Govt and RBI must resume consultations, instead of airing their differences

Independence of RBI as a regulator is vital and this can be easily undermined by such public display of differences

Last weekend, top officials in North Block, headquarters of the finance ministry, could not have had a peaceful sleep. Indeed, even senior officials in the Prime Minister’s Office must have been a little perturbed. The reason was a hard-hitting speech delivered last Friday by the deputy governor of the Reserve Bank of India, Viral Acharya.

Delivering the A D Shroff Memorial Lecture in Mumbai, Acharya said that in order to secure greater financial and macroeconomic stability, the RBI must have effective independence in its regulatory and supervisory powers over public sector banks, its balance-sheet strength and its regulatory scope. “Such