Is the RBI allowed to break its mandate?

"The RBI (Reserve Bank of India) Governor Shaktikanta Das announced a slew of measures aimed at further easing the liquidity conditions and providing relief to borrowers", by lowering interest rate by 40 basis points to 4%, to make it cheaper for borrowing, by deferring interest on working capital and by protecting defaulting companies from bankruptcy proceedings. Das announced similar measures in April apparently to mitigate the effects of the lockdown to tackle the coronavirus outbreak which had brought the economy to a standstill. However, it is not entirely the fault of the virus. Das carried out a Rupee/US Dollar swap worth $5 billion to inject Rs 350 billion into the economy in March last year when no one had heard of coronavirus. The economy has been sinking for two years and the lockdown just killed it off. "When snack makers start to lament that Indians can't afford to spend Rs 5 on biscuits, it's time to stop arguing over how much the nation's slowdown is cyclical and what part is structural," wrote Andy Mukherjee in August last year. "Apart from the rate cuts, the central bank has also announced Rs 8.04 lakh crore (Rs 8.04 trillion) worth of liquidity-boosting measures so far," wrote Deepthi Mary Matthew. "The idea behind liquidity is that people and businesses borrow more and then spend. As they do this, consumer demand will get revived, and businesses and overall economy will benefit," wrote Vivek Kaul. By putting extra money into commercial banks the RBI is trying to force banks to lend more. But this will not work. "Accept the reality that India's banks, burdened as they are by bad debt and hobbled as they are by the fear of incriminating investigations of credit decisions, are poor vehicles of financial intermediation," wrote an editorial in the Economic Times. Like the Federal Reserve in the US the RBI should set up a special facility to buy company bonds, says the editorial. But, does the RBI have the mandate to do that? "Two agreements were signed between the government and RBI in 1994 and 1997 to completely phase out funding through ad-hoc treasury bills. And later on, with the enactment of FRBM Act, 2003, RBI was completely barred from subscribing to the primary issuances of the government from April 1, 2006," wrote Matthew. This means that the RBI is forbidden from buying government bonds directly to prevent it from printing money to finance government spending, so how can it buy bonds from private companies, even through special vehicles? Despite injection of so much money into banks the amount of loans is shrinking, wrote Shayan Ghosh "Total outstanding non-food credit shrank by Rs 1.36 lakh crore, or 1.32%, to Rs 101.83 lakh crore on May 8 from March 27, data from the RBI showed." Banks are parking more than Rs 8 trillion in the RBI at 3.75% interest, rather than lend to businesses and consumers. If people could not afford biscuits at Rs 5 will they borrow money to buy air conditioners or cars?