It is heartening to note that the new Reserve Bank of India (RBI) Governor Shaktikanta Das spoke about protecting the core values, professionalism and autonomy of the central bank. But as they say, the proof of the pudding is in its eating. How things will unfold will depend on the view the RBI board takes on its governance structures (including the powers exercised by the committees of Central Board), the constitution, composition and agendas of the committees to look into the prompt corrective action framework and the economic capital framework, the issue of relaxing rules for power companies, the proposals to divest the central bank of its regulatory powers over payment systems.
While open and transparent communication with stakeholders is important, to totally subordinate the views of the central banks to those of the regulated entities and whom they lend to, will be unwise. Achievement of the short-term goals of stakeholders cannot take precedence over the longer-term interests of the financial system in particular and the economy in general. The operational autonomy of the central bank not only needs to be safeguarded but it should also be perceived to be protected.
Arun Pasricha New Delhi
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