.....The constitution of the country, as well as the RBI Act, envisions complete autonomy for the Reserve Bank of India, as the prime custodian of the monetary policy of the country to shield the economy from any fiasco, arising from political muddling or populism. Notwithstanding this constitutional safeguard against any political interference in the working of the RBI, the FM’s repeated assertions using the words such as, “in our (government’s) view, the government and monetary authority must point in the same direction and also walk in the same direction. As we take steps on the fiscal side, RBI should take steps on the monetary side” are altogether unwarranted and amount to constitutional impropriety. Even the Prime Minister had to intervene, though gently, on the side of the RBI and justify the autonomy enjoyed by the RBI......
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Statutory bodies like RBI should not be made subservient to the whims and fancies of officials in ministries for exercising the powers they are expected to exercise as part of their mandated functions. RBI has faced problems on such issues relating to banks earlier due to blurred clarity in powers and interpretation of law. Perhaps, RBI has learnt from the recent experiences while handling new generation private sector banks which did not survive and the interests of the clientele had to be protected by the regulator with GOI support.
Last ten years or so, RBI has been loitering around North Block for permission to continue a pension updation granted by RBI in exercise of powers available under Reserve Bank of India Pension Regulations which is being questioned by finance ministry which has interpreted the pension regulations differently. An amendment to RBI Pension Regulations made to conform to the GOI interpretation of the regulations is pending with finance ministry for more than a year. Such experiences too, can put RBI on guard while acting on trust.
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