Rahuram Rajan defends RBI deputy governor against Modi government's interference

Lloyd Doyle
November 7, 2018

RBI Governor Urjit Patel might resign from his position on November 19 due to health issues and the ongoing spat with the government, reports suggested.

"That's how much the PM needs from the RBI to fix the mess his genius economic theories have created. Protect the nation", he tweeted and also posted the media report.

However, the government is of the view that the RBI has over-estimated its capital reserves requirements resulting in an excess capital of Rs 3.6 lakh crore.

After a civil war broke out in the CBI, the cage has reached another autonomous institution, RBI, wherein the standoff between the government and the central bank has traversed the headlines of the newspapers.

"If this were to fructify, this would tantamount to the great Indian robbery", the former Union minister said.


However, he said, that the bank should not give more than the profit as dividend accounting to the government, advice which was echoed by accountants, as its role to ensure credit worthiness and printing money has made it "tough to give away dividend", the report added.

Talking about the government's intentions, Tewari alleged the reasons for such a move can be found in the economic data put out by the ministry of finance showing fiscal deficit and the current account deficit were mounting on a daily basis.

Unidentified officials said the government proposed to use the excess capital in consultation with the RBI to recapitalise public sector banks, help them expand their loan books and come out of the Prompt Corrective Action framework. The Opposition party claimed that this action sparked a constitutional crisis in the country, forcing Argentina to seek a $50-billion bailout from the International Monetary Fund.

The rift between the RBI and the Modi government turned ugly after Patel's deputy, Viral Acharya, said last week that attempts to undermine the central bank's autonomy could prove to be 'potentially catastrophic'.

Other reports by Iphone Fresh

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