Govt will not take away any 'significant' power of RBI, says Arun Jaitley

The simmering differences between the finance ministry and the Reserve Bank of India (RBI) over the proposal to dilute the Central bank's role in managing sale and purchase of government bonds in the market came to the fore again on Friday even as Union finance minister Arun Jaitley said that the government will not take away any "significant" power of the RBI and a clarification on its role in the regulation of bond market will be provided next month.

"Concern was expressed by... I think the (RBI) Governor had told about it that the timing (of issuance of GSecs) and all related issues need to be examined. That's the only thing. Ultimately, there are reflections, implications of both of these things on the monetary policy," RBI deputy governor S.S. Mundra said on the sidelines of Skoch Summit in the national capital.
Govt bonds, Sebi

The differences relate to the proposal in the Finance Bill 2015, which seeks to shift the government's debt management from the RBI to the Securities and Exchange Board of India (Sebi).

At the same time Mundra said that it is a consultative process and a work in progress.

Further probed on any other differences, Mundra said, "There is nothing like this. I think it is more of what the media perceives about it. It is a consultative process and it is a work in progress."

In the Budget speech, Jaitley had said, "We have concluded a Monetary Policy Framework Agreement with the RBI as I had promised in my Budget Speech for 2014-15. This Framework clearly states the objective of keeping inflation below six per cent. We will move to amend the RBI Act this year to provide for a Monetary Policy Committee."

Asked about the Budget proposal, Jaitley later said that a clarification on RBI's power to regulate will be provided during the debate on Finance Bill 2015 when Parliament reconvenes on April 20. "Whatever steps we take will be in consultation with the RBI. The RBI governor has been in touch with me," Jaitley told CNBC TV18.