By CNBC-TV18 Nov 1, 2018 6:27:45 AM IST (Updated)
Government sources on Wednesday clarified that Section 7 of the Reserve Bank of India Act of 1934 had never been formally invoked, a conversation and consultation maybe on. However, the sources added that letters of consultation under Section 7 were invoked three times.
The clarification came after several news reports claimed that the government had invoked the section amid the ongoing feud between the centre and the central government.
Here is what Section 7 of the Reserve Bank of India Act of 1934 says:
The Section 7 of the RBI Act says, “The central government may from time to time give such directions to the bank as it may, after consultation with the governor of the bank, consider necessary in the public interest”, meaning the government, in consultation with RBI governor, can give direct orders to the central bank to go ahead and carry out its wishes in public interest.