The need for RBI being made accountable

The article is very well written and has convincingly argued to fix accountability of RBI to the people of India for their fortunes and now the misfortunes. The RBI's core functions and additional functions are by and large carried out to the best of its professionalism and are presented before the Parliament and the Parliament Standing Committee on Finance.No doubt, RBI's functions often give rise to conflict of interest and this results perhaps in the necessity for fixing accountability for RBI.The reasons are not far to seek in making RBI working perhaps not in the interests of bringing in economic inequity. The RBI does not enjoy the autonomy as it deserves as a full fledged Central Bank. All its Directors are appointed by the Central government and they are not expected to dissent from the thinking of the Ministry of Finance or the Government. Unlike many Central Banks of the world, RBI has been entrusted with the responsibility of rural development by statute and other developmental functions apart from core Central Banking functions. Though NABARD has been set up exclusively for Agriculture and Rural Development, RBI has not been relieved of the development of agriculture and rural development. The Financial Inclusion cannot be the exclusive responsibility of RBI where the involvement of State, central and other agencies have an active role and responsibility taking into account the envisaged social and financial role of various financial institutions functioning both in rural and other areas. No doubt RBI has to be made accountable for its functions,but given the present circumstances,there are many aspects to be looked into taking into account the relationship between the RBI and the Government,the socio- economic conditions of the country and the general governance standards and accountability. The author's approach , however,deserves appreciation and a lot has to be done before the objective is set.

Dr.T.V.Gopalakrishnan

(This is in response to an article " RBI should be made accountable' that appeared in Money Life dated 18/10/13).