The Hindu Business Line : Review of RBI Act

Next April, the Reserve Bank of India (RBI) will complete 70 years of existence. Over the years its functions have undergone dramatic changes. From the historic developmental responsibility it discharged in the early years after freedom it has come back to its original role of regulation.

In the meantime there have been fundamental and revolutionary ideas on the theory and practice of central banking floating in the world. At one extreme, Milton Friedman wants the central bank to be abolished altogether.

Then there are experts who would like it to be downsized in view of liberalisation and deregulation. At the other extreme are those asking for its further strengthening with prudential powers exactly for the same reason.

The RBI Act, 1934 was revisited in a piecemeal fashion from time to time in the past and Amendments made to implement the recommendations of various committees.

However, no comprehensive review of the Bank's functions has ever been attempted.

Other developing countries such as The Philippines and Sierra Leone have enacted new legislation for their central banks.

It is time for the Indian Government to appoint a high-powered Commission to go into the functions and working of the RBI and propose a new law to replace the existing one.

A. Seshan

e-mail

Letters to the editor and contributions can be sent by e-mail to: bleditor@thehindu.co.in

More Stories on : Letters | RBI & Other Central Banks

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
RBI's gentle squeeze

Trends in patent and trademark law

Stock taking by the Plan panel

Tasks before the Twelfth Finance Commission — A tough balancing act indeed

Distress from stress

Index funds do not really lower risks

Investors, frogs and Yellowstone effect

Review of RBI Act

Trade policy