RBI governor's 10 prescription for a better apex bank

Central banks through out the world have been blamed for extraordinary economic crises over years

The Reserve Bank of India (RBI) should become a "knowledge institution" to respond to the changing global economic scenario, said D Subbarao, Governor of RBI.

In the last five years, the world has gone through an extraordinary economic crisis, and central banks around the world were blamed for what happened. As a result, Central banks across the world will have to go through a remarkable change.

“There has been a rigorous debate going on across the world, including India, about the autonomy and accountability of central banks,” he said. What has come out clearly now is that central bank should not confine itself to monitory policy, and must go beyond that. 

Addressing a huge gathering at the RBI Staff College in Chennai on the occasion of its Golden Jubilee Celebrations, he said the RBI should become attentive to the global happenings and cannot operate from the Ivory Tower anymore.

Elaborating on this theory of becoming a knowledge institution, he gave 10 attributes for the central bank to be future ready, to facilitate itself to transform knowledge into wisdom.

The attributes he listed were: RBI should learn to manage policy in a globalising world. The recent global and Euro crisis have demonstrated this sufficiently; the central bank should be able to make intelligent, mature and balanced judgement; the regulator should have open mind in order to learn from every happening; it must generate knowledge, it should be open, communicative and consultative; must aim at extensive outreach; must take accountability seriously; think positive; and be driven by values and ethics.

He said the RBI will soon come up with a code of ethics to follow.

Earlier, justifying the RBIs decision to allow corporates into the banking system, he said it was necessitated by the changing global economic situation. “It was in the best national interest,” he said.