RBI autonomy 'Essential', states Finance Ministry

The Finance Ministry of India on Wednesday said that the autonomy of the Reserve Bank of India (RBI) was ‘essential’ to put a break in the row between the Central Bank and the government. "The autonomy of the central bank, within the framework of the RBI Act, is an essential and accepted governance requirement," the ministry said in a statement.

“Governments in India have nurtured and respected this,” the statement further said.

"Both the government and the central bank, in their functioning, have to be guided by public interest and the requirements of the Indian economy. For the purpose, extensive consultations on several issues take place between the government and the RBI from time to time. This is equally true of all other regulators."

“Government of India has never made public the subject matter of those consultations. Only the final decisions taken are communicated. The government, through these consultations, places its assessment on issues and suggests possible solutions. The government will continue to do so," the statement said.

The latest statement came after speculations and reports said that the RBI governor Urjit Patel was on the brink of stepping down from his role by resigning following the breakdown in relations with the government.