RBI complains too much; its role has been better defined, powers expanded over four years of Narendra Modi govt
6 years, 1 month ago

RBI complains too much; its role has been better defined, powers expanded over four years of Narendra Modi govt

Firstpost  

There is a deluge of expert and academic opinion on the current Reserve Bank of India - Government ‘confrontation’. To quote: “Governments that do not respect central bank independence will sooner or later incur the wrath of the financial markets, ignite economic fire and come to rue the day they undermined an important regulatory institution.” Now, for a top RBI official, this is unusual. Looking back to 2008, recall the well-publicised differences between former finance minister Chidambaram and one of the most seasoned and balanced Reserve Bank Governors Y V Reddy over the foreign ownership of banks. Looking further back to 1957, then RBI Governor B Rama Rau could not come to terms with the alleged interference in monetary policy of finance minister T T Krishnamachari. Given this record, the RBI governor’s job should be to engage with the government on its concerns, and try to find workable solutions within the central bank’s institutional mandate, relying on his institution’s technical expertise and economic reasoning to make his case.

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History of this topic

The Constitution and RBI are two mighty pillars on which India’s stability rests
2 months, 1 week ago

The Constitution and RBI are two mighty pillars on which India’s stability rests

Live Mint  

The formidable institutional structure of the US will be severely tested today by both the presidential election process and its aftermath, whatever the outcome. The year 1935 also saw the establishment of the Reserve Bank of India with core functions as defined in those nascent days of central banking: issuance of bank notes and maintenance of reserves to secure monetary …

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 …

Needed: A new relationship contract between RBI and govt
4 years, 4 months ago

Needed: A new relationship contract between RBI and govt

Live Mint  

Two recent books, one by former Reserve Bank of India governor, Urjit Patel, and the other by former RBI deputy governor, Viral Acharya, have reignited the debate on central bank autonomy in India. Section 30 of the RBI Act for instance, allows the government to “supersede” the RBI central board. The third lever of government control lies in the composition …

Government to run power play at next RBI board meeting on 14 December; tensions likely to re-surface
6 years, 1 month ago

Government to run power play at next RBI board meeting on 14 December; tensions likely to re-surface

Firstpost  

Like the government, most board members feel that RBI should be “more transparent and accountable” for its decisions Mumbai/ New Delhi: For all the cordiality on show at the end of Reserve Bank of India’s last board meeting, tensions could re-surface when it next gathers on 14 December as the government aims to ramp up pressure for changes in the …

Govt, RBI should have continuous dialogue to address problems affecting economy: Vice President M Venkaiah Naidu
6 years, 1 month ago

Govt, RBI should have continuous dialogue to address problems affecting economy: Vice President M Venkaiah Naidu

Firstpost  

New Delhi: In an apparent reference to the recent spat between the government and the Reserve Bank, Vice President M Venkaiah Naidu on Tuesday said there should be a regular dialogue between the two in the boardroom to arrive at solutions to address problems affecting the economy. Amid growing tensions with the central bank, the Finance Ministry had earlier sought …

Govt does not need money from RBI in next 6 months, says Arun Jaitley; 'respect autonomy' of central bank
6 years, 1 month ago

Govt does not need money from RBI in next 6 months, says Arun Jaitley; 'respect autonomy' of central bank

Firstpost  

Critics accuse the government of trying to undermine the RBI’s authority, but Finance Minister Arun Jaitley said his government respected the institution’s independence. Mumbai: The government does not need money from the Reserve Bank of India in the next six months,finance minister Arun Jaitley said in a TV interview telecast on Friday, rejecting Opposition charges the government was seeking access …

Arun Jaitley says government does not need RBI funds in next six months, Centre keen to gain control over bank reserves
6 years, 1 month ago

Arun Jaitley says government does not need RBI funds in next six months, Centre keen to gain control over bank reserves

Firstpost  

Critics accuse the government of trying to undermine the RBI’s authority, but Arun Jaitley said the BJP-led government respected the institution’s independence. Mumbai: India does not need money from the Reserve Bank of India in the next six months, Union finance minister Arun Jaitley said in a TV interview on Friday, rejecting opposition charges the government was seeking access to …

Opinion | RBI vs govt: This truce is a defeat for central bank
6 years, 1 month ago

