Strengthen governance in PSBs : IMF

Why in the news ?
  • The International Monetary Fund (IMF) in its report asked the Indian government to improve the way state-­owned banks are run by bolstering board­level autonomy.
  • It also said that the government should consider eventually privatising them.
  • A key area of reform is to strengthen governance in public sector banks, said the IMF mission chief for India.
  • IMF Projects India’s economic growth to recover in 2018/19 and strengthen in 2019/20 as stability­ oriented macroeconomic policies and progress on structural reforms continue to bear fruit.
  • The IMF said that high foreign reserve buffers and strong FDI inflows had helped contain external vulnerabilities.
  • However, more can be done to sustain the recent foreign direct investment  inflows and remove trade barriers.
  • This include reducing trade documentation requirements and procedures, lowering tariffs, continuing to improve the business climate, and improving governance.
Internal and external risks
  • The IMF said risks to the outlook were, however, tilted to the “downside.” 
  • The Fund listed higher global oil prices and tighter global financial conditions as key external risks that had grown in recent months.
  • The IMF projected global crude oil prices to average $72 a barrel in 2018/19, up from $62 in its earlier forecast.
  • Domestic risks include tax revenue shortfalls and delays in addressing the twin bank­-corporate balance sheet problems.
RBI's role
  • According to the IMF, Reserve Bank of India (RBI) would need to gradually tighten monetary policy further due to rising inflation, driven mainly driven by higher oil prices and a falling rupee.
  • The RBI raised the repo rate for the second straight meeting by 25 basis points to 6.5%, while warning about the inflationary pressures. 
  • The average inflation is likely to rise to 5.2% in 2018/ 19 from a 17­year low of 3.6% in the previous fiscal year, the IMF said. 
International Monetary Fund (IMF)
  • The IMF, also known as the Fund, was conceived at a UN conference in Bretton Woods, New Hampshire, United States, in July 1944.
  • The IMF's primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other.
  • Now the International Monetary Fund (IMF) is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
  • IMF is headquartered in Washington, D.C.
The Hindu, IMF
Posted by Jawwad Kazi on 9th Aug 2018