Review the RBI - A.Seshan
The Reserve Bank of India Act 1934 has completed 80 years. Although it has been amended from time to time taking into account the recommendations of many committees and commissions appointed for various purposes there has been no comprehensive enquiry into its working with a view to replacing it with a new law in consonance with modern and recent trends in central banking. Meanwhile, many countries have enacted new laws to replace the old ones relating to their central banks. Such aspects as the objectives of monetary policy, autonomy, and role vis-à-vis other regulatory bodies need to be looked at afresh in the Indian context. The Financial Sector Legislative Reforms Commission has made some important recommendations that need to be taken into account. A commission with a view to formulating new legislation headed by a former finance minister or RBI governor on the review of the working of the Central bank could be announced in the Budget speech.
1 comment:
This is a timely suggestion.
It would be worthwhile to revisit the preamble of the Reserve Bank of India Act, 1934 which reads asunder:
“An Act to constitute a Reserve Bank of India.
Whereas it is expedient to constitute a Reserve Bank of India to regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage;
And whereas in the present disorganization of the monetary systems of the world it is not possible to determine what will be suitable as a permanent basis for the Indian monetary system;
But whereas it is expedient to make temporary provision on the basis of the existing monetary system, and to leave the question of the monetary standard best suited to India to be considered when the international monetary position has become sufficiently clear and stable to make it possible to frame permanent measures;
It is hereby enacted as follows: -”
Beyond some cut and paste, because of changes in the institutional structure in the financial sector or external policy compulsions, the RBI Act has not yet been subjected to the comprehensive review, envisaged in its preamble.
Post a Comment