RBI circular intrudes on government turf?

NEW DELHI: A controversial RBI circular issued in February may emerge as another point of contention with a section in the government of the view that the regulator intruded onto its turf.

While banning debt restructuring schemes, RBI decided to terminate the ‘5/25 scheme’ for bank loans for long-gestation infrastructure and core sector industries. Government officials believe RBI went ahead with the move despite the scheme being announced in Parliament in the 2014 budget. “Can the government ever issue instructions to banks under the Banking Regulation Act?” asked an official.

The circular is likely to be discussed at RBI’s board meeting on Monday.