RBI-government rift is out in the opentext_fields
New Delhi: The Centre is reportedly upset over RBI Deputy Governor Viral Acharya’s going public about the tussle between the government and the Reserve Bank of India.
Earlier Viral Acharya warned against undermining RBI’s independence as it would be “Potentially catastrophic”.
“ governments that do not respect central bank independence will sooner or later incur the wrath of financial markets, ignite economic fire, and come to rue the day they undermined an important regulatory institution” he was quoted as saying during his A D Shroff Memorial Lecture in Mumbai.
RBI Deputy Governor cited the example of Argentine government’s tinkering with its central bank showcasing what things could take to.
Officials who chose to remain anonymous reportedly said that the government wanted to keep things confidential. One official based in PMO office was quoted as dubbing the whole affair as “Very unfortunate”.
The standoff between RBI and the government triggered off after the government pressed RBI ease its lending restrictions on banks with a low capital base and huge uptick in bad debts.
It is reported that government officials called for the RBI to relax rending restrictions on certain banks.
Alongside, part of trimming up the RBI’s regulatory powers, the government had long been trying to set up a new regulator for the payment system.