The Finance Ministry on Saturday said that it respected the autonomy of the Reserve Bank of India and the consultations offered during the recent demonetisation of high-value currency notes should not be seen as infringement. The ministry’s statement comes after an employees’ union of the central bank wrote to Governor Urjit Patel requesting him to urgently “do away with unwarranted interference from the Finance Ministry”, ANI reported on Saturday.
After demonetisation, the Reserve Bank of India’s image has been “dented beyond repair”, the United Forum of Reserve Bank Officers and Employees wrote in the letter addressed to Patel. “It is painful to note that the RBI is being criticised by many quarters for its ‘operational mismanagement, by the press and many important personalities,” the forum said, according to The Indian Express. It represents three RBI unions, which include more than 18,000 employees of the central bank.
The employees also criticised the appointment of a senior Finance Ministry official to the RBI, calling it a “blatant encroachment” upon its management. Without mentioning a name, the unions emphasised that the reserve bank had not asked the ministry official to be a part of its functions, and that the government imposing itself on the RBI was unacceptable.
“The image of efficiency and independence that RBI had assiduously built up over decades by the strenuous efforts of its staff and judicious policy-making has gone into smithereens in no time,” PTI quoted from the letter. The forum also highlighted the round-the-clock work put in by RBI employees to replace or exchange demonetised notes.
On November 8, Prime Minister Narendra Modi had announced that Rs 500 and Rs 1,000 bills will no longer be legal tender. The RBI has been facing flak for being unprepared to tackle the cash crunch that followed. On December 23, former prime minister and RBI governor Manmohan Singh had questioned whether the RBI was given sufficient time to deliberate over the government’s currency ban decision.