Govt needs to hear RBI out, says top IMF economist

Washington, December 10 

The Indian government must heed the RBI’s message on financial stability, IMF’s Chief Economist Maurice Obstfeld has said, amid reports of friction between the central bank and the Finance Ministry over several issues, including how much capital the apex bank needs.

Addressing a group of journalists here on Sunday, he also said the International Monetary Fund (IMF) does not want politicians “manipulating” central banks for political ends.

“There is debate over whether it’s better for financial stability to be the remit of the central bank or an independent regulator...the UK in 1997, split them, then put them back together again,” he said.

“I’m not going to take a position on that...But I think...the central bank does have to be intimately concerned with financial stability to some degree and with the payment system,” he added.

In November, the RBI Board held a marathon meeting amid a rift between the central bank and the government over several issues, including how much capital the RBI needs, lending norms for SMEs and rules for weak banks. — PTI