Rajan says RBI, government reach consensus on policy panel

MUMBAI (Reuters) - The central bank and government have reached a "broad consensus" on the composition of a rate-setting panel, the Reserve Bank Of India governor said on Tuesday, without specifying any details.

The government last month unveiled a much-criticised draft law that reduces the central bank's independence to set interest rates, by delegating rate-setting to a Monetary Policy Committee (MPC) - the majority of whose members will be appointed by New Delhi.

Based on the draft proposal, the Reserve Bank of India (RBI) governor would have no veto power over panel's decisions, though he did under an earlier version of the plan.

"Currently the situation is that the governor has a veto. All advice is only advice, ultimately the decision is the governor's, so if we continue to retain a veto. It doesn't change the current situation, it maintains the status quo," RBI Governor Raghuram Rajan said.

(Reporting by Suvashree Dey Choudhury, writring by Himank Sharma; Editing by Simon Cameron-Moore)