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RBI board meeting on Monday; likely to reach common ground on some key issues

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New Delhi | The ongoing rift with the government is set to play out at the RBI’s crucial board meeting Monday, with the Finance Ministry nominees and some independent directors expected to take on Governor Urjit Patel and his team over issues ranging from MSME credit to the central bank’s reserves, though both sides are in favour of reaching a common ground.

While there have been reports and demands from some quarters for the Governor to step down, sources said Patel is unlikely to yield under pressure and will rather mount a strong defence of the central bank’s policies regarding stringent NPA recognition norms as well as measures taken to ease credit supply to MSMEs.

Patel and his four deputies, who all are members of the RBI’s 18-member central board, will present a united front, while a few independent directors too are expected to support the central bank’s mission to clean up bank balance sheets, sources said. The central board, headed by the RBI Governor, is expected to discuss issues mentioned in the agenda circulated to the board members in advance. Off-agenda items can also be raised in the meeting, with the chair’s permission.

The RBI’s central board currently has 18 members, though the provision is that it can go up to 21. The members include Governor Urjit Patel and his four deputies as ‘full-time official directors’, while the rest 13 have been nominated by the government, including two Finance Ministry officials — Economic Affairs Secretary and Financial Services Secretary.

Sources said the government and Reserve Bank of India (RBI) are looking to reach at an agreeable solution with respect to relaxation of the Prompt Corrective Action (PCA) framework and easing of lending norms for the MSME sector. If not in this board meeting, the issue of relaxation of PCA framework would reach a resolution in the next few weeks, they added. As a result of the relaxation, some banks may come out of the PCA framework by the end of this fiscal.

Of the 21 state-owned banks, 11 are under the PCA framework, which imposes lending and other restrictions on weak lenders. These are Allahabad Bank, United Bank of India, Corporation Bank, IDBI Bank, UCO Bank, Bank of India, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, Dena Bank and Bank of Maharashtra.

The PCA framework kicks in when banks breach any of the three key regulatory trigger points — namely capital to risk weighted assets ratio, net non-performing assets (NPA) and return on assets (RoA).  Globally, PCA kicks in only when banks slip on a single parameter of capital adequacy ratio, and the government is in favour of this practice being adopted for the domestic banking sector as well. The RBI is also expected to consider a special dispensation for micro, small and medium enterprises (MSMEs) and non-banking financial companies (NBFCs) which have been facing liquidity issues.

The government feels that the MSME sector — which employs about 12 crore people and plays a critical role in the economy — needs some support after being impacted by demonetisation and implementation of the Goods and Services Tax (GST). However, the central bank has been averse to the government’s demand as it considers the sectors to be vulnerable.

Meanwhile, Finance Minister Arun Jaitley on Saturday said that growth must not be throttled by limiting credit availability and liquidity. It is necessary that the growth process does not suffer due to the cleaning up of the banking system from the “collectively committed sins” during 2008-14 when the regulatory mechanisms also overlooked high debt accumulation, he said.

Amid growing tensions with the central bank, the Finance Ministry had sought discussions under the never-used-before Section 7 of the RBI Act which empowers the government to issue directions to the RBI Governor.

RBI Deputy Governor Viral Acharya had in a speech last month talked about the independence of the central bank, arguing that any compromise could be “potentially catastrophic” for the economy.

In his first public comments since the spat between the RBI and the Finance Ministry came out in the open, Swadeshi ideologue S Gurumurthy had last week said the stand-off “is not a happy thing at all”.

Gurumurthy, who was appointed to the board of RBI a few months back, had said the capital adequacy ratio prescribed in India is 1 per cent higher than the global Basel norms. He also pitched for easing lending norms for small and medium enterprises, which account for 50 per cent of the country’s GDP.

Last month, RSS-affiliated Swadeshi Jagran Manch said the RBI Governor should work in sync with the government or resign.

“The Reserve Bank of India Governor should work in sync with the government or otherwise resign,” SJM’s co-convener Ashwani Mahajan had said.

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Rafale steals the show at Aero India

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Bengaluru | Political row hit Rafale jet was the cynosure of all eyes as the breathtaking display of manoeuvres by military aircraft and the aerobatic team cast a spell at Aero India, Asia’s premier air show here on Wednesday.

The city’s skies dazzled with somersaults and stunts by the metal birds, which also paid tributes to the Surya Kiran aircraft pilot killed in a mishap during rehearsal on Tuesday.

The might of the Rafale jet was in full flow as it roared into the skies at the Yelahanka air base, the venue for the event, giving a dazzling display with breathtaking manoeuvres.

The Rafale aircraft flew at low speed to pay tribute to Wing Commander Sahil Gandhi who died in a mid-air collision between two aircraft of IAF’s aerobatics team ‘Surya Kiran” during rehearsal on Tuesday.