Opinion | RBI vs govt: This truce is a defeat for central bank

Live Mint  

Many of us will have breathed a sigh of relief as, after a marathon eight-hour meeting on Monday, it looked like India’s government and its central bank had finally made peace with each other after weeks of very public sniping. The RBI’s board, which contains several government nominees, agreed to set up a committee to examine the bank’s reserves, one …

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 …

Opinion | A thin line divides RBI autonomy, alignment
6 years, 1 month ago

Opinion | A thin line divides RBI autonomy, alignment

Live Mint  

The tawdry, and discreditable, public feud between the government and the Reserve Bank of India seems to indicate that, in the midst of many shortages, the government is hoarding reserves of surplus political capital. Things must have gone terribly wrong and relations deteriorated irreconcilably for the government to situate a routine central bank board meeting squarely in the piazza of …

Opinion | Revisiting accountability at Reserve Bank of India
6 years, 2 months ago

Opinion | Revisiting accountability at Reserve Bank of India

Live Mint  

“The most independent central bank is not likely to be a socially optimal central bank,” economists Guy Debelle and Stanley Fischer wrote in a paper titled How independent should a central bank be?Fischer is a former vice chairman of the US Federal Reserve and was professor of economics at Massachusetts Institute of Technology when the paper was written in 1994. …

RBI deputy governor Viral Acharya in government crosshairs
6 years, 2 months ago

RBI deputy governor Viral Acharya in government crosshairs

Live Mint  

New Delhi: The government may train its guns on Reserve Bank of India deputy governor Viral Acharya if the confrontation with the central bank escalates at the RBI board meeting on 19 November, a person familiar with the deliberations within central bank’s board said. In case discussions between the government and RBI break down, the government may choose to invoke …

Opinion | Can RBI, other central banks survive the age of populism?
6 years, 2 months ago

Opinion | Can RBI, other central banks survive the age of populism?

Live Mint  

Is central bank independence the next casualty of the age of populism? The government wants the central bank to loosen lending restrictions — to fuel economic activity and jobs growth — and turn over more of its cash reserves, presumably to fund populist spending ahead of next year’s elections. Meanwhile, in Europe, the populists who have seized power in Italy …

RBI-govt spat: International Monetary Fund against interference that compromises central bank's independence
6 years, 2 months ago

RBI-govt spat: International Monetary Fund against interference that compromises central bank's independence

Firstpost  

The standoff was in relation to RBI’s handling of weak public sector banks, tight liquidity in the market and ways of resolving bad loans in the power sector. I’ve said this before standing here that we support clear lines of responsibility and accountability… And, international best practice is that there should be no government or industry interference that compromises the …

Opinion | RBI’s independence needs to be protected
6 years, 2 months ago

Opinion | RBI’s independence needs to be protected

Live Mint  

The relationship between the government and the Reserve Bank of India used to be cooperative and productive, but has vitiated over the past decade. Public airing of differences must be eschewed and the government must take steps to strengthen RBI’s independence. He also warned that governments that do not respect central bank independence will sooner or later incur the wrath …

Opinion | The ball was always in the government’s court
6 years, 2 months ago

Opinion | The ball was always in the government’s court

Live Mint  

Amid speculation that Reserve Bank of India governor Urjit Patel might quit, the government did well on Wednesday to issue a statement, highlighting that the autonomy of the central bank is essential. Section 7 of the RBI Act says that “The Central government may from time to time give such directions to the bank as it may, after consultation with …

Public Airing Of Rift Between RBI, Govt Must Stop: Rakesh Mohan
6 years, 2 months ago

Public Airing Of Rift Between RBI, Govt Must Stop: Rakesh Mohan

The Quint  

Public sparring between the central government and the central bank is not healthy for an economy like India, cautioned former Reserve Bank of India Deputy Governor Rakesh Mohan. “I do hope that saner heads will prevail.” On Friday, RBI Deputy Governor Viral Acharya, in a public speech, aired concerns over some of the ways in which the government could impinge …

The RBI Shouldn’t Mix ‘Autonomy’ With the ‘Scope’ of Its Mandate
6 years, 2 months ago

The RBI Shouldn’t Mix ‘Autonomy’ With the ‘Scope’ of Its Mandate

The Quint  

Let’s take the proposition further. If, indeed, technocrats are more capable of taking long-term decisions, why leave fiscal policy in the hands of elected representatives? The reason that fiscal policy has not been delegated to technocrats is that it has multiple welfare and distributional effects that are best-weighed by elected representatives. Monetary policy, with its focus on inflation, is believed …

