Not dissatisfied with functioning of RBI, Arun Jaitley says in Lok Sabha

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New Delhi | Published: December 28, 2018 9:59:49 PM

Finance Minister Arun Jaitley Friday replied in negative to a question whether the government was not satisfied with the functioning of the Reserve Bank of India.

Arun Jaitley, RBI, Lok Sabha, International Monetary Fund, Prompt Corrective Action, Viral AcharyaThe government and the RBI under the previous Governor Urjit Patel were at loggerheads on several issues, including over appropriate size of reserves which the central bank should hold.

Finance Minister Arun Jaitley Friday replied in negative to a question whether the government was not satisfied with the functioning of the Reserve Bank of India. In a written reply to the Lok Sabha, the minister quoted a report of International Monetary Fund (IMF) which said the supervision and regulation by the RBI was strong and improved in recent years. “No, madam,” Jaitley said to a question whether the government is not satisfied about the functioning of the RBI.

The government and the RBI under the previous Governor Urjit Patel were at loggerheads on several issues, including over appropriate size of reserves which the central bank should hold. There were also differences over the lending to the small and medium enterprises, and norms concerning supervisory action over public sector banks under Prompt Corrective Action (PCA) of the RBI.

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The differences reached a flash point with Patel suddenly quitting the RBI on December 10. Patel’s resignation was being speculated right from the time the government cited a never-before-used provision of the RBI Act to get him to consider its views on relaxing lending norms for segments such as small and medium enterprises, appropriate size of reserves the central bank must maintain and easing norms for weak banks. Earlier, RBI Deputy Governor Viral Acharya had raised concerns over the autonomy of the central bank, triggering speculations that the government and the central bank were not same page on many issues.

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