Autonomy of Reserve Bank is 'essential', says Centre
New Delhi, Oct 31 (IBNS): The Indian government on Wednesday said 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, in their functioning, have to be guided by public interest and the requirements of the Indian economy," read the government statement.
"For the purpose, extensive consultations on several issues take place between the Government and the RBI from time to time," it said.
"This is equally true of all other regulators," read the statement.
The Government of India said it has never made public the subject matter of those consultations.
"Only the final decisions taken are communicated. The Government, through these consultations, places its assessment on issues and suggests possible solutions. The Government will continue to do so," it said.
The Finance Ministry issued the statement amid rising tension between the Centre and the RBI.
The conflict came to the public domain after deputy governor of RBI Viral Acharya said last week that undermining central bank independence could be “potentially catastrophic".