four places. First, item number 9 in the minutes has been completely redacted, including its reference in the annexures.
Importantly, with reference to the discussion on the financial sector, some decision seems to have been redacted. The fourth black-out also occurs in the annexures.