Responsibility fulfilled

In part 2 of the series, the author argues that some changes made to the RBI board lack merit and examines the role of the central bank in regulating the payment and settlement system

Some changes have been made to the Reserve Bank of India (RBI)  board without adequate discussion. Since the inception of the RBI in 1935, the Act provided for only one government director on its board. It had also been specified that this director would be a nonvoting position. This provision is more important symbolically than in actual practice; in fact, votes are seldom resorted to in the functioning of RBI's board. Even without a formal vote the reality is that the government's representative always has an influential and effective voice in the board. The intention of this provision was to