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 to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public interest”. This supposed issuance of a letter to RBI under Section 7 needs to be seen in the light of recent judgement by Allahabad high court in a case filed by Independent Power Producers Association of India challenging RBI’s 12th February circular. The high court in August said the government could issue directions to RBI under Section 7 of RBI Act.

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History of this topic

To-do list for RBI’s new boss
1 month ago

To-do list for RBI’s new boss

Times of India  

It is as the world is weighing what Trumponomics will mean this time around, that Sanjay Malhotra becomes the 26th man to helm India’s central bank. A further context is how RBI’s role is evolving to meet its target to become the model central bank across the Global South. The new governor also takes charge as monetary policy across the …

Indian bankers aren’t always frank about RBI regulations, are they?
2 months ago

Indian bankers aren’t always frank about RBI regulations, are they?

Live Mint  

The ‘world’s banker’ Jamie Dimon, CEO of JPMorgan Chase, speaks his mind even if it means taking swipes at US regulators. Kamath and HDFC’s chairman Deepak Parekh would air their views publicly on important banking issues, including what the Reserve bank of India should be doing on interest rates. Cut to now, it’s extremely rare for bankers to talk about …

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 …

Key decisions of central bank cannot be left to politicians, says former RBI Governor Subbarao
8 months, 3 weeks ago

Key decisions of central bank cannot be left to politicians, says former RBI Governor Subbarao

The Hindu  

Former Governor of the Reserve Bank of India Duvvuri Subbarao on April 24 said key decisions tasked to the central bank such as reining in inflation änd ensuring price stability cannot be delegated to politicians as the latter have a short cycle. “You can’t leave those decisions to politicans.,” the former IAS officer said, pointing out that decisions on price …

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 …

RBI may consider issuing bonds to help soak up foreign money into stocks
3 years, 10 months ago

RBI may consider issuing bonds to help soak up foreign money into stocks

Live Mint  

The Reserve Bank of India may consider issuing its own bonds to help soak up a deluge of foreign money into stocks that threatens financial stability, according to a report published by its researchers. “Enhancement of sterilization capacity may be necessary to deal with possible surges in capital flows in the future.” The RBI report recommended further strengthening foreign-exchange reserves, …

Explained: Is RBI Governor's concern about cryptocurrency justified?
3 years, 10 months ago

Explained: Is RBI Governor's concern about cryptocurrency justified?

India Today  

Reserve Bank of India Governor Shaktikanta Das recently expressed concern about the use of cryptocurrencies. The judgement did provide relief, but several cryptocurrency exchanges have called for better regulation of digital currency trade to fix current issues. Now, the government is planning to introduce a bill — Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 — in Parliament to …

RBI has 'major concerns' over cryptocurrencies: Governor Shaktikanta Das
3 years, 10 months ago

RBI has 'major concerns' over cryptocurrencies: Governor Shaktikanta Das

India Today  

The Reserve Bank of India has “major concerns” about cryptocurrencies, Governor Shaktikanta Das said on Wednesday, flagging potential risks to financial stability. “We have major concerns from the financial stability angle,” Das told news channel CNBC-TV18 in an interview, adding that the RBI was “targeting to launch” a digital currency. “In order to ensure that there is financial stability we …

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 …

RBI steps will prevent more NPAs, boost cheaper credit
4 years, 8 months ago

RBI steps will prevent more NPAs, boost cheaper credit

Live Mint  

Covid-19 has altered life as we know it, heralding unprecedented times in every way. In its second press conference since the nationwide lockdown because of the covid-19 outbreak, the Reserve Bank of India on Friday announced additional measures to support the economy and revive growth momentum. These measures announced by the RBI were primarily aimed boosting liquidity, expanding credit flow …

Opinion | A judgement that balances power and proportionality
4 years, 10 months ago

Opinion | A judgement that balances power and proportionality

Live Mint  

In a judgement on Wednesday spanning elements as diverse as Vedic philosophy and cypherpunks, Jain parables and the history of central banking, the Supreme Court set aside a circular issued by the Reserve Bank of India banning entities regulated by it from dealing in virtual currencies. Rich with details on the character of virtual currencies and their manner of regulation, …

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 …

No decision yet on how to use RBI windfall: Sitharaman
5 years, 4 months ago

No decision yet on how to use RBI windfall: Sitharaman

Live Mint  

Finance minister Nirmala Sitharaman Tuesday strongly reacted to the Congress' allegation of "stealing RBI's reserves", saying she does not care about such charges and the opposition leader should have spoken to the finance ministers from his party before hurling such charges. Congress leader Rahul Gandhi earlier in the day hit out at the government over the record cash transfer from …

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 …

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 …

Opinion | An intruder undermines RBI
5 years, 10 months ago

Opinion | An intruder undermines RBI

Live Mint  

Bankruptcy proceedings usually involve protecting a firm’s assets from creditors. The ruling by the bankruptcy court, which is overseeing the government- Already India has lost two RBI governors because, among other things, they dared to ask banks to acknowledge problem loans in time, classify them correctly and make adequate provisions for losses. Already-delayed Indian tribunal proceedings will stretch forever, with …

RBI is looking through core inflation, and it may be right this time around
5 years, 10 months ago

RBI is looking through core inflation, and it may be right this time around

Live Mint  

Housing, healthcare and education have been the deadly trio that have upset an otherwise benign narrative on India’s inflation. The debate currently is whether the Reserve Bank of India is right in responding to the subdued headline inflation rate, even though some of its components are running amok. Housing inflation has been slowing down over the past six months, and …

