After staff cry foul, FinMin says ‘govt respects autonomy of RBI’

Refuting allegations of interference by an RBI union, the Finance Ministry on Saturday said the government fully respects independence and autonomy of the Reserve Bank of India.

“Consultations between the government and 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 ministry said in a statement.

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 demonetisation and alleged that the government has been impinging on the central bank’s autonomy by appointing an official for currency coordination. 

“It is categorically stated that the government fully respects independence and autonomy of the 

Reserve Bank of India,” the Finance Ministry said.

Various employee unions of the central bank have written to the RBI Governor to ask him to take action against the alleged “unwarranted interference” by the government.

In their letter to Patel, the union said they’ve read reports that say a joint secretary from the Finance Ministry is being sent to the RBI headquarters to coordinate currency operations.

“If true, this is most unfortunate and we take strong exception to this measure of the government as impinging on the RBI autonomy and its statutory as well as operational jurisdiction,” they said.

The union raised the issue after at least three former Governors — Manmohan Singh (former Prime Minister), Bimal Jalan and Y V Reddy — flagged concerns about the central bank’s functioning. Former deputy Governors, including Usha Thorat and K C Chakrabarty too have voiced their worries.

The letter 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.