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 independence of the central bank and financial supervisor,” Rice said. The row was sparked off last Friday when RBI Deputy Governor Viral Acharya in a hard-hitting speech warned that undermining central bank’s independence could be “potentially catastrophic”, possible indication of the RBI being pushed to relax its policies ahead of general elections next year. Sources privy to the development said the government had sent at least three letters on different issues under Section 7 of the RBI Act that gives it powers to issue any direction to the central bank governor on matters of public interest.

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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 …

reserve bank of india 25th financial stability report
2 years, 6 months ago

reserve bank of india 25th financial stability report

The Hindu  

The Reserve Bank of India on Thursday said the Indian economy is well on the path of recovery even though inflationary pressures and geopolitical risks warrant careful handling and close monitoring of the situation. The RBI's 25th Financial Stability Report also said banks as well as non-banking financial institutions have sufficient capital buffers to withstand shocks. "Notwithstanding the challenges from …

The Hindu Explains | What has the RBI cautioned against in its latest Financial Stability Report?
3 years, 11 months ago

The Hindu Explains | What has the RBI cautioned against in its latest Financial Stability Report?

The Hindu  

The story so far: On Monday, the Reserve Bank of India released the 22nd issue of its biannual Financial Stability Report outlining the risks to financial stability as well as the resilience of the financial system in the contemporary context. In his foreword, RBI Governor Shaktikanta Das flagged the many risks ahead, including the recent, accentuating “disconnect between certain segments …

Opinion | An easy surrender of the country’s economic defences
5 years, 4 months ago

Opinion | An easy surrender of the country’s economic defences

Live Mint  

The global economy is admittedly in a strange place and even the usually reliable experts are struggling to decode an evolving economy and the central bank’s place in it. To address this new normal, we are conducting a public review of our monetary policy strategy, tools, and communications.” Coincidentally, the same day Lawrence Summers and Anna Stansbury published a Project …

RBI Financial Stability Report: There is good news and bad news, but where is the plan of action?
5 years, 6 months ago

RBI Financial Stability Report: There is good news and bad news, but where is the plan of action?

Firstpost  

The Financial Stability Report is a very important document on the financial sector as it analyses threadbare the overall state of the various segments as well as highlights the risk-related issues that have been identified which can cause potential challenges. The FSR is happy with the state of the banking system as the gross non performing asset ratio is 9.3 …

‘Financial stability is a key theme for monetary policy’
5 years, 6 months ago

‘Financial stability is a key theme for monetary policy’

The Hindu  

With the liquidity crisis of non-banking finance companies threatening to spillover to other sectors, Reserve Bank of India governor Shaktikanta Das has highlighted the importance of the central bank’s role to maintain financial stability. Speaking at the Lal Bahadur Shastri National Academy of Administration, Mussoorie, Mr. Das said while there is no explicit mandate of the monetary policy to maintain …

Opinion | RBI, the world’s model central bank? Just maybe
5 years, 7 months ago

Opinion | RBI, the world’s model central bank? Just maybe

Live Mint  

India is becoming the gold standard for monetary policy in Asia, if not the world. While global markets are giddy from hints that the Federal Reserve may cut interest rates, India’s central bank has been easing since February. Passive inflation and the central bank’s full tank of gas make the case to cut even stronger. Thursday’s quarter-point reduction in the …

RBI accountable to govt, differences must be resolved internally in country’s interest: Bimal Jalan
6 years ago

RBI accountable to govt, differences must be resolved internally in country’s interest: Bimal Jalan

Firstpost  

The government also wants the RBI to release more liquidity to the shadow banking sector and relax its provisioning norms for banks. New Delhi: The Reserve Bank of India is accountable to the government and should make policies within the framework set by the government, according to a former central bank chief now heading a panel tasked with framing guidelines …

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 …

Opinion | Finding the right balance at the central bank
6 years ago

Opinion | Finding the right balance at the central bank

Live Mint  

The regrettable mechanics of the recent change of guard at the Reserve Bank of India raises some important questions, some long overdue, about the institution’s accountability, transparency and autonomy, and the relevance of having a governor with a strong backbone. The new approach internalised that the adoption of modern monetary management in India also favoured individuals with strong macroeconomics- or …

IMF chief economist supports RBI; says government should heed central bank's message on financial stability
6 years, 1 month ago

IMF chief economist supports RBI; says government should heed central bank's message on financial stability

Firstpost  

The IMF’s chief economist Maurice Obstfeld said he does not want politicians “manipulating” central banks for political ends. Washington: It is important for the Indian government to heed the Reserve Bank of India’s message on financial stability, IMF’s Chief Economist Maurice Obstfeld said Sunday, amidst reports of friction between the central bank and the Finance Ministry. Addressing a group of …

