Autonomy of Reserve Bank 'essential', says finance ministry

Urjit Patel governor of the Reserve Bank of India at the spring meetings of the International Monetary Fund and World Bank in Washington D.C

This section has never been invoked in the history of independent India despite numerous clashes between the government and the RBI over the years.

The currency fell as much as 0.5 percent to 74.0575 per dollar on Wednesday, after the Economic Times reported that the government invoked a rarely-used power to direct the central bank on matters of public interest.

"Both government and the central bank, in their functioning, have to be guided by public interest and the requirements of the Indian economy".

Now, reports are coming that the Modi government might invoke never used before Section 7. Section 7 allows the govt to override RBI's autonomy.

Senior government officials said the RBI's guidelines on NPAs were not only stringent but "too harsh", and could have serious ramifications on industries such as MSME and power.

More news: New Emoji Are Coming to Your iPhone in the iOS 12.1 Update

Former finance minister Yashwant Sinha said RBI governor must resign if govt has issued directives to central bank.

Sources within the government and the RBI said that, over the last few months, the two sides had held discussions on various issues, including easing of norms under the prompt corrective action framework for weaker banks.

Backing the deputy governor, AIRBEA said that "Acharya had spoken more in disgust and despondency due to continuous nibbling by the government and the ministry of finance".

The development comes amidst growing rift between the centre and the central bank after the RBI deputy governor Viral Acharya, in a fiery speech, warned that undermining a central bank's independence could be "potentially catastrophic".

The letter, according to Firstpost, wanted RBI to carve out exemption for power companies under 12 February circular.

More news: Apple Expected to Unveil Updated iPad and Mac at New York Event

He added, "We did not invoke Section 7 in 1991 or 1997 or 2008 or 2013".

The autonomy of the Reserve Bank of India (RBI) is "essential" and an accepted governance requirement, the government said on Wednesday in a rare statement issued amid reports of a rift with the central bank. Second letter, the report added, was on using RBI's capital reserves and the third letter was on relaxing constraints on PCA banks for loans to SMEs. In particular, the central bank is not directly subject to political time pressures and the induced neglect of the future; by virtue of being nominated rather than elected, central bankers have horizons of decision-making that tend to be longer than that of governments, spanning election cycles or war periods.

"Only the final decisions taken are communicated".

After Finance Minister Arun Jaitley's scathing remarks on the Reserve Bank of India's "lending spree", Governor Urjit Patel may consider stepping down from the role, a CNBC-TV18 report said. "But it is quite worrisome to see the government trying to continuously interfere into the RBI's operations". "We appeal to all right-minded people and experts to speak out and persuade the government to amend, and let RBI do its jobs in an unfettered was as per statutes, mandates, practices".

More news: Khashoggi's fiancee declined Trump's invitation to the US

Related News:



Most liked

Steven Gerrard interrupts question for player to clarify "warning" for Rangers squad
After Celtic's win against Hearts on Sunday, the Hoops set up a clash with Aberdeen in this year's Betfred Cup final. McGinn said: "We just (discussed finding a way) to get in behind them a bit more".

Afghanistans Kandahar province votes a week late after police chief killed
Ibrahimi said 111 candidates were vying for 11 seats in Parliament from southern Kandahar in Afghanistan's 249-seat chamber. Around 300 people had been killed or injured last Saturday in the margin of the vote , according to a count by the AFP .

Angela Merkel Won't Seek Re-Election As Party Chair
The CDU result marks a huge drop from the 38.3 percent won by the party during Hesse's last election in 2013. The chancellor has indicated that she will seek another two-year term as CDU leader in December.

Cleveland Cavaliers Tickets Sold for Just $2 Before Tip-Off Wednesday
Drummond - who was ejected in the win over the 76ers - had 20 points and 20 rebounds through three quarters against Cleveland. Oklahoma led 50-34 at halftime after Boston had shot just 32 per cent and missed all 11 three-point attempts.

Trump says synagogue should have had armed guard to stop deadly shooting
The suspect is in custody and it is believed he acted alone. "Our nation and the world are shocked and stunned by the grief". At a political rally in Murphysboro, Illinois, Trump said "the evil anti-Semitic attack is an assault on all of us".

Too soon to say if shooting was racial attack
Bush's criminal record shows he threatened his ex-wife and punched a deputy sheriff during a family court hearing years ago. The report says Bush repeatedly unplugged the phone so they couldn't call police and fled the home with a handgun.

Strong 6.8 magnitude quake strikes off Greece
Greece suffers from thousands of earthquakes per year, due to the area lying on one of the world's most quake prone regions. The tremor was felt strongly throughout western Greece as far as Athens , as well as in Albania, Italy, Libya and Malta.

Knife-wielding woman injures 14 children in Chinese kindergarten
Nine students were killed at a middle school in Shaanxi province in April by a 28-year-old man who was later sentenced to death. The attack took place in the the city's outskirts as children were returning to classes, according to The Associated Press .

The White House Dismisses Report That Claims US President Has Three Cellphones
Lastly, Hua suggested "they should stop cut off contact with the outside". Mr Trump recently joked about the lack of mobile security.

Powerball numbers drawn for $750M jackpot, 4th largest in USA history
The Virginia Lottery said in a statement that the chances of matching the first five numbers in Mega Millions are 1 in 12,607,306. Patel says he has no idea who bought the winning ticket for Tuesday night's Mega Millions drawing.

Barcelona begin life without Messi as Inter visit Camp Nou
For a broken arm, the Argentinian for the first time in 11 years, will miss " El Clasico " encounter with real Madrid . Two more bookmakers estimated the victory of inter in this match 6.25.

Sri Lanka president suspends parliament amid political crisis
His regime refused to acknowledge war-era abuses, and bitter divisions between minority Tamils and majority Sinhalese persist. Sirisena, who was Rajapaksa's minister of health, broke away from him to contest the presidential elections.

Livescore: Latest Europa League result for Chelsea vs BATE Borisov
Damn the tactics, mentality, work rate etc etc etc that I keep hearing - bottom line, the boy scores goals, we need goals. Many feel that Patrice Evra is going to be appointed as the next director of football at Manchester United .

At least 800 troops to be sent to US-Mexico border
This comes as Defense Secretary James Mattis is expected to sign an order to send more troops to the southern border. Honduras has been governed by a military dictatorship since the 2009 coup, which was backed by the United States.

Trump Tweets, 'I Rarely Use a Cellphone,' From His iPhone
The Chinese are said to be using information picked up from monitoring Trump's calls to figure out who he listens to the most. Of course, it's not necessary to actually bug the president's phone if he's going to simply chat over an unsecured line.