A day before the crucial board meeting of the Reserve Bank of India, Congress leader and former Finance Minister P. Chidambaram alleged on Sunday that the government was “determined to capture” the central bank to gain control over its reserves.
In a series of tweets, he said that Monday would be a day of reckoning for the central bank’s independence and India’s economy. “Government is determined to ‘capture’ RBI in order to gain control over the reserves. The other so-called disagreements are only a smokescreen,” he said.
“Nowhere in the world is the central bank a board-managed company. To suggest that private business persons will direct the Governor is a preposterous idea,” he said. “November 19 will be a day of reckoning for central bank independence and the Indian economy.”
The Finance Ministry and the RBI have had differences over the past few weeks. Reports suggested that the government was exploring ways of utilising a third of the RBI’s reserves of ₹9.59 lakh crore, and wanted the norms eased for banks with poor balance sheets and liquidity.
On November 9, the government denied that it was asking the RBI for its reserves, but maintained that discussions were under way on the “appropriate size of capital reserves” that the central bank maintains. “There is no proposal to ask the RBI to transfer ₹3.6 or ₹1 lakh crore, as speculated,” Economic Affairs Secretary Subhash Chandra Garg had tweeted.