Ahead of Tuesday’s first quarter review of the Annual Policy Statement, the Reserve Bank of India governor today met Finance Minister Pranab Mukherjee and other senior officials in North Block.
“Our policy review is scheduled for Tuesday. As is the standard practice, I came to review the macroeconomic situation with the Finance Minister,” Subbarao told reporters after the meeting, that lasted around 40 minutes.
The governor spent over an hour in North Block. He first met Finance Secretary Ashok Chawla for approximately 15 minutes before meeting Mukherjee. Omita Paul, advisor to the finance minister, Financial Services Secretary R Gopalan and Chawla also joined the governor in Mukherjee’s room.
After the meeting with the finance minister, Subbarao and Gopalan headed back to Chawla’s room where they held a brief discussion. However, neither the governor nor Subbarao commented on what happened during the meetings. “What we will do, you will get to know on July 27,” Subbarao said.
He refused to comment on the Securities and Insurance Laws (Amendment and Validation) Ordinance, on which RBI had raised concerns. Among other things, the Ordinance has mandated the establishment of a joint mechanism headed by the finance minister, which will resolve regulatory disputes related to hybrid financial products.
The other financial sector regulators have been proposed to be appointed as members. Subbarao wrote to Mukherjee earlier this month, suggesting that the Ordinance be allowed to lapse as it impacts regulatory autonomy. Instead, RBI wanted that the existing high-level coordination committee on financial markets, headed by the governor, be the forum for regulatory coordination.
Ten days ago, Subbarao had told reporters in New Delhi that he met the finance minister in connection with the Ordinance and that RBI had certain reservations and concerns.
