Govt may have invoked law to issue directions to RBI
6 years, 2 months ago

Govt may have invoked law to issue directions to RBI

Live Mint  

New Delhi: The crisis between the government and the Reserve Bank of India seems to be escalating with the government reportedly invoking Section 7 of the Reserve Bank of India Act in an unprecedented move. Under Section 7 of the RBI Act of 1934, “the central government may from time to time give such directions to the bank as it may, after consultation with the governor of the bank, consider necessary in the public interest”. The Economic Times reported on Tuesday that the Narendra Modi government had invoked Section 7 of the RBI Act for the first time in the history of independent India. At the same time, news agency Reuters reported on Wednesday morning that RBI governor Urjit Patel may consider resigning, indicating that either side will force the initiative in the coming days. Tensions escalated after RBI deputy governor Viral Acharya in a speech last Friday stressed on the need for the RBI’s autonomy, arguing that governments facing election pressures had a short term outlook whereas the central bank had a longer term view.

Bank Rbi Act Patel Jaitley Section 7  issue  central  term  india  govt  governor  rbi  invoked  banks  act  law  directions  liquidity  economy  bank

History of this topic

Reimagining how the Reserve Bank functions
2 years ago

Reimagining how the Reserve Bank functions

Hindustan Times  

The Supreme Court judgment on demonetisation last week appears to have reignited the debate on the relationship between the Reserve Bank of India and the Union government. The parliamentary committee wants to ensure that financial regulators such as RBI are adequately prepared to support India’s growth journey, the chair of the committee, Jayant Sinha, said in an interview to Mint …

Bimal Jalan to head panel to decide on RBI cash reserves: Former central bank governor enjoys govt support, but committee to have final say
6 years ago

Bimal Jalan to head panel to decide on RBI cash reserves: Former central bank governor enjoys govt support, but committee to have final say

Firstpost  

Jalan will lead a six-member committee which will review the status, need and justification of various provisions, reserves and buffers presently provided for by the RBI The Reserve Bank of India on Wednesday formed an expert committee on economic capital framework led by former RBI governor Bimal Jalan to determine the amount of reserves it needs to keep and the …

Much ado about nothing: Demystifying the needless hue and cry over the RBI
6 years ago

Much ado about nothing: Demystifying the needless hue and cry over the RBI

Op India  

“The only function of economic forecasting is to make astrology look respectable,” remarked the legendary Economist John Kenneth Galbraith. Whoever in Congress thought of RBI autonomy and role in influencing election outcome doesn’t have enough knowledge to even make credible sounding arguments. According to the RBI Act’s Section 7, “the central government may from time to time give such directions …

Amidst speculations over Govt-RBI stand off, Jaitley asks how a mere discussion be considered ‘destruction’ of an institution
6 years, 1 month ago

Amidst speculations over Govt-RBI stand off, Jaitley asks how a mere discussion be considered ‘destruction’ of an institution

Op India  

Finance Minister Arun Jaitley, while speaking at the Times Networks India Economic Conclave today, stated that though there are ‘two or three areas of differences’ between the RBI and the Government, how a mere discussion on its functioning could be considered “destruction” of an institution. Amidst allegations by the opposition that his government has created a situation wherein the Reserve …

Arun Jaitley admits to issues with RBI on credit flow, liquidity as govt under fire for Urjit Patel's sudden exit
6 years, 1 month ago

Arun Jaitley admits to issues with RBI on credit flow, liquidity as govt under fire for Urjit Patel's sudden exit

Firstpost  

Though Jaitley did not explicitly mention it, the discussions he was alluding to were under Section 7 of the RBI Act, through which the government of the day can force down certain policies for the central bank to implement, citing national interest Mumbai: Under fire for the surprise resignation of governor Urjit Patel, senior Union ministers went on an offensive …

Government, RBI must work together, end turf war
6 years, 1 month ago

Government, RBI must work together, end turf war

Deccan Chronicle  

The ostentatious turf battle between the Union finance ministry and the Reserve Bank of India is not the real issue. As India still reels under the socialist module of controlling economic activities, which the present government perpetuates, the public sector banks are pushed and prodded to finance government schemes, whether it be infrastructure projects, agriculture loans and loan waivers, start-up …

Govt refuses to yield on Section 7 of RBI Act
6 years, 2 months ago

Govt refuses to yield on Section 7 of RBI Act

Live Mint  

New Delhi: The Union government will not yield ground on its right to issue a directive to the Reserve Bank of India, even as it claimed that contentious issues between the two should be resolved at the board meeting of the central bank on 19 November. Tensions escalated between RBI and the government after the latter wrote three letters to …