Three Rafale jets have landed in Bengaluru for Aero India- two for flying and one on static display.

Rafale has been participating in the Aero India shows since 2011.

India has signed an Inter-Government Agreement with France to purchase 36 Rafales– to form two squadrons.

Congress president Rahul Gandhi has been carrying on a sustained campaign against the Modi government on Rafale, accusing it of favouring Anil Ambani’s firm as an offset partner and saying it was crony capitalism.

The Comptroller and Auditor General (CAG) report tabled in Parliament recently revealed that the Rafale deal negotiated by the NDA government to procure 36 fighter jets was 2.86 per cent cheaper than the UPA’s 2007 offer.

The Jaguar, Tejas and Sukhoi 30 aircraft flew in the ‘missing man’ (aerial salute) formation in honour of Gandhi.

Army Chief Gen Bipin Rawat, Air Force Chief B S Dhanoa and Navy Chief Admiral Sunil Lanba were also present.

Thebiennial edition of International Aerospace and Defence Exhibition – Aero India 2019 was inaugurated by Defence Minister Nirmala Sitharaman in the presence of Karnataka Chief Minister H D Kumaraswamy.

Enthralling stunts were performed by Sarang aerobatics teams with daredevil crosses and spins, that has been the mainstay of the Aero India for many editions.

The air display began with vintage Dakota aircraft, followed by formations of Advanced Light Helicopter (ALH) Dhruv and Light Utility Helicopter, DO-228, Hawk and HTT40 aircrafts.

Then came the flypast and thrilling manoeuvres by MIG 21, Sarang team, Saras PT1, Embraer along with Sukhoi, Boeing P8I, LCA Tejas, HTT40, Sukhoi Su-30MKI, LUH, F-16 Fighting Falcon, Airbus 330 and the mighty B-52 Stratofortress bomber, among others.

LCA also paid tribute to former Prime Minister Atal Bihari Vajpayee, who named it as Tejas, by performing certain sets of manoeuvres.

On static display among other things at the air show are HAL’s Light Utility Helicopter(PT-1), Light Combat Helicopter (TD-2), Advanced Light Helicopter (Rudra) and ALH MICU (Medical Intensive CareUnit).

The Aero India official website said a total of 61 aircraft would be on display and 403 exhibitors would be part of the show.

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Vande Bharat Express hits motorcycle, no damage: Railways

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New Delhi | The Vande Bharat Express hit a motorcycle near Allahabad on its third commercial run on Wednesday, the railways said, adding that no one was injured in the incident.

The incident occurred hours after stones were hurled at the train near Tundla in Uttar Pradesh in the morning.

The incident took place near Phaphamau, around 42 km from Allahabad.

“The train hit a motorcycle, which was abandoned by its owner on the tracks as he saw the train approaching while illegally trespassing on the tracks. While the vehicle has completely been damaged, the Vande Bharat Express suffered none. No one was injured and the train will run as per schedule,” Northern Railway Spokesperson Deepak Kumar said.

The train, made indigenously at a cost of around Rs 97 crore, has been plagued by issues since its trial runs commenced in November last year. It had suffered damage to its window panes when stones were hurled on it on two occasions previously.

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India, Saudi agree on need for increasing pressure on countries supporting terror: PM Modi

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New Delhi| India and Saudi Arabia agree that there is a need to increase all possible pressure on countries supporting terrorism, Prime Minister Narendra Modi said on Wednesday after holding talks with Saudi Crown Prince Mohammed Bin Salman.

Prime Minister Modi and the Saudi Crown Prince explored ways to further deepen strategic ties against the backdrop of escalating tensions between India and Pakistan following the Pulwama terror attack.

The barbaric terror attack in Pulwama last week is a cruel symbol of the scourge spread over the world by this anti-humanitarian danger, Modi said in his press statement with Salman by his side.

“In order to deal effectively with this threat, we agree that there is a need to increase all possible pressure on the countries supporting terrorism in any manner,” Modi said, without naming Pakistan.

He asserted that destroying the terror infrastructure and punishing terrorists as well as their supporters was “very important”.

Prime Minister Modi also called for a strong action plan for combating extremism and so that the powers spreading violence and terror cannot mislead the youth.

The Saudi Crown Prince, in his press statement, said his country will cooperate with India in tackling terrorism, including by intelligence sharing.

The crown prince arrived here on a less than 30-hour visit Tuesday night, a day after concluding his high-profile tour of Pakistan where he said the dialogue was the only way to resolve “outstanding issues” between India and Pakistan.

In a special gesture, Modi received Salman at the airport here, signifying the importance India attaches to the visit by the leader of the Gulf nation.

In a joint statement, Pakistan and Saudi Arabia on Monday called for avoiding “politicisation” of the UN listing regime at a time when India was stepping up efforts to brand the Jaish-e-Mohammed terror group’s chief Masood Azhar a global terrorist.

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