Finance Minister Arun Jaitley on Friday said that the government is not examining the option of using powers of RBI board to override Governor of the Central Bank.
Finance Minister Arun Jaitley on Friday said that the government is not examining the option of using powers of RBI board to override the governor of the Central Bank. The expert panel to recommend level of RBI reserves should include other connected matters too, Arun Jaitley also said in reply to lawmakers’ questions in the Parliament.
Earlier last month, there were reports that the government may invoke Section 7 of RBI Act after the rift between the RBI and the government widened on several issues including sharing of surplus capital. The provision in the RBI Act empowers the government to issue directions to the RBI.
The section empowers the government to issue directions in public interest to the central bank, which otherwise does not take orders from the government.
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The finance ministry also issued a statement saying the autonomy of the central bank, within the framework of the RBI Act, was an essential and accepted governance requirement. “Extensive consultations on several issues take place between the government and the RBI from time to time. The government, through these consultations, places its assessment on issues and suggests possible solutions. The government will continue to do so,” the release had said, indicating that it wouldn’t shy away from bringing up what it regards as matters of concern with the RBI in the future.