This famous emerging markets investor backs government on feud with RBI; lists 2 key tasks for central bank

On the recent spat between RBI and government, the veteran investor has some advice for the former: lower interest rates and share some surplus capital with the government.

As central banks across the globe have turned too powerful, especially in influencing markets, political forces would soon start to take them over, said a renowned emerging markets investor. However, it’s probably a good thing to happen as central banks are depending on numbers which are questionable, resulting in negative impact on markets, Mark Mobius, Founder, Mobius Capital Partners LLP also told ET Now.

On the recent spat between RBI and government, the veteran investor has some advice for the former: lower interest rates and share some surplus capital with the government. He also said that RBI is holding excess capital in terms of GDP of various countries.

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Meanwhile, the ongoing spat between the RBI and the government widened after the latter asked for Rs 3.6 lakh crore from the RBI’s reserves but the central bank reportedly refused.The government is of the opinion that the RBI’s risk management is too conservative. Following this extended feud, last RBI Governor Urjit Patel stepped down.

In its last meeting, RBI board meeting also advised the RBI to consider a scheme for the restructuring of stressed standard assets of MSMEs. The board while retained 9 percent capital to risk weighted assets ratio (CRAR), it extended the deadline for meeting Basel-III norms by one year to March 2020.