Seems the RBI has relinquished its autonomy to Modi Government, claims JD(U)

Janata Dal (United) leader and former Rajya Sabha member Pavan Varma on Saturday said that it seemed as if the Reserve Bank of India (RBI) has relinquished its autonomy to the Centre by allowing bureaucrats from the finance ministry to oversee the demonetisation and remonetisation process at the central bank.

"The Reserve Bank of India is the central bank of the country. Now, there need not be an attitude or approach of confrontation with the democratically-elected Central Government, neither should the RBI and the government agree on everything. Essentially, the RBI must retain its autonomy to advise, formulate and recommend policy to the government. But in the case of demonetisation, the public perception about the RBI appears to be that it relinquished its autonomy in order to blindly toe the line as dictated to them by the Government. And this is what has come out too from the letter by the employees," Varma told ANI in an interview here.

"In addition, there was operational mismanagement. The RBI has a key role in implementing the decision. But it seems that the employees themselves feel the mismanagement," he added.

Earlier, in a strongly worded letter addressed to the RBI Governor Urjit Patel, the United Forum of Reserve Bank Officers and Employees had alleged that post the government's demonetisation move, the image of the Central bank was dented beyond repair.

"We request the Governor of the RBI, its highest functionary and protector of its autonomy and prestige, to do the needful urgently to do away with this unwarranted interference from the Finance Ministry and assure the staff accordingly as the staff feels humiliated," the letter had added.

It had also said that the autonomy and image of the RBI was 'dented beyond repair' due to mismanagement and termed the appointment of a senior Finance Ministry official as a 'blatant encroachment' of its exclusive turf of currency management.

The letter sought to draw attention to the RBI Act 1934, which stipulates that the central bank was constituted to 'regulate the issue of notes and keeping of reserves with a view to secure monetary stability in India' and generally, to operate the currency and credit system of the country.

The letter came days after concerns about the RBI's functioning being raised by Manmohan Singh (former prime minister), Y V Reddy and Bimal Jalan among others.