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Central bank's autonomy an accepted governance requirement: Finance Ministry

ANI | Updated: Oct 31, 2018 15:00 IST

New Delhi [India], Oct 31 (ANI): Amid some media reports stating that Reserve Bank of India (RBI) governor Urjit Patel may consider resigning after an alleged rift with Union Finance Minister Arun Jaitley, the Finance Ministry on Wednesday clarified that the government holds "extensive consultations with the RBI from time to time".
The Finance Ministry, in a statement released on Wednesday, said that autonomy of the central bank, within the framework of the RBI Act, is an essential and accepted governance requirement. It further asserted that both the government and the central bank, in their functioning, have to be guided by public interest and the requirements of the Indian economy.
"The autonomy for the Central Bank, within the framework of the RBI Act is an essential and accepted governance requirement. Governments in India have nurtured and respected this. Both the Government and the Central Bank have to be guided by public interest and the requirements of the Indian economy," the statement read.
"For the purpose, extensive consultations on several issues take place between government and RBI from time to time. This is equally true of all regulators. The government of India has never made public the subject matter of those consultations. Only final decisions are communicated. The Government, through these consultations, places its assessment on issues and suggests possible solutions. The Government will continue to do so," the statement added.
The Centre issued a note amid reports that it had invoked Section 7 of the RBI Act, which allows the central government to issue directions to the central bank governor on matters of public interest.
Earlier in the day, former finance minister and senior Congress leader P Chidambaram warned of "more bad news" if reports stating that the government has invoked Section 7 of the RBI Act were true. He added that it showed that the government was 'desperate' and was hiding facts about the economy.
"If, as reported, Government has invoked Section 7 of the RBI Act and issued unprecedented 'directions' to the RBI, I am afraid there will be more bad news today. We did not invoke Section 7 in 1991 or 1997 or 2008 or 2013. What is the need to invoke the provision now? It shows that government is hiding facts about the economy and is desperate" Chidambaram said in a tweet.
Bharatiya Janata Party leader Subramanian Swamy voiced his support for Patel and said he must be persuaded to stay.
"If RBI governor resigns then it is a direct consequence of FM blaming him publicly yesterday for NPAs. Patel is a self-respecting scholar of economics (Ph.D in Banking from Yale). He should be persuaded to stay," Swamy tweeted. (ANI)

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