RBI Is More Than Autonomous, But Government Is The Sovereign: Governor Shaktikanta Das

Asserting that the Reserve Bank of India is more than autonomous, Governor Shaktikanta Das said though the central bank engages with the government in free and frank discussions, there is no interference from it when it comes to making decisions.

Das said the differences of opinion between the government and the monetary authority happens in all the countries as the perspectives are different, but it is essential to discuss, talk and resolve the differences.

He said there has to be exchanges of ideas and explaining one's position to the other is necessary as it creates a harmonious and healthy relationship. The conversations with the government cannot be stopped because the government is the sovereign and the RBI is part of the sovereign, he underlined.

“The RBI is not a cheerleader for anyone but people who say the central bank should not be a cheerleader for the government, I have one question: 'Do you expect the central bank to go on lecturing and abusing the government on the economy?” Das wondered aloud.

There will be differences of opinions, there is a difference of opinion between the RBI and the government on several issues but we do talk and these discussions are internally, he said.

“If at the drop of a hat, I rush to the media and make a statement expressing my differences with the government, then what it is going to achieve,” Das said, adding that it is desirable that such expression of dissent is done internally.

“In fact, let me may tell you when you have such discussions, the central bank carries greater weight in getting things which it wants to get done,” the governor said.

It can be recalled that during the tenors of the past two governors—Raghuram Rajan and Urjit Patel—the differences between the government and the Mint Road began to spill onto the public domain. This had both of them leaving and also the deputy governor Viral Acharya.

On Bank Mergers

RBI is in discussions with the government to ensure that the mega bank merger process is carried out in a non-disruptive manner, governor Das said.

Last month, the government had announced the creation of four large state-run banks by merging ten of them. This will take down the number of total state-owned banks to 12 from the 19 by April.

"This is an issue which is also being discussed between the government and the RBI so as to ensure that the entire process of transition is non-disruptive," Das said the event.

The governor said the transition has to be non- disruptive in terms of credit disbursements, loan repayments, loan collections and all other functions of banking should not be affected.

Of the 10 banks getting merged, only a few of them have so far received the board mandate and none of them have moved the RBI seeking approvals.