Govt versus RBI

September 03 2018

Sources reveal that the battle between the Reserve Bank and the government took its shape from the very day when the central bank issued a new circular on February 12, 2018, according to which a new, stringent rule was coming into play for companies with loan default of Rs 2000 crore or more.
RBI wanted that in such cases, the concerned bank will now have to frame their solutions within 180 days. If the desired result is not found, such accounts will have to be put under the bankruptcy process. Also, the banks which do not adhere to this rule may have to pay a penalty.

As soon as this rule came into force, many corporate and public undertakings in its purview knocked the doors of courts. At the time, the government too extended its sympathies towards these companies, rather than the Reserve Bank.
The latest report by the RBI on Demonetisation (which has made Rahul Gandhi’s attacks on the government fiercer) can be considered its reply to the government over the conflict.

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