Union minister Piyush Goyal talks on phone during the first day of the Winter Session of Parliament. (Source: PTI)

Top Indian Minister Slams Central Bank on Eve of Board Meeting

(Bloomberg) -- One of Prime Minister Narendra Modi’s top ministers accused India’s central bank of wielding power without accountability, hours before the new governor’s first board meeting.

Piyush Goyal, a railways minister who briefly held the finance portfolio, criticized the Reserve Bank of India for “drastically” changing a system for dealing with banks burdened by bad loans last year, without consulting the government.

Top Indian Minister Slams Central Bank on Eve of Board Meeting

In a series of tweets late Thursday, Goyal said the tightening of the Prompt Corrective Action framework amounted to “changing the rules of the game midway into the match” and highlighted that such a move “is not there anywhere in the world.” Eleven public-sector banks are subject to the PCA, which places strict curbs on their lending while they deal with soured debts.

“It is our duty to hold institutions accountable to the people of India,” Goyal said. “We need to know whether all the people are able to get loans from the banks easily, what is the liquidity situation in the country today.”

The tweets could deepen doubts about the central bank’s autonomy following the sudden resignation of its chief on Monday. Modi’s government has been putting pressure on the RBI to ease the lending restrictions and release more of its capital to bolster the economy.

Goyal also said the RBI’s reserves are “amongst the highest and are not being put to good use.”

New Governor Shaktikanta Das, a former bureaucrat who is expected to be more dovish on monetary policy than his predecessor, met the heads of Mumbai-based public-sector banks on Thursday. At the board meeting Friday, he and his colleagues are expected to discuss a government proposal for closer supervision of the central bank.

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