RBI Should Be Accountable to Parliament

RBI should be accountable to Parliament: K C Chakrabarty -Economic Times
When it comes to flagging issues of regulatory concern, no Reserve Bank of India deputy governor has been as outspoken as K C Chakrabarty, who is stepping down office on Friday - two months before his term ends. Besides several initiatives on consumer protection and bad loans, Chakrabarty has done work in the areas of cooperative banking, payment systems and currency management. In an interview with TOI, Chakrabarty speaks of how he sees the role of a central banker.

What do you think are the issues for voters this election?

The issues are different for different voters. I can only say that any government which can deliver on governance and give us growth and stability should be selected. Each party says they are going to do that. Policy manifesto wise, I don't think there is any problem. But we are apolitical and we feel all parties are good.

So how does a central banker ensure independence?

Ultimately the central bank is created by the government ... by Parliament. How can I say we will be a separate country? We are not talking about independence, it is about autonomy and I don't think that is a big issue. Today, we have more autonomy and we have less accountability. Ideally, the central bank should be accountable to Parliament. In our system, accountability to Parliament is manifested through the ( finance) ministry. Whether we should make a change in that is something that society has to debate Globally, in mature democracies, the accountability of the central bank to society is through Parliament.

When it comes to accountability, should it be on a single point like inflation?

That is more effective. If you do 10 things you are not doing anything. You can have a matrix, but all areas should have specific parameters. But if in this structure you do not deliver in any one area, it will be considered a failure. Ideally, there is only one goal. But if you have a good monitoring mechanism and good capacity you can have 10 goals.

When 70% of banking is owned by the government, can RBI be independent?
Our policy framework is decided by the government. Within that framework RBI is the regulator. I have no problem if the government decides on regulation, but in that case they should say that the RBI should not do regulation supervision. Also, if the owner is allowed to regulate, what about private banks? That is why we . 

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