India's growth 'very solid', important for govt to pay heed to RBI's message on financial stability: IMF Chief Economist
6 years, 1 month ago

India's growth 'very solid', important for govt to pay heed to RBI's message on financial stability: IMF Chief Economist

India TV News  

India's growth over the past four years has been 'very solid', said IMF's Chief Economist Maurice Obstfield on Sunday. "But as the government is trying to better oversee the banking system, these loans have migrated to shadow banking and that is an area where more needs to be done to contain financial pressures, which we are beginning to see in …

Arvind Subramanian says RBI's regulatory failure created IL&FS mess, calls upon central bank to step up ability of supervision
6 years, 1 month ago

Arvind Subramanian says RBI's regulatory failure created IL&FS mess, calls upon central bank to step up ability of supervision

Firstpost  

Mumbai: Terming the IL&FS crisis as a regulatory failure, former chief economic advisor to finance minister Arvind Subramanian has said the Reserve Bank should be held responsible for the crisis at one of the largest entities it has been regulating. But I think they are wrong” he says and quotes the late British prime minister Margaret Thatcher who used to …

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 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 …

Govt slugfest with RBI finally ends in a draw
6 years, 1 month ago

Govt slugfest with RBI finally ends in a draw

Deccan Chronicle  

It was an unequal fight to begin with. Raghuram Rajan, arguably the most flamboyant RBI governor in recent times, who set in motion the deep reforms of banks by tightening prudential oversight, was fond of citing the god of the bond market as the final arbiter of the central bank’s performance. An ugly public spat with the RBI could rake …

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 …

It is ceasefire, not a truce between RBI and govt
6 years, 1 month ago

It is ceasefire, not a truce between RBI and govt

Live Mint  

Markets are considerably relieved that the unhealthy spat between the Reserve Bank of India and the government has been diffused after a nine-hour board meet on Monday. The Indian rupee rose and bonds gained, an indication that the absence of a raid on the central bank’s balance sheet was welcomed. What was feared to end in a possible exit of …

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 …

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 …

Govt wants RBI to transfer its surplus of Rs 3.6 lakh crore; central bank believes move will impact macroeconomic stability
6 years, 2 months ago

Govt wants RBI to transfer its surplus of Rs 3.6 lakh crore; central bank believes move will impact macroeconomic stability

Firstpost  

RBI is of the view that the use of its reserves will hurt the government’s commitment to fiscal prudence. The finance ministry reportedly wants Reserve Bank of India to transfer a surplus of Rs 3.6 lakh crore and believes that the central bank’s capital requirements and terms for the transfer of its reserves to the government are based on a …

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 …

Opinion | RBI is from Mars, finance ministry is from Venus
6 years, 2 months ago

Opinion | RBI is from Mars, finance ministry is from Venus

Live Mint  

India’s worst kept secret is that the Reserve Bank of India and the finance ministry do not get along. If the government has to walk alone to face the challenge of growth, we will walk alone.” Part of the reason for the excessive blood letting this time was the strategic leaks of hostile communications between the finance ministry and RBI, …

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 …

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 …

The cast of characters in the Govt vs RBI fight
6 years, 2 months ago

The cast of characters in the Govt vs RBI fight

Live Mint  

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. Here’s a look at the key personalities involved in the public spat: Urjit Patel, governor of the Reserve Bank of India RBI governor Urjit Patel’s silence is also his biggest weapon: he has …

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 …

Urjit Patel versus Centre: NDA govt has a strong case to influence RBI, but only irony is that it is turning Nehruvian
6 years, 2 months ago

Urjit Patel versus Centre: NDA govt has a strong case to influence RBI, but only irony is that it is turning Nehruvian

Firstpost  

Urjit Patel has won considerable sympathy among the nation’s economic elite for asserting that the RBI needs autonomy and independence to perform its role In a symbolic move, the Reserve Bank of India governor Urjit Patel walked into North Block on Tuesday for a meeting of the Financial Stability and Development Council with four of his deputy governors in tow …

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 …

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. …

Govt very upset with Reserve Bank of India for making rift public, holds Urjit Patel responsible
6 years, 2 months ago

Govt very upset with Reserve Bank of India for making rift public, holds Urjit Patel responsible

Firstpost  

Government officials have recently called for the Reserve Bank of India to relax its lending restrictions on some banks New Delhi: Government officials are very upset with the Reserve Bank of India for publicly talking about a rift with the government, fearing it could tarnish the country’s image among investors, senior officials said on Monday. On Friday night, the RBI …

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 …

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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