Letter to BS: RBI should take Monetary Policy Committee into confidence

RBI has to not only take MPC into confidence but has to see if ultimately the purpose of providing relief to the ailing sectors is served

The editorial “Policy credibility” (April 30) rightly highlights the role of the Monetary Policy Committee (MPC) in ensuring financial stability. Quick measures needed to fight the coronavirus pandemic can be off track, but in the digital age nothing stops the central bank from holding an emergency MPC meet for consultation during this unusual situation. Pumping too much of liquidity through customised repo routes, reduction of reverse repo rate, and leaving the flow of funds to non-banks, trade and industry without corresponding relaxations in prudential norms are some of the measures that do not align well. While the Reserve Bank of India is forthcoming with relief measures, it has to not only take MPC into confidence but has to see if ultimately the purpose of providing relief to the ailing sectors is served.

K Srinivasa Rao  Hyderabad

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