NEW DELHI: Amidst differences over regulation of money market between RBI and the government, the central bank today said there is a need to examine various related issues connected with issuance of public debt.
"Concern was expressed by.. I think, the (RBI) Governor had told about it that the timing (of issuance of G-Secs) and all related issues need to be examined. That's the only thing. Ultimately, there are reflections, implications of both of these things on the monetary policy," RBI Deputy Governor S S Mundra said.
The differences relate to proposal in the Finance Bill 2015 which seeks to shift money market regulation from RBI to Sebi.
Further probed on any other differences, Mundra said, "there is nothing like this. I think it is more of what the media perceives about it. It is a consultative process and it is a work in progress."
In the Budget speech Finance Minister Arun Jaitley had said: "We have concluded a Monetary Policy Framework Agreement with the RBI, as I had promised in my Budget Speech for 2014-15. This Framework clearly states the objective of keeping inflation below 6 per cent. We will move to amend the RBI Act this year, to provide for a Monetary Policy Committee."
Mundra said: "It's a budget declaration and more details have to be understood. Once those things are known then it will be discussed."
Further, it is reported that the central bank also has some reservations over a related budget proposal, establishing an independent public debt management office (PDMA).
On monetary policy framework, Mundra said, "view has been expressed earlier also that it needs to be discussed in detail. And the whole contour of what exactly is proposed is yet to be known."
Asked about cut in cash reserve ratio (CRR), he said "it would depend on evolving situation. But CRR or no CRR, you must have seen that RBI has taken several steps to manage liquidity in the market...I think we will take an evolutionary view and see how various instruments can be put into effective use."
CRR is the portion of deposits that banks have to compulsorily park with RBI. At the moment, CRR is at 4 per cent.
"If it (CRR) would have lost its relevance, then it would not have been there today...there can be several suggestions. We can't say that none of the surveys are without merit. Not at the same time all the suggestions can be accepted," he said on the sidelines of Skoch Summit here.
On fed rate hike, Mundra said: "certainly the country is better prepared to deal with this eventuality when it happens. Having said that this is an event which will have its own implications and we will be dealing with it."