New Regulations for RBI? Narendra Modi Government Set to Change Functioning of RBI, Say Reports
File image of the Reserve Bank of India (Photo Credits: PTI)

New Delhi, November 16: The government is likely to propose a new set of regulations for the functioning of the Reserve Bank of India (RBI) so that it can closely supervise the functioning of the Central Bank. Reports inform that the new regulations are believed to aim at making the RBI, a board-managed institution. According to a tweet by Bloomberg Quint, the government proposes changes to enable closer supervision of the RBI.

The Narendra Modi-led government recommends that the RBI board draft regulations will enable the setting up of panels, reports inform. The newly formed panels will then closely monitor the functions of the RBI including financial stability, monetary policy transmission and foreign exchange management. Finance Ministry Dismisses Charge of Seeking Rs 3.6 Lakh Crore From RBI, Says 'Govt's Fiscal Math on Track'.

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Reports inform that the government is likely to move to establish the authority of the RBI board via new regulations. As per details by the sources, the proposal could be discussed at the crucial RBI board meeting which is scheduled for Monday. They further added saying that these proposed changes may not need amendments to the RBI Act. Modi Govt Trying to 'Capture RBI' Ahead of Lok Sabha Polls, This Will Be 'Catastrophic': Chidambaram.

According to a tweet by CNN, Former RBI Governor C Rangarajan batted for RBI's autonomy and said that the Central Bank's board should only offer advice and not try to give governor directions. Rangarajan warned that the government will send wrong signals if it uses Section 7 of the RBI Act to get its way, which empowers the government to issue directions to the RBI Governor.

Taking a jibe at the Centre, West Bengal Chief Minister Mamata Banerjee on Friday accused the NDA government of destroying key Indian institutions such as the CBI and the RBI. Banerjee claimed that after the Lok Sabha elections, the saffron party that has made 'building statues' its poll agenda will itself be reduced to a statue. Raghuram Rajan on RBI vs Govt Feud: 'Autonomy of Central Bank Must be Respected'. 

In the recent past, tensions between the central bank and the government have escalated, with the Finance Ministry initiating discussions under the never-used-before Section 7 of the RBI Act which empowers the government to issue directions to the RBI Governor. On November 27, RBI Governor Urjit Patel is scheduled to appear before a parliamentary panel to brief it on various issues, including the stand-off with the government, status of the economy and demonetisation.