The central board of Reserve Bank of India discussed the policy for cooperative banks and non-banking financial companies during its meeting on Friday. The matter was taken up at the 580th meeting of RBI's central board in Bhubaneswar chaired by Governor Shaktikanta Das.
"The Board's discussions focussed on issues related to urban cooperative banks, extension of Enforcement Policy and Framework to cooperative banks and NBFCs," the central bank said in a statement.
The NBFC sector has been under pressure since Infrastructure Leasing and Financial Services (IL&FS) went belly up in 2018. The incident created a liquidity crunch for the the banking sector as it affected banks that lend to NBFCs.
This year, cooperative banks came into focus after Punjab and Maharashtra Cooperative (PMC) Bank faced RBI clampdown on account of wrongdoings. Later investigations revealed a Rs 4,355-crore fraud devised by the bank's senior officials and promoters of realty firm HDIL.
In its meeting, the RBI central board also reviewed the current economic situation and domestic and global challenges. The economic troubles are not subsiding as evident in the macroeconomic figures. India's economic growth slumped to its lowest in six and a half years during the September quarter. Meanwhile, retail inflation of the country in November rose to a 40-month high on the back of higher vegetable prices, whereas industrial output slumped for the third month in a row in October due to poor performance of eight core industries. Notably, the RBI looks at retail inflation while deciding its policy rates.
The central board also assessed Report on Trend and Progress of Banking in India for the year 2018-19, as well as other policy and operational issues, the RBI said in its statement.