New Delhi: Days after Viral Acharya, RBI’s Deputy Governor pitched for ‘effective independence’, All India Reserve Bank Employees Association (AIRBEA) on Monday expressed concern over his statements and sought autonomy of the apex bank.
“Undermining the country’s central bank was a recipe for disaster which the government must desist. Let the two talk and sort out the issues instead of the government trying to ride roughshod over the RBI, what they are trying at the expense of the nation,”said the association in a statement.
Notably, the RBI and the government have been apparently differing on approach to certain issues, such as those pertaining to payment systems regulator and Prompt Corrective Action (PAC) norms for banks.
Earlier on Friday, Acharya had asserted that governments that do not respect central bank’s independence would sooner or later incur the wrath of financial markets. “Undermining a central bank’s freedom could be ‘potentially catastrophic‘,” said Acharya while, delivering a hard-hitting speech in Mumbai.
“Wiser politicians will give a central bank necessary autonomy so that they reap electoral benefits of stable macroeconomic conditions which such independence will bring,”PTI had quoted Acharya as saying.
Acharya’s speech comes a week after the RBI decided to go public with its displeasure on who will regulate payment systems by posting a dissent note, and amid pressure from the government to relax the prompt corrective action (PCA) norms which restrict lenders’ activities for having high levels of dud assets and depleting capital reserves.
(With inputs from agencies)