Government respects RBI's autonomy and independence: FinMin

A day after the employee unions of the Reserve Bank of India expressed their resentment against alleged interference of the government in the central bank's affairs, the Finance Ministry on Saturday said that it fully respects its autonomy.

"It is categorically stated that the government fully respects the independence and autonomy of the Reserve Bank of India (RBI)," Finance Ministry said in a statement here.

"Consultations between the government and the 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 statement said.

The Finance Ministry's reaction comes after some unions alleged infringement of the autonomy of the RBI by the Centre.

The RBI employees on Friday had shot off a letter to RBI Governor Urjit Patel expressing concern over alleged interference by the central government.

The letter asked the Governor whether a recent media report, according to which the Finance Ministry had deputed a Joint Secretary-level officer to the RBI to oversee its currency chest operations, was true.

"If true, this is most unfortunate and we take strong exception to this measure of the government as impinging on the RBI's autonomy and its statutory as well as operational jurisdiction," the letter read.

"Having put RBI in a quandary, now the Finance Ministry has placed their official, as reported, on RBI set-up to 'co-ordinate', allegedly. Apart from showing RBI operations and its gigantic performance in poor light, the government now blatantly encroaches on its jurisdiction, which, we state strongly, we cannot accept."

"We want to state very categorically that RBI is fully capable 'to co-ordinate the central bank's currency chest operations', which RBI have been performing over decades, and we do not need any 'assistance' from anywhere," the employees wrote.

The employee unions pointed out that the criticism faced by the RBI for alleged operational mismanagement during the recently-concluded demonetisation drive has dented its image 'beyond repair'.

"It is painful to note that RBI is being criticised from many quarters for its 'operational mismanagement', by the press and many important personalities. Its autonomy and image have been dented beyond repair," the letter stated.

"Such critics include even former RBI Governors. An image of efficiency and independence that RBI assiduously built up over decades by the strenuous effort of its staff and judicious policy making has gone into smithereens in no time. We feel extremely pained, we reiterate," it added.

The unions also requested the RBI Governor to protect the central bank's autonomy and prestige.

--IANS

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