The recent showdown between the Reserve Bank of India (RBI) and the government of India (GOI) was unwarranted. The team of bureaucrats at the Ministry of Finance that was disturbed by the unpalatable attack by the Deputy Governor Viral Acharya on the government’s stand on the relaxation in prompt corrective action norms and restrictions on further lending and on a special liquidity window for non-banking financial corporations, must have advised their boss to assert himself. Finance Minister Arun Jaitley questioned the RBI Governor Urjit Patel on why the regulator failed to arrest the ballooning corporate debt and mounting non-performing assets.
The writing on the walls is quite clear and both the parties who are contributors in equal measure or in slightly differing measures, are entangled in a war of words instead of fighting together to overcome the alarming situation with many public sector banks in deep red. It sounds nice when the GOI is equated to a T20 match and the RBI to a test match. But that does not offer a true picture. The ruling party can continue to rule until ousted.
It must be remembered that the governor and the deputy governors of the RBI can continue in their position as long as they enjoy the confidence of the government in power. It is not clear why the RBI does not take a leaf out of Life Insurance Corporation of India’s book, a behemoth ready to bail out IDBI, IL&FS without an iota of resistance. The RBI should not try to be more royal than the king himself. It should learn to exercise restraint. Let not the RBI governor and his deputies forget that the governor is but an adviser to the GOI.
Ramanath Nakhate Mumbai
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