RBI-government spat shows central bank's independence, says Morgan Stanley India research head Ridham Desai
6 years, 2 months ago

RBI-government spat shows central bank's independence, says Morgan Stanley India research head Ridham Desai

Firstpost  

Mumbai: American brokerage Morgan Stanley on Tuesday said the Reserve Bank is more independent than it was in the past and the debate triggered by deputy governor Viral Acharya last week illustrates the progress on this front. The fact that it is there in the media, the fact that it is there in the open, suggests that we are a …

RBI vs Narendra Modi government: Public spat won’t help, but India’s best bet is not to mess with its central bank
6 years, 2 months ago

RBI vs Narendra Modi government: Public spat won’t help, but India’s best bet is not to mess with its central bank

Firstpost  

Almost every RBI governor, be it Y V Reddy or D Subbarao, have pitched for central bank autonomy in public forums inviting the wrath of the government of the day. The turf war between the Reserve Bank of India and the Narendra Modi government on the subject of the central bank’s autonomy is out in the open and is turning …

Why RBI is at loggerheads with the government
6 years, 2 months ago

Why RBI is at loggerheads with the government

Live Mint  

A growing rift between India’s central bank and the government has been many months in the making. In the latest move, the Reserve Bank of India made its disagreement with authorities public in a hard-hitting speech by Deputy Governor Viral Acharya on Friday — which he said had the backing of Governor Urjit Patel — defending the central bank’s independence. …

Viral Acharya's comments on 'effective independence' of RBI: Employees association seeks central bank's autonomy
6 years, 2 months ago

Viral Acharya's comments on 'effective independence' of RBI: Employees association seeks central bank's autonomy

Firstpost  

Kolkata: Days after deputy governor Viral Acharya raised concerns over the central bank’s autonomy, the Reserve Bank employees association Monday came out in support of the views, saying “undermining the central bank is a recipe for disaster” and government to stop nibbling at its autonomy. Delivering the AD Shroff memorial lecture last week here, Acharya said governments that did not …

Viral Acharya is right; RBI should be left alone to do its job, not coerced for political reasons
6 years, 2 months ago

Viral Acharya is right; RBI should be left alone to do its job, not coerced for political reasons

Firstpost  

The most recent debate has been on the independence of the central bank. Next, on the issue of control of public sector banks, the central bank is unable to do what it has done for private banks especially on governance issues as this is where the problem is founded. Also, in the past, when some private banks were down under, …

Opinion | Undercutting the RBI will not end well
6 years, 2 months ago

Opinion | Undercutting the RBI will not end well

Live Mint  

Time was when capital markets put a premium on “strong men”. Things must have got serious because RBI deputy governor Viral Acharya used two successive public speeches to communicate RBI’s discomfort with the government’s repeated attempts to undermine the central bank. It is true that the RBI’s ledger has many red marks and there are many things that the central …

Opinion | Protecting the central bank’s independence
6 years, 2 months ago

Opinion | Protecting the central bank’s independence

Live Mint  

Reserve Bank of India deputy governor Viral Acharya’s A.D. Shroff Memorial Lecture last week was the second occasion within a month when he chose to deliver a strong message. European Central Bank president Mario Draghi recently raised the issue of the threat to central banks’ independence from governments. It is also in the interest of the government that the central …

Signs of policy struggle between RBI and govt
6 years, 2 months ago

Signs of policy struggle between RBI and govt

Live Mint  

Mumbai: In a sign of a mounting policy struggle between the Reserve Bank of India and the government, a top bank official warned on Friday that undermining a central bank’s independence could be “potentially catastrophic”. “Governments that do not respect central bank independence will sooner or later incur the wrath of financial markets, ignite economic fire, and come to rue …

RBI deputy governor bats for its independence
6 years, 2 months ago

RBI deputy governor bats for its independence

Live Mint  

Mumbai: Reserve Bank of India deputy governor Viral Acharya on Friday stressed the importance of a central bank’s independence and said direct intervention and interference by the government in the operational mandate of the central bank negates its functional autonomy. This way, the institutional arrangement of independence, transparency and accountability to the public not only balance but also strengthen the …

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