1. Finance Ministry rubbishes reports of breaching RBI autonomy; says it respects independence of central bank

Finance Ministry rubbishes reports of breaching RBI autonomy; says it respects independence of central bank

"It is categorically stated that the Government fully respects the independence and autonomy of the Reserve Bank of India," said a press release issued by the ministry.

By: | New Delhi | Updated: January 14, 2017 6:06 PM
rbi autonomy, reserve bank of india independence, reserve bank of inidia autonomy and independence, rbi auonomy it said that RBI and Government indulge in consultations as and when needed for public importance. (Reuters)

Finance Ministry on Saturday rubbished reports claiming infringement of autonomy in RBI functioning by the union government. The ministry said that it fully respects independence and autonomy of the Central Bank. However, it said that RBI and Government indulge in consultations as and when needed for public importance. “It is categorically stated that the Government fully respects the independence and autonomy of the Reserve Bank of India,” said a press release issued by the ministry. “Consultations between the Government and the RBI are undertaken on various matters of public importance whenever such consultation is mandated by law or has evolved as a practice,” it said. The said that consultations mandated by law or those evolved by practice should be taken as RBI’s infringement. “Consultations mandated by law or as evolved by practice should not be taken as infringement of autonomy of RBI,” added the release.

Several RBI employees, in a letter written to Governor Urjit Patel, had written to uphold central bank’s autonomy and said that they feel “humiliated” by events since demonetisation. The letter asked the Governor whether a recent media report, according to which the Finance Ministry had deputed a Joint Secretary-level officer to the RBI to oversee its currency chest operations, was true.

“If true, this is most unfortunate and we take strong exception to this measure of the government as impinging on the RBI’s autonomy and its statutory as well as operational jurisdiction,” the letter read.

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“Having put RBI in a quandary, now the Finance Ministry has placed their official, as reported, on RBI set-up to ‘co-ordinate’, allegedly. Apart from showing RBI operations and its gigantic performance in poor light, the government now blatantly encroaches on its jurisdiction, which, we state strongly, we cannot accept.” the RBI employees body had said in a statement.

“We want to state very categorically that RBI is fully capable ‘to co-ordinate the central bank’s currency chest operations’, which RBI have been performing over decades, and we do not need any ‘assistance’ from anywhere,” the employees wrote.

The employee unions pointed out that the criticism faced by the RBI for alleged operational mismanagement during the recently-concluded demonetisation drive has dented its image ‘beyond repair’.

 

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