What Did RBI's Central Board Discuss About Economic Conditions?
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Synopsis
In a significant meeting on December 19, 2023, the Reserve Bank of India's central board, chaired by Governor Sanjay Malhotra, tackled pressing economic issues and approved a new deposit insurance framework for banks while reviewing critical banking reports.
Key Takeaways
- RBI's central board meeting focused on economic conditions.
- Approval of a risk-based deposit insurance framework for banks.
- Discussion on the Trend and Progress of Banking in India, 2024–2025.
- Highlighting the importance of consumer protection in banking.
- RBI's proactive measures in addressing economic challenges.
Mumbai, Dec 19 (NationPress) The central board of the Reserve Bank of India (RBI) convened on Friday to discuss the current state of both domestic and global economies, with Governor Sanjay Malhotra leading the 620th meeting of the bank's board of directors. The RBI issued a statement confirming that the Board has sanctioned a risk-based deposit insurance framework for banks.
In an official announcement, the RBI stated, "The 620th meeting of the Central Board of Directors of the Reserve Bank of India occurred today in Hyderabad under the leadership of Governor Sanjay Malhotra." The Board engaged in discussions regarding the global and domestic economic landscape and the challenges that accompany it.
Furthermore, the board reviewed the draft report titled Trend and Progress of Banking in India, 2024–2025 and assessed the functioning of several Central office departments.
"The board endorsed the risk-based deposit insurance framework for banks. It also evaluated the activities of specific Central Office Departments and the draft report on the Trend and Progress of Banking in India, 2024-25," the statement elaborated.
Present at the meeting were Deputy Governors T. Rabi Sankar, Swaminathan J, Poonam Gupta, and Shirish Chandra Murmu.
Other members of the Central board, including Nagaraju Maddirala, Secretary of the Department of Financial Services; Satish K Marathe, Revathy Iyer, Pankaj Ramanbhai Patel, and Ravindra H Dholakia, also participated in the meeting.
Previously, the RBI had implemented a compounding order under Section 15 of the Foreign Exchange Management Act (FEMA), 1999, involving Nearbuy India Private Limited. This move has led to the cessation of proceedings against the company for alleged violations of the Act, as per the statement from the Enforcement Directorate (ED).
The order was executed by the RBI on October 17 following a "No Objection" from the ED, according to an agency statement.
In this instance, the ED initiated an investigation based on credible intelligence received under the provisions of the Act.
Upon concluding the investigation, the agency filed a complaint under FEMA before the Adjudicating Authority on December 3, 2024. The complaint highlighted various contraventions under FEMA, including late reporting of foreign inward payments under Para 9(1)(A) of Schedule 1 to FEMA 20/2000-RB, amounting to Rs 35.82 crore, and the tardy submission of Form FCGPR after issuing shares under Para 9(1)(B) of the same schedule, totaling Rs 73.01 crore.
The RBI has now undertaken the compounding for these violations, the statement concluded.
Point of View
I note that the RBI's recent meeting signifies a proactive approach towards managing economic challenges. The approval of the deposit insurance framework not only aims to protect consumers but also reflects the RBI's commitment to maintaining financial stability in India. This decision should be welcomed by stakeholders across the sector as it addresses both domestic and global economic uncertainties.
NationPress
23/12/2025
Frequently Asked Questions
What is the purpose of the RBI's central board meeting?
The RBI's central board meeting aims to discuss the current economic conditions, approve policies such as deposit insurance frameworks, and assess the performance of banking operations.
Who presided over the 620th meeting of the RBI's central board?
The meeting was presided over by Governor Sanjay Malhotra.
What significant framework was approved during the meeting?
The board approved a risk-based deposit insurance framework for banks.
What was discussed regarding Nearbuy India Private Limited?
The RBI issued a compounding order concerning Nearbuy India Private Limited under FEMA, which concluded the proceedings against them for alleged violations.
What are the implications of the new deposit insurance framework?
The new deposit insurance framework aims to enhance the protection of depositors' funds in the banking system, thereby increasing consumer confidence.
