Arun Jaitley hits back at RBI, says it allowed lending excesses
Live MintNew Delhi/Mumbai: Finance Minister Arun Jaitley blamed the Reserve Bank of India on Tuesday for failing to stop a lending spree between 2008-2014 that left banks with huge bad debts, inflaming a row that recently erupted between the government and the central bank. On Friday, RBI Deputy Governor Viral Acharya warned that undermining a central bank’s independence could be “potentially catastrophic”, in an indication that it is pushing back hard against government pressure to relax its policies and reduce its powers ahead of a general election due by next May. Government official were very upset by Acharya’s comments, which included a reference to problems created in Argentina when its government meddled in central bank affairs, senior sources in the administration said on Monday. Yet, Jaitley was publicly critical of the RBI on Tuesday, saying the central bank’s lax policies had contributed to banks’ current woes. The union, in a letter to the media on Monday, urged the government to allow the RBI to do its job in an “unfettered way” and warned that undermining the central bank’s autonomy is a “recipe for disaster and the government must desist”.
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