Indian Express Editorial & Vocabulary – A good step back


A good step back

After an openly fractious build-up to the board meeting of the RBI on Friday, both the government and the central bank now appear to have stepped back to work out solutions to contentious issues. That should calm the financial markets and investors worried about the fall-out of the stand-off. On two issues, the RBI will now be guided by the advice of its board — on funding of small and medium firms hurt largely by the government’s demonetisation move and the subsequent slowdown and on a review of the existing framework on Prompt Corrective Action (PCA) which places fetters on lending by 11 state-owned banks. The RBI will now finalise a loan recast scheme for SMEs up to a ticket size of Rs 25 crore with conditions which would ensure that financial stability is not imperilled. Similarly, the RBI’s Board for Financial Supervision will review the PCA framework to assess if some of the lenders can be freed from the restrictions and to help boost credit flow.

The regulator has also agreed to some forbearance in terms of the capital requirement for banks by easing the deadline for maintaining the capital conservation buffer by an year to the end of March 2020 although it has not bought the government’s argument that the RBI should lower the capital norm of 9 per cent to 8 per cent in line with internationally accepted Basel norms. The board has wisely left it to an expert committee to determine the economic capital framework of the central bank including the controversial issue of the transfer of surplus. Importantly, this will be for future transfers, thus putting a lid on the current controversy on the level and size of transfers the government is entitled to.

For now, both sides have settled for a truce, but whether this is enduring will be known only when there is closure on issues such as liquidity for NBFCs and governance in RBI. That also raises the larger question of whether significant policy decisions should be pushed through with national polls just six months away. On the RBI’s part, just as it forcefully articulated its pushback, it should engage more with the government and also communicate better. It is important for both the government and the RBI to resist the temptation of portraying the boardroom developments as a victory or a climbdown. Monday’s outcome, however, cannot cloud the fact that the issue of fiscal management and repairing of bank balance sheets is far from being fully addressed.


Fractious: irritable and quarrelsome.

Example: They fight and squabble like fractious children

Synonyms: grumpy, bad-tempered, irascible, irritable, crotchety, grouchy

Contentious: causing or likely to cause an argument

Example: A contentious issue

Synonyms: controversial, disputable, debatable, disputed, open to debate


Subsequent: coming after something in time.

Example: The theory was developed subsequent to the earthquake of 1906

Synonyms: following, ensuing, succeeding, later, future, coming, to come

Recast: give a metal object a different form by melting it down and reshaping it.

Example: This metal would be recast into additional cannon

Imperil: put at risk of being harmed, injured, or destroyed.

Example: White-band disease imperils coral reefs

Synonyms: endanger, jeopardize, risk, put in danger, put in jeopardy, expose to danger

Argument: an exchange of diverging or opposite views, typically a heated or angry one.

Example: I’ve had an argument with my father

Synonyms: quarrel, disagreement, squabble, fight, dispute, wrangle, clash

Determine: cause something to occur in a particular way; be the decisive factor in.

Example: It will be her mental attitude that determines her future

Synonyms: control, decide, regulate, direct, dictate, govern, affect

Entitled: give someone a legal right or a just claim to receive or do something.

Example: Employees are normally entitled to severance pay

Synonyms: qualify, make eligible, authorize, allow, permit, enable

Articulate: showing the ability to speak fluently and coherently.

Example: An articulate account of their experiences

Synonyms: eloquent, fluent, effective, persuasive, lucid, expressive

Resist: withstand the action or effect of.

Example: Antibodies help us to resist infection

Synonyms: withstand, be proof against, combat, weather, endure


Please enter your comment!
Please enter your name here