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RBI needs to be accountable but government is not the right body to direct central bank, says Ananth Narayan

Updated : December 14, 2018 08:55 PM IST

The 25th governor of the Reserve Bank of India (RBI), Shaktikanta Das, chaired his first board meeting on Friday. Although it was the second such meeting of the board in less than a month, the members discussed various issues that have been a point of contention between the central bank and the government.

The board discussed issues pertaining to governance framework and global and domestic challenges, but it completely steered clear of the prompt corrective action (PCA) framework.

On the approach of the new governor in the meeting, RBI board member Sachin Chaturvedi said that Das brought a conciliatory approach and listened to everyone’s opinions.

“He gave chance to everyone to speak, which I think is absolutely democratic in terms of getting everyone along. So that was very widely appreciated in the board. Everybody enjoyed interacting with him," Chaturvedi said.

Ananth Narayan, professor, SPJIMR, said RBI should be accountable, but the government is not the right body to direct the central bank.

“RBI needs to be accountable and we need to have a lot of scrutiny on things that it has done. I am pretty sure that the government is not the right body to direct the RBI to do things. There are different compulsions involved and we have to find a way of getting back to a neutral RBI,” Narayan said.
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