RBI reviews the ongoing slowdown and the economic situation happening in various sectors.

On Friday, the Central Board of the Reserve Bank of India (RBI) reviewed the current economic situation, international and domestic problems and various fields of activity. The analysis is taking place in the midst of a more marked economic slowdown and recent PMC loan manipulations flagging a new threat to banking governance and NPA frauds.

The Board has also addressed the present situation of the financial sector in depth in this context, with particular emphasis on the regulatory and supervisory structure of commercial banks and also of NBFCs.

In the midst of a weak growth forecast, the RBI Central Board met with the global agencies and the RBI itself, and the recent PMC bank fraud, which caused questions if the current legislation on cooperative banks is adequate for checking fraud and safeguarded common man’s money therein.

On Thursday Deepak Parekh, HDFC Chairman, said, without taking the name of the PMC Bank, that it is “brutally wrong” to have daily borrowing waivers and corporate loan write-offs but that the common man’s savings cannot be covered by a financial system. In my opinion, in finance, there is no greater cardinal sin than manipulation of the hard-earned savings of the common man.

In the current fiscal year, RBI has already reduced its projected GDP growth to 6.1%. On Thursday, Moody’s Investors Service reduced its GDP growth forecast 2019-20 for India from 6.2 per cent earlier to 5.8 per cent, saying there was a marked slowdown in the economy, which has been related in part to the long term.

Moody’s attributed the decline to an investment-led slowdown that has extended into consumption, propelled by financial stress among rural households, and creating weak job opportunities.

The Board addressed the role of Payment Banks and Small Finance Banks in promoting financial inclusion, Local Boards’ annual activity statements, the Board’s various sub-committees, and the operation of a few departments of the Central Office.

RBI last month put PMC Bank under “Directions” due to a weak financial condition, with the central bank having capped Rs 25,000 deposit withdrawals.

PMC is reportedly in bad financial health and governance because of its exposure to the near-insolvent real estate player HDIL, to which it has lent more than 70% of its Rs 9,000 crore in advances but all of these have not been reported in balance sheets.