RBI' autonomy an essential, accepted governance requirement : Finance Ministry
New Delhi, Oct 31 (IBNS) : The Finance Ministry on Wednesday issued a statement, saying the Reserve Bank of India's autonomy is “an essential and accepted governance requirement”.
The statement said that the Government holds extensive consultations with the RBI from time to time, during which is places its assessment on issues and suggests possible solutions, which is not disclosed to the public until a final decision has been taken.
“The autonomy of 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,” the ministry stated in a press note.
“Both the Government and Central Bank, in their functioning, have to be guided by public interest and the requirements of the Indian economy. For the purpose, extensive consultations on several issues take place between the Government and the RBI from time to time,” it added.
“Government of India 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,” the Finance Ministry stated.
The statement comes amid reports of the government having issued directions to the RBI on issues such as easing lending norms to infuse liquidity in the system.
Reacting to the statement issued by the finance ministry, former finance minister P Chidambaram tweeted “Obviously, the government has concealed something. The buzz is that government has recently written one or more letters to the RBI.” He added: “Will government say whether such letters have been written and whether the letters specifically refer to Section 7 of the RBI Act?”