RBI must understand its mandate in a broader sense: FM

Says the central bank must also look at larger mandate of growth and creation of jobs

In a veiled message to the Reserve Bank, Finance Minister P Chidambaram has hinted that it should not focus solely on containing inflation but also look at the larger mandate of growth and creation of jobs.

Ahead of his meeting with PSU bank chiefs tomorrow, he also said banks would have to be heard before advising them on taking a balanced view about passing on the benefit of rate cuts to consumers.

"RBI must understand its mandate in a broader sense. Yes, RBI's mandate is price stability, containing inflation and maintaining fiscal stability but that must be understood as part of a larger mandate of growth and creation of jobs," he told PTI.

He was replying to a question on what he expected from RBI in the next policy review scheduled on July 30.

On at least a couple of occasions, Chidambaram had not hidden his unhappiness over the hawkish stance adopted by RBI Governor D Subbarao over meagre interest rate cuts.

"I think all central bankers talk in very ambiguous terms but this I think there is nothing wrong in the statement," Chidambaram said in reply to a question on the recent statement by Fed Chief Ben Bernanke which had led to spooking of markets across emerging economies.

To a question on banks not passing on rate cut benefits to borrowers, Chidambaram said, "We must also hear the side of the bankers. While the case of the consumers, the borrowers is a very strong case, for the bankers also they put a equally strong case.

"It is after hearing them then the government would have to advise the public sector banks to take a balanced view".