RBI notified the Supreme Court: Banks, financial and non-banking financial institutions were ordered to take ‘appropriate action’ to credit the difference between compound and simple interest received on loans of up to Rs 2 crore during the moratorium scheme into the accounts of eligible borrowers by 5 November.
In an affidavit filed by Assistant General Manager Prasanta Kumar Das, the Reserve Bank of India ( RBI) referred to the additional response of the Ministry of Finance on 23 October and stated that the federal bank also acted in accordance with this by recently issuing a notification to banks and FIs on the repayment of additional money to borrowers.
The central government had previously told the apex court that by 5 November the lenders were asked to credit the difference between compound and simple interest earned on loans of up to Rs 2 crore during the loan moratorium scheme of the RBI into the accounts of eligible borrowers.
In its recent affidavit, the RBI claimed that “All Primary (Urban) Cooperative Banks / State Cooperative Banks / District Central Cooperative Banks, All All India Financial Institutions and All Non-Banking Financial Companies (including Housing Finance Companies) should be directed by the provisions of the scheme and take the required steps within the prescribed timeline.”
Roles of RBI
The country’s central bank is the Reserve Bank of India (RBI). The RBI is a regulatory authority. In the Indian economy, it is responsible for printing currency notes and managing the supply of money.
The control of nearly all the share capital was initially in the hands of non-government shareholders. The RBI was nationalised on January 1, 1949 in order to avoid the centralization of the shares in a few hands.
- Issue of Notes: The Reserve Bank has a monopoly on printing the country’s currency notes. It has the exclusive right, with the exception of one rupee note (issued by the Ministry of Finance), to issue currency notes of different denominations. The Minimum Reserve Scheme for issuing / printing currency notes has been implemented by the Reserve Bank. It has held gold and foreign exchange reserves of Rs. 200 Cr since 1957. Including at least Rs. 115 cr. It should be in gold and it should stay in international currencies.
- Government Banker- The second significant role of the Reserve Bank is to work as the Government of India and States Banker, Agent and Advisor. It conducts all of the state and central government’s banking functions and also provides valuable guidance to the government on economic and monetary policy issues. It controls the government’s public debt as well.
- Banker’s Bank:- For other commercial banks, the Reserve Bank performs the same roles that other banks usually do for their customers. The RBI loans money to all the country’s commercial banks.
- Credit Controller:- The RBI is responsible for managing credit generated by commercial banks. To control the additional flow of money in the economy, RBI uses two techniques. These techniques are quantitative and qualitative techniques for monitoring and managing the country’s credit flow. If RBI finds that the economy has a sufficient supply of money and can trigger an inflationary situation in the country, it squeezes the supply of money through its tight monetary policy and vice versa.
- Custodian of Foreign Reserves:-The Reserve Bank buys and sells foreign currencies in order to keep the foreign exchange rates steady and also protects the foreign exchange funds of the government. As its stock declines in the economy and vice versa, RBI sells the foreign currency in the foreign exchange market. India currently has a foreign exchange reserve of approximately US$ 487 bn.
- Other functions:-A variety of other developmental work is carried out by the Reserve Bank. The role of the clearinghouse is to arrange loans for agriculture and trade bills, to provide government loans for the purchase and sale of valuable commodities, etc.