Refuting allegations of interference by an union of Reserve Bank of India (RBI), the Finance Ministry on Saturday clarified that the Government fully respects independence and autonomy of the RBI. “It is categorically stated that the Government fully respects the independence and autonomy of the RBI,” Finance Ministry said in a statement here.
“Consultations between the Government and the RBI are undertaken on various matters of public importance wherever such consultation is mandated by law or has evolved as a practice. Consultations mandated by law or as evolved by practice should not be taken as infringement of autonomy of RBI,” the statement added.
The RBI employees’ union on Friday had shot off a letter to RBI Governor Urjit Patel expressing concern over alleged interference by the central Government. The Finance Ministry's immediate reaction comes after the union's alleged infringement of the autonomy of the central bank by the Centre. The letter asked the Governor whether a recent media report, according to which the Finance Ministry had deputed a Joint Secretary-level officer to the RBI to oversee its currency chest operations, was true.
“If true, this is most unfortunate and we take strong exception to this measure of the Government as impinging on the RBI’s autonomy and its statutory as well as operational jurisdiction,” the letter read. Post demonetization, the United Forum of Reserve Bank Officers and Employees in a letter to RBI Governor Urjit Patel had said employees were feeling 'humiliated' by events since November 8, 2016 and alleged that the Government has been impinging on the central bank's autonomy by appointing an official for currency coordination.
“We want to state very categorically that RBI is fully capable to 'co-ordinate' the central bank's currency chest operations, which the RBI has been performing over decades, and we do not need any 'assistance' from anywhere,” the employees wrote.
“Such critics include even former RBI Governors. An image of efficiency and independence that the RBI assiduously built up over decades by the strenuous effort of its staff and judicious policy making has gone into smithereens in no time. We feel extremely pained, we reiterate,” it added.
The letter also said the RBI staff has carried out its job excellently after the move to ban 87 per cent of the outstanding currency by the Government. The union also raised the issue after at least three former RBI Governors - Manmohan Singh (former Prime Minister), Bimal Jalan and YV Reddy - flagged concerns about the central bank's functioning. ex- Dy Governors, including Usha Thorat and K C Chakrabarty too have voiced their worries.