The government has issued “several” letters to the Reserve Bank of India initiating consultations under Section 7 of the RBI Act, said a person familiar with the matter. While consultations have been initiated under this provision, no directions have been given, said this person.
It reads: The Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public interest.
Section 7 of the RBI Act gives the government broad powers to give directions to the RBI in public interest. It has never been used by any government in the past.
The letters were issued at least a month before Deputy Governor Viral Acharaya gave a strong speech on central bank independence, the person said.
