The Hindu Editorial & Vocabulary – Give and take

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Give and take: on the RBI board meeting

After the heat and dust of the last one month, the board meeting of the Reserve Bank of India on Monday turned out to be muted and professional, as it should have been. Any summary and precipitate action by the Centre to have its way would have created more problems than it solved, apart from it not going down well with the markets. The decisions taken by the board address the concerns of both the Centre and the central bank, though on balance it appears that the RBI carried the day. Two of the biggest concerns of the Centre where it was expecting an immediate resolution — relaxation of the Prompt Corrective Action framework on 11 public sector banks and provision of liquidity for non-banking financial companies — will be addressed at a future date. The first one has been referred to a department of the RBI for examination, while no decision seems to have been taken on the second. In addition, the Centre’s attempt to tap the RBI’s rich reserves has also been staved off for now, with the matter left to be decided by a committee set up exclusively for the purpose. This is as it should be. Given that the membership and terms of reference of the committee will be jointly decided by the Centre and the RBI, there is little scope for either side to complain of bias. The RBI has been transferring all of its surpluses to the Centre in the last five years based on the recommendations of an earlier committee led by Y.H. Malegam. Given this, it is unclear what more the new committee can possibly recommend on future surpluses, unless of course it is allowed to go into sharing of the reserves that now exist on the RBI’s balance sheet.

The central bank partially yielded to the Centre on two other issues — the Basel capital framework for banks and easing credit flow to micro, small and medium enterprises (MSMEs). The RBI didn’t concede the demand for alignment of the capital norms to Basel (they are higher now), but by pushing back the deadline by a year for increasing the capital buffer, it has freed up funds for banks to lend. Again, by permitting debt recast for MSME borrowers of up to ₹25 crore, the RBI has attempted to address their credit concerns, which was one of the major demands of the Centre. Clearly, there was enough give-and-take in the meeting that left both sides with the feeling that they had gained something. At Monday’s meeting the board turned hands-on probably for the first time in recent memory, from being just an advisory body. That the meeting went on for over nine hours clearly indicates that there was an intense exchange of views, which is not a bad thing at all. Differences between the Centre and the central bank must be thrashed out in such a setting, rather than in the media or in public speeches.

Vocabulary

Precipitate: done, made, or acting suddenly or without careful consideration.

Example: I must apologize for my staff—their actions were precipitate

Synonyms: hasty, overhasty, rash, hurried, rushed, impetuous, impulsive


Concerns: a matter of interest or importance to someone.

Example: Oil reserves are the concern of the Energy Department

Synonyms: responsibility, business, affair, charge, duty, job, province


Resolution: a firm decision to do or not to do something.

Example: She kept her resolution not to see Anne any more

Synonyms: intention, resolve, decision, intent, aim, plan, commitment


Prompt: done without delay.

Example: The owner would have died but for the prompt action of two paramedics

Synonyms: quick, swift, rapid, speedy, fast, direct, immediate, instant

 


Liquidity: the availability of liquid assets to a market or company.

Example: We have notions of linkages between liquidity and the bond markets, and between liquidity and different assets,’ says Diamond


Staved: avert or delay something bad or dangerous.

Example: A reassuring presence can stave off a panic attack


Yielded: give way to arguments, demands, or pressure.

Example: The Western powers now yielded when they should have resisted

Synonyms: surrender, capitulate, submit, relent, admit defeat, back down


Concede: admit that something is true or valid after first denying or resisting it.

Example: I had to concede that I’d overreacted

Synonyms: admit, acknowledge, accept, allow, grant, recognize


Alignment: arrangement in a straight line, or in correct or appropriate relative positions.

Example: The tiles had slipped out of alignment


Intense: extreme force, degree, or strength.

Example: The job demands intense concentration

Synonyms: extreme, great, acute, fierce, severe, high, exceptional


Thrashed: beat a person or animal repeatedly and violently with a stick or whip.

Example: She thrashed him across the head and shoulders

Synonyms: hit, beat, strike, batter, thump, hammer, pound

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