The rift between The Reserve Bank of India and the Centre has widened and could lead to the Reserve Bank of India (RBI) governor Urjit Patel considering resignation, some media reports have pointed out, citing sources.
There has been an irreversible breakdown between the RBI Governor Urjit Patel and the government, the media said, adding that all options were on the table. The RBI was not immediately available for comment.
Finance Minister Arun Jaitley himself held for the first time FSDC Meeting. Notably, yesterday, the high-level FSDC meeting chaired by Finance Minister Arun Jaitley discussed liquidity issues being faced by the non-banking financial companies, sources said. The meeting assumes significance as the FSDC is meeting for the first time after RBI Deputy Governor Viral Acharya raised the issues regarding independence of the central bank.
Unlike in the past, all the four RBI deputy governors attended Tuesday’s FSDC meeting along with Patel.
Headed by the finance minister, the Financial Stability and Development Council (FSDC) includes Reserve Bank Governor, Sebi Chairman, and heads of other regulators like PFRDA, IRDAI, and also Chairman of the Insolvency and Bankruptcy Board (IBBI).
Reserve Bank Governor Urjit Patel said the liquidity problem in NBFCs is not as severe as is being projected, but assured the government that it would ensure adequate liquidity in the system, sources said after the meeting.
Acharya in a speech on Friday had said that undermining the central bank’s independence could be “potentially catastrophic”.
He had also called for greater powers for RBI to regulate public sector banks as it seeks to clean up the banking system, saying that central bank’s independence was necessary to secure greater financial and macroeconomic stability.