November 16, 2018 / 3:22 PM / in 7 months

Government wants committees to oversee RBI, Bloomberg reports

A Reserve Bank of India (RBI) logo is seen at the gate of its office in New Delhi, India, November 9, 2018. REUTERS/Altaf Hussain

MUMBAI (Reuters) - India’s government is seeking to form panels to monitor functions of the Reserve Bank of India (RBI), Bloomberg reported on Friday, citing people with knowledge of the matter, which could escalate tensions between the finance ministry and the bank.

The government of Prime Minister Narendra Modi has proposed that the board of the RBI draft regulations that will enable it to set up committees to monitor tasks such as financial stability, monetary policy transmission and foreign exchange management, the report added.

Each panel might consist of two to three members of the RBI’s central board, which includes representatives of the finance ministry, senior company executives and some economists close to Modi’s ruling nationalist party.

The RBI and India’s finance ministry did not immediately respond to requests for comment.

The board meets on Monday, amid government pressure on the RBI to relax lending curbs and hand over surplus reserves to the government.

New Delhi and the RBI are getting close to ironing out some of their policy differences, two sources told Reuters this week, as they seek to defuse tensions that had threatened to unnerve investors.

RBI Governor Urjit Patel is scheduled to appear before a parliamentary committee on Nov. 27 in New Delhi, where he is likely to face questions on the differences with the government, a panel member said, declining to be named.

Reporting by Sankalp Phartiyal; Editing by Krishna N. Das, Larry King

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