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Highhandedness : RBI governor should work with govt or quit, says RSS

New Delhi : In an aggressive call to toe in line, RSS said that that governor of autonomous apex bank should work in sync with the government or quit the post.

It is the latest outburst over friction brewing between the Centre and Reserve Bank of India for some time.

The head of economic wing of RSS made the remark during an interview on Wednesday. He elaborated saying,  the RBI governor has to support govt in its efforts towards economic growth.

Urjit Patel, should also “restrain his officials from making differences public” RSS office bearer Ashwani Mahajan said.

RSS has been largely critical of RBI’s hawkish stance and its wary of foreign trained economists including former RBI governor Rahuram Rajan and former chief economic advisor at the finance ministry Arvind Subramanian.

There were reports earlier of Centre mulling to invoke never-before-used Sec 7 to issue directions for governor to act on.

The backdrop
The govt and RBI has been fighting it out on a few issues for a while. While govt believes the central bank should ease lending rules for the 11 banks under prompt corrective action(PCA) framework, RBI stands its ground that such flexibility would undo clean-up efforts done so far.

It all started with IL&FS default on loans from non-banking financing companies(NBFCs)  sending the sector clamouring for liquidity. Though the lenders approached RBI for eased liquidity, the apex bank maintained that the banking system did not witness any spike in borrowing costs and the market was just repricing risk in an evolving situation.

 

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