The statement issued on Monday by the RBI Employees Union + asking the government to "desist" from curbing the central bank's autonomy has, however, raised eyebrows in the Capital's corridors of power.
Many in the government believe the union was put up to it and view it as an act of provocation.
Read also: Tensions between Patel-led RBI, government reach reach boiling point
Interestingly, finance minister Arun Jaitley and Patel are scheduled to meet on Tuesday at a meeting of the Financial Stability & Development Council.
A senior government official told TOI, "Starting with the speech of deputy governor Viral Acharya + and the unnecessary statement allegedly on behalf of employees, we have been witnessing a case of unilateral aggression. But we have decided not to rise to the bait as the need is to steady the boat in view of the challenges confronting the economy."
Muscle-flexing by some ind directors irks RBI bosses
Saying he was intrigued by the RBI "eruption", the government official added, "It is baffling because all the divergences and differences which have been portrayed as triggers have been debated for months. They are part of a regular government-central bank dynamic and could not have been catalysts for the statements we're now seeing."
Given that its differences with the RBI have acquired a political dimension with the Congress accusing the government + of interference, the government has, at least for the moment, decided to remain "strategically silent". But its unhappiness with RBI's "indifference to market reality" has been an open secret for over a year.
From the RBI side, some senior officials said the leadership of the central bank has been unhappy with the muscle-flexing by certain independent members of the board, especially S Gurumurthy, who has been goading it to increase flow of funds to small and medium enterprises by improving liquidity of non-banking finance companies (NBFCs). Gurumurthy, one of the leading lights of the RSS-affiliate SJM , has also made a case for easing the rules for prompt corrective action that have placed lending and expansion curbs on "weaker banks" at a time when the government is keen to rev up credit.
RBI and the government have been at odds over a host of issues — from interest rates to ensuring adequate fund availability for classification of weak banks. Acharya's attack on the government last week is being widely seen as a public escalation of tensions.
Government officials made it clear the Centre would take all possible measures to ensure that the overall economy was not impacted for want of funds. "The government has moved on its own on several issues such as IL&FS (where the board was superseded). We will also take steps to address the liquidity concerns of NBFCs," a top official said.
from Times of India https://ift.tt/2CMrdBn
