Govt respects RBI autonomy: FinMin

United Forum of Reserve Bank Officers and Employees said employees were feeling humiliated

Refuting allegations of interference by the Reserve Bank of India (RBI) employees’ union, the finance ministry on Saturday said the government fully respects the independence and autonomy of the central bank.

“Consultations between the government and RBI are undertaken on various matters of public importance wherever such consultation is mandated by law or has evolved as a practice. Consultations mandated by law or as evolved by practice should not be taken as infringement of autonomy of RBI,” the ministry said in a statement.

The United Forum of Reserve Bank Officers and Employees, in a letter to RBI Governor Urjit Patel, had said employees were feeling “humiliated” by events since demonetisation and alleged that the government has been impinging on the central bank’s autonomy by appointing an official for currency coordination.

Prime Minister Narendra Modi had announced the demonetisation of old Rs 500 and Rs 1,000 notes on November 8 last year. The last date to deposit old currency in banks was December 31.

The letter from the RBI employees’ union had said, “Apart from showing RBI operations and its gigantic performance in a poor light, the government is now blatantly encroaching its jurisdiction, which we cannot accept.” 

“It is categorically stated that the government fully respects independence and autonomy of the Reserve Bank of India,” the finance ministry said on Saturday.

The union raised the issue after at least three former governors — Manmohan Singh (also former prime minister), Bimal Jalan and Y V Reddy — flagged concerns about the central bank’s functioning. Former deputy governors, including Usha Thorat and K C Chakrabarty, too, have voiced their worries.

The letter said the RBI staff has carried out its job excellently after the move to ban 87 per cent of the outstanding currency by the government.