The central board of Reserve Bank of India (RBI), which met first time under new Governor Shaktikanta Das, yesterday, has felt to further examine governance structure of the bank, before deciding on whether it can be board-driven. After the meeting, it said that the board deliberated on the governance framework of the Reserve Bank and it was decided that the matter required further examination.
RBI’s governance is a major bone of contention between the government and the bank, which led Urjit Patel to quit as RBI Governor on Monday. The government wants RBI to be driven by the board instead of the Governor, as is currently the case.
With non-technical people (non-economists) as Directors in the board of the central bank, the final word on any economic policy by the RBI is that of the Governor. However, the Central government wants the RBI Governor to be accountable to the board.
The board also reviewed other contentious issues like liquidity in the economy and credit in the market which soured the relationship between the government and the central bank over the past several months, with the government wanting the RBI to intervene.