Government to run power play at next RBI board meeting: Sources

For all the cordiality on show at the end of Reserve Bank of India’s last board meeting, tensions could re-surface when it next gathers on December 14 as the government aims to ramp up pressure for changes in the way the central bank operates. A majority of the 18-member board, now stacked with government nominees, intends to press for reduced curbs on lending and governance changes that would give the board more say, according to three sources with direct knowledge of what was said when the board last met on Nov. 19. Like the government, most board members feel that RBI should be more transparent and accountable for its decisions, said one source, who was also aware of discussions held subsequently within the government. With a general election due by May, and voters concerned about weak farm incomes and whether enough jobs are being created, Modi is keen to stimulate the economy and is looking for the RBI to allow easier lending policies To speed along its transformation, the government has appointed experts from various fields, including accounting, technology and finance to the board. At its next meeting, it is likely to review how the central bank and the board engage, as well as the functioning of the sub-committees of the board, the sources said.

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