NEW DELHI: A day ahead of the meeting of the board of directors of the Reserve Bank of India, Senior congress leader and former finance minister P Chidambaram has said the Government seemed determined to 'capture' RBI in order to gain control over the reserves.
''November 19 will be a day of reckoning for central bank independence and the Indian economy. Government is determined to 'capture' RBI in order to gain control over the reserves. The other so-called disagreements are only a smokescreen,'' Mr Chidambaram said in a series of tweets late on Saturday night.
Mr Chidambaram said that it was a preposterous idea to suggest that private business persons will direct the Governor. ''Nowhere in the world is the central bank a Board-managed Company. To suggest that private business persons will direct the Governor is a preposterous idea,'' Mr Chidambaram said.
The crucial meeting of the RBI board of directors on November 19 comes in wake of differences between the RBI and the government over a host of issues including the economic capital framework, capital adequacy, stringent rules relating to prompt corrective action (PCA) and availability of liquidity for MSMEs.
The biggest point of contention between the two is how much reserve is good enough for RBI to meet financial emergencies and whether any cut in 'surplus' reserves can be used to support the economy. The opposition Congress has alleged that the government is seeking to transfer Rs 3.6 lakh crore from RBI, which would be one-third of the reserves, in a bid to meet its fiscal deficit target.
The government has, however, denied media reports suggesting that it sought transfer of Rs 3.6 lakh crore from RBI.The Finance Ministry has said it wants to discuss and fix an appropriate economic capital framework with the central bank.