Mumbai: A Reserve Bank of India employees union has written to Governor Urjit Patel objecting to a finance ministry move to send a joint secretary to coordinate cash operations at the central bank.
Bloomberg Quint first reported this on Friday night. According to a copy of the letter posted on its web site, the United Forum of Reserve Bank Officers and Employees has called this move “unfortunate” and that it “impinged on RBI autonomy and its statutory as well as operational jurisdiction”, in a strongly worded letter to the governor.
The letter also highlights that RBI Act 1934 empowers the central bank to regulate the issue of bank notes.
“Right from 1935, for more than eight decades, RBI has been managing the currency system of the country seamlessly and fulfilling its statuary responsibility,” the letter said.
“RBI has developed technologically perfected, expanded the system with more than 4000 currency chests and about the same number of coin vaults,” the letter added.
RBI has come under a lot of flak after the government decided to invalidate Rs500 and Rs1,000 bank notes, about 86% of the country’s currency in circulation. Its role in the decision making process and its preparedness have come under question with the central bank putting out at least 60 notifications in the first 50 days, some often reversing earlier decisions.
In their letter, the unions said that “it is painful to note that RBI is being criticised from many quarters for its operational management.”
They said that the central bank’s “autonomy and image have been dented beyond repair.”
The letter comes at a time when former Governors Y.V. Reddy and Bimal Jalan also raised concerns about the eroding autonomy of the central bank. Y.V. Reddy said in an interview that RBI’s autonomy had been eroded and that recent criticism by global rating agencies now threatens to compromise the central bank’s hard-earned reputation.
“An image of efficiency and independence that RBI assiduously built up over decades by the strenuous efforts of its staff and judicious policy making has gone into smithereens in no time”, noted the letter.
The letter also criticized the finance ministry which has “imposed itself on RBI, which is absolutely unacceptable and deplorable.”
“May we request you that as the Governor of RBI, its highest functionary and protector of its autonomy and prestige, you will please do the needful urgently to do away with this unwarranted interference from the ministry of finance and assure accordingly as the staff feel humiliated,” said letter.