RBI GOVERNOR PATEL DRAWS VEIL OVER RIFT WITH MODI GOVT

The Reserve Bank of India (RBI) chief on Wednesday drew a veil over a public spat with the government, refusing to answer questions on a matter which had raised concerns that the central bank’s independence could be undermined.

Announcing policymakers’ decision to leave the central bank’s interest rates unchanged for now, governor Urjit Patel made clear he would not be drawn on a controversy that first blew up in October.

“I already said that I would avoid those questions because we’re here discussing the monetary policy committee resolution,” he told reporters at a press conference.

Patel’s reluctance to broach the subject was fairly typical for a central banker regarded as naturally reticent. Making his first media appearance since the row erupted, Patel brushed off questions from two reporters. “Is this related to the monetary policy committee resolution? I don’t think so. We’re here to discuss the monetary policy committee resolution and the macro economy,” Patel responded the second time he was pressed to comment.

The disagreements with Prime Minister Narendra Modi’s government do not involve monetary policy. Indeed, three of the six members of the MPC, chaired by Patel, are government nominees, and the decision to keep interest rates where they are was unanimous. However, the RBI also announced it would be lowering bank’s mandatory bond holdings, known as the statutory liquidity ratio (SLR), from the start of next year to persuade banks to lend more rather than park case in safe-haven government securities.

MUMBAI: