RBI Top Boss Urijit Patel Unhappy With Central Government’s Interference

0
322
khabarbar.com
Urijit Patel - RBI Governor

The trouble between the government and autonomous bodies seems to be far from being over.

On Friday, Reserve Bank of India’s Deputy Governor Viral Acharya had a public outburst. Incidentally this had been simmering for a while, however, Acharya chose to become vocal about the pressures being created by some recently-appointed non-official directors to the central bank’s board for MSME (Micro, Small and Medium Enterprises) forbearance and relaxation of the RBI’s prompt corrective action (PCA) framework for some banks to ensure better credit flow to stressed sectors.

Last week we thought it was only the deputy governor who has been disturbed by this kind of government interference. However, as per a latest article by BBC Hindi and TOI, reports of a drift between RBI Governor Urijit Patel and the Centre have surfaced today.

 

khabarbar.com

 

The report suggests that both the Governor and the Government have not been seeing eye to eye and have a host of issues which remain unresolved in the past one year. Also, there seems to be a complete breakdown of communication between the Central Bank and the Centre, as reported by TOI.

It is imperative to note that Viral Acharya was brought in by Urijit Patel himself, and the former’s dissent is a clear indication that all is not well between the RBI and Government of India. Clearly RBI is unhappy with the constant interference by the centre which does not leave any room for RBI to function as an autonomous body.

 

khabarbar.com
Viral Acharya – Deputy RBI Governor

 

Patel was appointed in September 2016 after Raghuram Rajan decided to move back to the US. Now with Patel’s non-co-operation with the government has raised serious doubts whether he will get any extension after his term ends in September 2019. TOI also stated that some in the government have now said that Rajan was better off than Patel even though he did not part on a good note with them.

2018 has been a year with never ending conflicts between the two and it only seems to have worsened. The initial cracks appeared when the government expressed their unhappiness when RBI not only did not cut rates but even raised them, spilling over into regulation, something the central bank believed as it’s exclusive domain.

 

ALSO READ – 

 

Demonetisation declared failure, 99.30% of Demonetised Money Returns To RBI

 

 

In February, RBI released a circular demonstrating classification of non-performing assets and norms of loan restructuring, which annoyed the centre to a great extent as they considered this ‘too harsh’.

Nirav Modi fraud was another tipping point, where RBI was blamed immediately. However, the central bank in return demanded more powers to oversee public sector banks so that they could be at par with private sector peers.

The Central Bank also refused the centre’s demand in bailing out the NBFCs due to a cash crunch after IL&FS defaulted on payment.

What infuriated the entire team at the RBI was the manner in which Nachiket Mor was removed from the RBI board more than two years before his term was to end. Also this exit was given to him without any formal intimation. This was Mor’s second term where he had been nominated by the government in 2017 for a period of four years.

khabarbar.com
S Gurumurthy

 

Recently appointed director and SJM activist, S Gurumurthy has been constantly pushing RBI’s intervention to help small businesses. Other government nominees also made a detailed presentation on the need to bring capital norms in line with global standards instead of making them more stringent.

Arun Jaitley, Finance Minister, on Saturday said that the stakeholders (read RBI) needed to have a wide range high quality discussion with all stake holders.

 

 

khabarbar.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here