Conflict of interest

RBI should be allowed to withdraw its nominees in PSBs

The Union government’s decision to turn down the Reserve Bank of India’s (RBI’s) demand to remove its nominees on the boards of public sector banks (PSBs) is unfortunate. RBI Governor Urjit Patel has been repeatedly asking the finance ministry to allow the central bank to distance itself from the boards to avoid a clear conflict of interest. This is not a new demand. Even Mr Patel’s predecessor, Raghuram Rajan, asked for a similar shift during his stint. In August 2016, Mr Rajan wrote to the government arguing that the “RBI would perform a purely regulatory role, and withdraw its representatives