Always respected, nurtured central bank's autonomy: FinMin amid RBI rift

Reserve Bank of India | File Photo
The autonomy of the central bank, within the framework of the RBI Act, is an essential and accepted government requirement, the Finance Ministry said on Wednesday amid a widening rift between the government and the Reserve Bank of India (RBI).

"Both the Government and the central bank, in their functioning, have to be guided by public interest and the requirements of the Indian economy," the Ministry said in a statement.

The note said extensive consultations on several issues take place between the government and the RBI, details of which are never disclosed by the government.

The statement came after reports said that RBI Governor Urjit Patel may consider resigning from his post given a breakdown in relations with the government.

CNBC-TV18 and ET Now cited sources as saying that Patel could quit.

Tensions between the RBI and the government have spilled into the public domain after Deputy Governor Viral Acharya said last week that undermining central bank independence could be "potentially catastrophic", indicating the authority is pushing back against government pressure to relax its policies and reduce its powers ahead of a general election due by May.

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