Ignoring Union Finance Ministry pressures to divert significant portion of its reserves to rescue the government from it’s financial mess and also public sector banks from NPAs turmoil, Reserve Bank of India (RBI) asserted that they need to maintain high credit worthiness.
Answering several questions before the Parliamentary Standing Committee on Finance, headed by former union minister Veerappa Moily, he said that they requires to maintain the current level of currency reserves keeping in mind international volatility.
Attending the Committee meeting, in which former Prime Minister Manmohan Singh is also a member, he made it clear “These reserves are meant “for periods of stress and not for meeting normal needs”. Thus, he has indicated that there is no question of ment it ways due to government’s pressure.
The governor’s comments to the committee are significant as the Modi-led Central government and the RBI were in a bitter battle about the amount to reserves that need to be maintained by the Central Bank.
The governor had appeared in front of a panel to brief the demonetisation and non-performing assets (NPA) situation. The RBI has contended that a large part of the reserves — estimated at around Rs 9.7 lakh crore or around 28% of its assets — are notional and should not be touched.
Leaders of opposition parties like Congress and Trinamool Congress hurled many questions at the governor in the committee meeting over the RBI losing grip over its autonomy and its rift with the Centre. Patel will submit written responses for the questions within a week.