NEW DELHI: Refuting allegations of interference, 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.
“Commenting on the “mismanagement” since November 8 when demonetisation was announced and the criticism from different quarters that followed, the letter said, “Its (RBI’s) autonomy and image have been dented beyond repair,” an official of the All India Reserve Bank officers Association said.“We request the Governor of the RBI, its highest functionary and protector of its autonomy and prestige, to do the needful urgently to do away with this unwarranted interference from the Finance Ministry and assure the staff accordingly as the staff feels humiliated,” the letter added.
In a letter, they said the autonomy and image of the RBI has been “dented beyond repair” due to mismanagement and termed the appointment of a senior Finance Ministry official as a “blatant encroachment” of its exclusive turf of currency management.
“It is categorically stated that the government fully respects independence and autonomy of the Reserve Bank of India,” the finance ministry 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 nearly 86 per cent of the outstanding currency by the government.