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 way the central bank operates. Like the government, most board members feel that RBI should be “more transparent and accountable” for its decisions, said one source, who was also aware of discussions held subsequently within the government. “This mainly includes governance at the central bank, the relationship between the board and the RBI and other related issues.” Those other issues could include providing more liquidity support to a weakened non-banking finance sector, functioning of the sub-committees of the central board and easing lending curbs on 11 state-run banks who are under a prompt corrective action plan imposed by the RBI. Unhappy about such pressure, late last month RBI Deputy Governor Viral Acharya warned that undermining central bank independence could be “catastrophic”.

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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 …

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 …

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 …

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 wants to discuss RBI ‘governance issues’ with it
6 years, 1 month ago

Govt wants to discuss RBI ‘governance issues’ with it

Hindustan Times  

The Centre wants to discuss changes to the Reserve Bank of India’s governance structure at a board meeting next month, including setting up some oversight panels, economic secretary Subhash Chandra Garg told a news channel. The proposals to discuss governance at the RBI’s December 14 board meeting may further inflame tensions between the finance ministry and central bank. Worsening tensions …

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 …

Expert committee to look into issues concerning capital surplus: RBI
6 years, 1 month ago

Expert committee to look into issues concerning capital surplus: RBI

India TV News  

Signalling a temporary truce, the Reserve Bank and the government Monday agreed to refer to an expert committee the contentious issue of appropriate size of reserves that the RBI must hold, while restructuring of stressed loans of small businesses would be considered by the central bank. The setting up of the committee, whose members will be decided by the government …

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 …

Centre-RBI tussle: Balance of power, in the balance
6 years, 1 month ago

Centre-RBI tussle: Balance of power, in the balance

The Hindu  

The role of the Board of Directors of the Reserve Bank of India and its powers vis-à-vis the RBI Governor have come into focus in the ongoing tussle between the Centre and the central bank. The Centre has hinted that it is examining the option of using the powers of the RBI Board to override the Governor. As per the …

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 set up committees to oversee different functions
6 years, 1 month ago

Govt wants RBI to set up committees to oversee different functions

Live Mint  

Mumbai: The government has proposed changing rules that will enable closer supervision of the central bank, people with knowledge of the matter said. The government has recommended that the board of the Reserve Bank of India draft regulations to enable setting up of panels to oversee functions including financial stability, monetary policy transmission and foreign exchange management, the people said, …

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 …

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-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 …

Amid Spat Between Govt & Central Bank, Focus Returns on RBI Board
6 years, 2 months ago

Amid Spat Between Govt & Central Bank, Focus Returns on RBI Board

The Quint  

But the role of the central board, in theory, is very different from what it has been in practice. The board has been a consultative body rather than a decision making one, said the person quoted above while adding that the board, if it chooses, is fully empowered to make decisions. Issues ranging from the flow of credit to small …

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 …

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 …

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 …

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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