RBI Governor Urjit Patel may not quit, resignation reports baseless

RBI Governor Urjit Patel may not quit, resignation reports baseless

RBI Governor Urjit Patel may not quit, resignation reports baseless

"For the objective, extensive consultations on several issues take place between the Government and the RBI from time to time", it added. Governments in India have nurtured and respected this.

In open letter, All India Reserve Bank Employees Association says govt must desist from nibbling at central bank's autonomy and let it do its job in an unfettered way, else it will incur the wrath of financial markets.

Acharya's speech comes after a long-running tug of war between the government and the RBI over whether the central bank should part with some of its Rs 3.6 lakh crore ($48.93 billion) reserves to fund the country's fiscal deficit. For the objective, extensive consultations on several issues take place between the government and the RBI from time to time. 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; their wiser counterparts who invest in central bank independence will enjoy lower costs of borrowing, the love of worldwide investors, and longer life spans.

A report by news agency Reuters said that Urjit Patel may consider resigning from his post given a breakdown in relations with the government headed by Prime Minister Narendra Modi.

"The autonomy for the Central Bank, within the framework of the RBI Act, is an essential and accepted governance requirement".

Finance ministry and RBI are said to have differed on the central bank's handling of weak public sector banks, tight liquidity in the market and ways of resolving bad loans in the power sector. "It shows that the government is hiding facts about the economy and is desperate", he said in a tweet.

"The government never makes public the subject matter of those consultations". "There have been talks with the RBI on these issues, but invoking Section 7 (1) is something that has not come up yet but we need to also ensure that industries are not killed", he added. "Only the final decisions taken are communicated", the statement said.

Jaitley had on Tuesday blamed the RBI for failing to stop a lending spree between 2008-2014 that left banks with huge bad debts, inflaming a row that recently erupted between the government and the central bank.

The government has cited the never-before-used power of issuing directions to RBI Governor to seek a resolution to differences with the central bank, sources with knowledge of the development said. "The Government will continue to do so", Finance Ministry statement said.

According to a media report, the government has invoked the never-before-used powers under the RBI Act allowing it to issue directions to the central bank governor on matters of public interest.

The former finance minister also attacked the government after it issued a statement to clarify things that are going on between itself and the RBI.

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