Opinion | RBI’s cut goes beyond a political narrative
5 years, 11 months ago

Opinion | RBI’s cut goes beyond a political narrative

Live Mint  

Monetary policy is usually formulated under the shadow of various influences. Multiple shadows have cast a pall over Shaktikanta Das’s maiden monetary policy as Reserve Bank of India governor and the Indian central bank’s sixth and last one for 2018-19. The shadow of imminent elections looms largest over the political economy, especially after the interim budget’s unabashed display of courtship …

Opinion | The whys and what ifs of central bank autonomy
5 years, 11 months ago

Opinion | The whys and what ifs of central bank autonomy

Live Mint  

Why should central banks be autonomous and what are the consequences of the government infringing on such autonomy? For example, voters elect a government to create more jobs, but the central bank can keep interest rates high to stifle investment and, consequently, job creation. India’s history since Independence is one of high state and central government deficits, a weak banking …

Facts, No Fiction: There’s a new sheriff in RBI
6 years, 1 month ago

Facts, No Fiction: There’s a new sheriff in RBI

Op India  

This week has been a roller coaster ride, from high profile extradition cases, the resignation of the RBI governor and the results of recent assembly elections. That being said, it is well acknowledged that India has one of the tightest of monetary policies and that too at a time where inflation seems to be significantly lower than even RBI’s estimates. …

RBI autonomy 'sacred', should not be compromised, says former CEO Arvind Subramanian
6 years, 1 month ago

RBI autonomy 'sacred', should not be compromised, says former CEO Arvind Subramanian

Firstpost  

Mumbai: With the reins of RBI governorship passing to an ex-bureaucrat, former chief economic advisor Arvind Subramanian Wednesday said central bank autonomy is “sacred”, which should not be compromised. “RBI has a very good reputation for very good reasons maintaining the functional autonomy in decision-making and governance is absolutely sacred, we must not compromise on that,” he added. He said …

Shaktikanta Das, who oversaw demonetisation, is new RBI governor
6 years, 1 month ago

Shaktikanta Das, who oversaw demonetisation, is new RBI governor

Live Mint  

New Delhi/Mumbai: The government on Tuesday appointed Shaktikanta Das, member of the fifteenth finance commission, as the governor of the Reserve Bank of India, a day after Urjit Patel resigned at the end of a bruising tussle with the government over the regulator’s independence and the regulation of banks. Das, who was secretary in the department of economic affairs when …

Demonetisation threw up political, economic puzzles: Arvind Subramanian
6 years, 1 month ago

Demonetisation threw up political, economic puzzles: Arvind Subramanian

The Quint  

New Delhi, Dec 9 Drawing the link between demonetisation and GDP numbers, former Chief Economic Advisor Arvind Subramanian has said the puzzle thrown up by the note ban has a dual aspect - whether its impact as seen in the GDP numbers reflects a resilient economy, and if the growth figures pose questions about the official data collection process itself. …

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 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 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 …

RBI board meet today: Amid tiff with government, central bank likely to debate liquidity crisis
6 years, 1 month ago

RBI board meet today: Amid tiff with government, central bank likely to debate liquidity crisis

Firstpost  

The RBI board is also expected to discuss issues related to making relaxations to its Prompt Corrective Action framework to clean up the balance sheet of banks burdened with NPAs. Mumbai: The RBI’s crucial board meeting on Monday is expected to take up the liquidity crisis that initially triggered a tiff between the government and the central bank, according to …

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 …

RBI vs govt: At 19 November board meet, S Gurumurthy’s economic theories and other pain points await Urjit Patel
6 years, 1 month ago

RBI vs govt: At 19 November board meet, S Gurumurthy’s economic theories and other pain points await Urjit Patel

Firstpost  

Battle lines are drawn and fireworks are likely at the central bank’s board meet scheduled for 19 November. The 18-member central board of the RBI has five members from the central bank including the governor and the rest are government nominees. The signals are clear from the recent statements of Swaminathan Gurumurthy, the RBI’s board member who was recently appointed …

RBI vs Government Row: An Open Letter to RBI Governor Urjit Patel
6 years, 2 months ago

RBI vs Government Row: An Open Letter to RBI Governor Urjit Patel

The Quint  

The fall of the Rupee’s value and the market’s performance recently is not new to you. As the deputy governor, you managed the Urjit Patel Committee and braved through the crisis. Recently, you were served a show cause notice from the Supreme Court of India for not abiding by its order to disclose the list of wilful defaulters of loans …

Dear govt, RBI income is not meant for your expenses
6 years, 2 months ago

Dear govt, RBI income is not meant for your expenses

Live Mint  

What would a householder do when its expenses threaten to outstrip income? Hence when it looked like its fiscal math was too difficult to manage, the government seems to have hit upon a new reserve, called the Reserve Bank of India. The latest string of arguments from the government including tweets of the economic affairs secretary suggest that the government …

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 …

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 …

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 …

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-Centre tiff has economists worried
6 years, 2 months ago

RBI-Centre tiff has economists worried

Deccan Chronicle  

Hyderabad: With the stand-off over the RBI’s autonomy reaching its fever pitch, economists advised caution as the showdown between them on a host of issues, including a proposal to dip into the central bank’s reserves, could impact the economy. “The stand-off is over three issues — namely the government’s proposal to wean away RBI’s regulatory powers over payments bank and …

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 …

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 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 …

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 …

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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