Skip to main content

Draft financial code not last word on veto power

By
The finance ministry on Friday sought to downplay a contentious suggestion by a government- appointed committee about taking away the veto power of the Reserve Bank of India governor in the proposed monetary policy committee ( MPC).
It also highlighted the point that the committee was appointed by the previous United Progressive Alliance government and the incumbent one had common ground with the RBI governor on veto power.
The consultation paper on the Indian Financial Code was not the last word on the RBI’s powers, said a senior finance ministry official. Other sources said the ministry had broad understanding with the RBI governor on veto rights.
The government had no intention of diluting the power or autonomy of the RBI, they said. They also underscored the point that a decision to grant veto power to the governor would be taken at the " highest" level.
On Thursday, a revised draft by the Financial Sector Legislative Reforms Commission ( FSLRC) was put up on the finance ministry site. The draft suggested the RBI governor should not have veto power in the seven- member committee on fixing the policy interest rate to target inflation.
This was a departure from its earlier draft that had proposed entrusting the power to the governor in case of a conflict with the majority view.
"Decisions in a meeting of the monetary policy committee must be taken by a majority vote of the members present and voting," the revised draft said. The decisions would be binding and the central bank must form a committee to decide the rate, it suggested.
In case of a tie, the governor will have a second and casting vote. Five members are required for a quorum.
At present, the RBI governor consults a technical advisory committee, but does not necessarily go by the majority opinion while deciding on the monetary policy stance.
The sources in the finance ministry said the issue had been misinterpreted.
They said the earlier government had constituted the committee, which had now put up a revised report. This government had not done anything out of pique against the RBI governor, they pointed out.
Business Standard, New Delhi, 25th July 2015

Comments

Post a Comment

Popular posts from this blog

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By
  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm
Post a Comment
Read more

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep
Post a Comment
Read more

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

By
  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and
Post a Comment
Read more