Government fully respects independence and autonomy of RBI: Finance Ministry

The Finance Ministry on Saturday answered over RBI's employee union allegation, stating that the government completely respect the central bank's independency and autonomy.

It said in a release, "There has been a report in sections of the Press that some unions have alleged infringement of the autonomy of the Reserve Bank of India.  It is categorically stated that the Government fully respects the independence and autonomy of the Reserve Bank of India."

Further it added, "Consultations between the Government and the RBI are undertaken on various matters of public importance wherever such consultation is mandated by law or has evolved as a practice. Consultations mandated by law or as evolved by practice should not be taken as infringement of autonomy of RBI."

In a letter dated January 13, 2017 to Urjit Patel governor of RBI, the employees union said, they were feeling "humiliated" by events since demonetisation and alleged that the government has been impinging on the central bank's autonomy by appointing an official for currency coordination.

The letter said they were criticised despite carrying out the "humongous task" of replacing the old bills.

The union raised the issue after at least three former governors -- Manmohan Singh (former prime minister), Bimal Jalan and Y V Reddy -- flagged concerns about the central bank's functioning. Former deputy governors, including Usha Thorat and K C Chakrabarty too have voiced their worries.

The letter said the RBI staff has carried out its job excellently after the move to ban 87 per cent of the outstanding currency by the government. 

On November 08, 2016, Modi-led panel announced demonetisation of high-denomination currency Rs 500 and Rs 1000 in a move to curb black money and terror financing. 

(With Inputs from PTI.)