Government respects and nurtures RBI’s autonomy:Fin Min

Reports on Wednesday, 31 October suggested that the government has issued “several” letters to the Reserve Bank of India initiating consultations under Section 7 of the RBI Act. The section allows it to issue directions to the central bank governor on matters of public interest.

The development comes amid a widening rift between the Modi government and Patel after the central bank’s Deputy Governor Viral V Acharya in a speech on Friday, 26 October, warned that undermining autonomy and independence of RBI could be “potentially catastrophic”.

In his strongest criticism of RBI yet, Finance Minister Arun Jaitley on Tuesday had hit out at the central bank for failing to check indiscriminate lending during 2008 and 2014 that has led to the present bad loan or NPA crisis in the banking industry.