Urjit Patel's resignation: What RBI, Modi govt locked horns over

During Urjit Patel's tenure as governor, RBI had run-ins with the government on numerous issues

During Urjit Patel’s tenure as governor, the Reserve Bank of India had run-ins with the government on a number of issues. Here are some of the instances: 

Financial Resolution and Deposit Insurance Bill 2017

Govt: Proposed a resolution corporation for financial firms in distress

RBI: Opposed various provisions, including the role of the corporation to avoid conflicts of jurisdiction

Economic capital framework

Govt: Review rules to allow RBI to part with more surplus funds to the government

RBI:  Need a strong balance sheet to perform critical functions

Chairperson of Economic capital framework

Govt: Batted for former RBI governor Bimal Jalan

RBI:  Wanted ex-RBI deputy governor Rakesh Mohan as the panel head

Regulatory powers over public, private banks

Govt: RBI has wide-ranging powers over PSBs

RBI:  Regulatory powers over PSBs weaker than over private banks

Regulatory capital norms

Govt: Align them with global norms

RBI: Important to continue; any slack will be harmful

NBFC liquidity

Govt: Provide special refinance window and take other measures

RBI: Not a systematic issue; no need to act as lender of last resort for NBFCs
 

February 12 circular on NPAs

Govt: Dilute the norms to help power firms

RBI: No relaxation; duty-bound to resolve stressed assets in a time-bound manner

Norms for payments system

Govt:Proposed an independent payments regulatory board

RBI:Released a dissent note to say the board must remain within overall structure of RBI

RBI nominee on PSB boards

Govt: Gives us comfort

RBI: Our presence on boards is a conflict of interest 

Governance reform in RBI

Govt: Need for participation of independent directors to ensure meetings are not closed doors

RBI: Governance structure robust; proposed minimal changes from its end

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