Letters: Reviewing the RBI Act | Business Standard

Letters: Reviewing the RBI Act | Business Standard

It would be worthwhile to revisit the preamble of the Reserve Bank of India Act, 1934 which reads asunder: “An Act to constitute a Reserve Bank of India. Whereas it is expedient to constitute a Reserve Bank of India to regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage; And whereas in the present disorganization of the monetary systems of the world it is not possible to determine what will be suitable as a permanent basis for the Indian monetary system; But whereas it is expedient to make temporary provision on the basis of the existing monetary system, and to leave the question of the monetary standard best suited to India to be considered when the international monetary position has become sufficiently clear and stable to make it possible to frame permanent measures; It is hereby enacted as follows: -” Beyond some cut and paste, because of changes in the institutional structure in the financial sector or external policy compulsions, the RBI Act has not yet been subjected to the comprehensive review, envisaged in its preamble. FSLRC has also missed a ‘god-sent’ opportunity to do this long pending exercise by succumbing to ‘compulsions’. As legislative procedure and government action in the present scenario would be slow, it would be desirable for RBI itself to make an internal assessment of its responsibilities in regard to monetary policy vis a vis various other additional responsibilities such as developmental role, institution-building and management of public debt thrust on it by history and come out with a discussion paper.


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