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The Economic Times

RBI union moots a Collegium of experts to appoint governors and deputy governors to ensure central bank autonomy and independence

MUMBAI: Reporter: The Reserve Bank of India has proposed that a collegium of experts comprising former RBI governors, other prominent central bankers and economists should appoint governors and deputy governors and not the government as stipulated in the RBI Act.

The recent resignation by deputy governor, Viral Acharya at least six months before his term expired is the trigger for mooting such a proposal. “Such sensitive and important positions related to the central bank of the country must be decided not by a few ministry officials, not even by finance ministry himself, but by a collegium of experts comprising former RBI governors, other prominent central bankers and economists” said the All India Reserve Bank of India Employees Association in a media release issued on Tuesday.

Th union suspects that the deep differences between the government and the central bank impacted the autonomy and the independence of the central bank is the main cause of his early exit, though he cites personal reasons. Acharya, a member of the RBI’s monetary policy committee has more than once differed with other members of the committee including the governor in recent meetings. He has also opposed the case for dilution of prompt corrective action for public sector banks which is belived to have not gone well with the government.

Only such a body (collegium) can assess and judge the competence, knowledge and experience for the incumbents for such posts and only such appointments can ensure the neutrality, autonomy and independence of the central bank of the country and prevent undesirable political and purposive interference in such matters” the release said.

As per Section 8 of the RBI Act, 1934, the governors and the deputy governors are to be appointed by the central government.
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