RBI's new governor is adopting a more consultative approach in important decisions, Nuvama Research claims

The Reserve Bank of India (RBI) is also becoming more consultative in its approach with its new governor. Nuvama Research also opined as much in a study. Nuvama avers that it is seen from its recent step in eliminating the hike in risk weighting on loans advanced by non-banking finance companies (NBFCs) and microfinance institutions (MFIs).

The report pointed out that, in an interaction with the media on February 7 after the monetary policy announcement, the RBI governor and deputy governor had said that the central bank is unlikely to reduce the risk weight on NBFC loans due to interconnected risks. But in a contradiction with that argument, RBI later reduced the risk weighting on bank loans that are provided to NBFCs. The report suggested that the move apparently followed a series of meetings between RBI governor Das with bank as well as NBFC leaders.

"Under the new governor, the RBI is taking a more consultative approach than before...RBI has relaxed the risk weight on banks' NBFC loans, possibly following the governor's recent meeting with CEOs of NBFCs and banks. NBFCs may have sought this relaxation," said Nuvama Research.