Govt to continue pressing Reserve Bank of India for relaxing norms, funds to boost lending
6 years, 2 months ago

Govt to continue pressing Reserve Bank of India for relaxing norms, funds to boost lending

Firstpost  

The reports of rift between the central bank and the government surfaced last month following which the finance ministry reportedly started discussion with the RBI under the never-used before Section 7 of the RBI Act. New Delhi: Keeping up the heat on the Reserve Bank of India, the government will continue to press the central bank to relax norms to …

RBI autonomy: Bimal Jalan says it’s central bank’s job to implement govt policy, governor should quit if differences cannot be resolved
6 years, 2 months ago

RBI autonomy: Bimal Jalan says it’s central bank’s job to implement govt policy, governor should quit if differences cannot be resolved

Firstpost  

The sharply depreciating rupee amidst rising global oil prices and the massive foreign funds outflow from the capital market are not crises If there are irreconcilable differences of opinion between the government and the regulator, then ‘whoever is heading the agency should step down,’ said Bimal Jalan, former governor to RBI to Mint. The sharply depreciating rupee amidst rising global …

Finance Ministry baits RBI afresh, two days after declaring truce
6 years, 2 months ago

Finance Ministry baits RBI afresh, two days after declaring truce

Live Mint  

New Delhi: Two days after declaring a truce with the Reserve Bank of India, the ministry of finance has baited the central bank again, pointing out that the financial markets remain resilient and there are no signs of the wrath of the market. Garg’s comments are seen as a response to a speech by RBI deputy governor Viral Acharya last …

The history of the contentious ‘RBI Act Section 7’
6 years, 2 months ago

The history of the contentious ‘RBI Act Section 7’

Live Mint  

Mumbai: Section 7 of The Reserve Bank of India Act, 1934, became a contentious issue after the tension between the central bank and government turned into a public spat over the last few days. According to the RBI Act’s Section 7, “the central government may from time to time give such directions to the Bank as it may, after consultation …

RBI autonomy row: Govt cites never-used powers of issuing directions for resolving issues with central bank
6 years, 2 months ago

RBI autonomy row: Govt cites never-used powers of issuing directions for resolving issues with central bank

Firstpost  

Finance ministry and RBI are said to have differed on the central bank’s handling of weak public sector banks, tight liquidity in the market and ways of resolving bad loans in the power sector. Section 7 of the RBI Act empowers the government to issue directions to the central bank, after consultation with RBI Governor, on issues that it considers …

Govt vs RBI: Arun Jaitley, Urjit Patel settle for an uneasy truce, for now
6 years, 2 months ago

Govt vs RBI: Arun Jaitley, Urjit Patel settle for an uneasy truce, for now

Live Mint  

New Delhi/Mumbai: A day after the two sides publicly and bitterly crossed each other, the Reserve Bank of India and the union government took a step back on Wednesday. Conceding that differences can arise, the carefully-worded finance ministry release admonished RBI, saying, “ government of India has never made public the subject matter of those consultations. The first letter was …

Will govt invoke Section 7 of RBI Act? All you need to know about this never-before-invoked Act
6 years, 2 months ago

Will govt invoke Section 7 of RBI Act? All you need to know about this never-before-invoked Act

Firstpost  

Section 7 empowers the central government to give directions to the RBI, after consultation with the Governor of the central bank, as it may consider necessary in the public interest. There have been reports that the government may consider invoking Section 7 of the Reserve Bank of India Act allowing it to issue directions to the central bank governor on …

Government says consultations on with RBI, remains mum on Section 7
6 years, 2 months ago

Government says consultations on with RBI, remains mum on Section 7

India Today  

Neither denying nor accepting, the Ministry of Finance has issued a statement saying that extensive consultations on several issues take place between the government and the RBI and only final decisions are communicated. For the purpose, extensive consultations take place between the government and the RBI from time to time. The ministry also said in the statement that the government …

Government trying to destroy autonomous structure of RBI: Congress
6 years, 2 months ago

Government trying to destroy autonomous structure of RBI: Congress

The Quint  

New Delhi, Oct 30 Sharpening its attack on Finance Minister Arun Jaitley, the Congress on Tuesday accused the government of trying to destroy autonomous institutions like the Reserve Bank of India and alleged him of interfering in the work of the central bank. Equally important is to remember the role of the RBI as the payment regulator cannot be diluted …

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