Banking

RBI Employees Raise Concerns Over Finance Ministry Intervention in Central Bank Operations

In a letter to RBI governor Urjit Patel, the employee union says that the image of the central bank has been dented beyond repair.

RBI employee letter

New Delhi: Employees of the Reserve Bank of India (RBI), more specifically a forum calling itself the Union Forum of Reserve Bank Officers and Employees, have expressed concerns over the independence of the central bank in a letter to governor Urjit Patel.

An Economic Times report points out that the employee union letter slams the finance ministry’s decision to help “coordinate the central bank’s currency operations”.

“Our attention has been drawn to a recent news item that Finance Ministry sends Joint Secretary to coordinate RBI cash ops,” the letter starts.  “If true, this is most unfortunate and we take strong exception to this measure of the Government as impinging on RBI autonomy and its statutory as well its operational jurisdiction”.

The employee union also points out that for the past eight decades, the “RBI has managing the currency system of the country seamlessly and fulfilling its statutory responsibility”. It has been doing this, the letter says, perfectly well even after November 8, when demonetisation was announced.

“It is painful to note that the RBI has been criticised from many quarters for its ‘operational mismanagement’.  Its autonomy and image have been damaged beyond repair. Such critics include even former Governors…” the letter states.

In recent times, former RBI governors Y.V Reddy and D Subbarao have criticised the manner in which the RBI has handled the Modi government’s demonetisation move.

FinMin intervention

The RBI employee union, however, is particularly distressed by any potential intervention by the finance ministry. As it notes:

“Having put RBI in a quandary, now the Finance Ministry have placed their official, as reported, on RBI set-up to ‘coordinate’ allegedly. Apart from showing RBI in a bad light, the Government now blatantly encroaches on its jurisdiction which, we state strongly, we cannot accept.

The letter ends by requesting Patel to “please do the needful urgently to do away with this unwarranted interference from the Ministry of Finance, and assure the staff accordingly, as the staff feel humiliated”.

The letter is signed by AIRBEA general secretary Samir Ghosh, AIRBWF general secretary S. V. Mahadik, AIRBOA general secretary C. M. Paulsil and RBIOA general secretary R N Vatsa.