Cash Reserves For Periods of Stress, Not Govt’s Normal Need: Patel

RBI Governor Urjit Patel would give written responses on some controversial issues.

RBI Governor Urjit Patel. (Photo: Reuters)

Reserve Bank of India (RBI) Governor Urjit Patel on Tuesday, 27 November, told a parliamentary committee that in view of international volatility and to maintain creditworthiness, the current level of currency reserves held by the central bank is necessary.

As per a source, quoted by the Times of India, Patel said:

“These reserves are meant to be used during periods of stress and not for meeting normal needs.”

Urjit Patel, RBI Governor

In past few weeks, the RBI and the finance ministry were on different page over issues ranging from the appropriate size of reserves to be maintained by the central bank to easing of lending norms for small and medium enterprises.

Patel, who appeared before the Parliamentary Standing Committee on Finance, would give written responses on some of the controversial issues raised by the members, including the government citing never-used powers to get the central bank on the discussion table, said MPs who were present in the meeting.

The RBI governor, however, did not answer specific questions on the government considering using Section 7 of the RBI Act, NPAs, the autonomy of the central bank and other contentious issues, sources said.

"He stayed clear of controversial questions like government invoking special powers, instead he gave intelligent replies without saying anything," they said.

The RBI governor appeared before the panel days after the RBI's face-off with the finance ministry over issues ranging from the appropriate size of reserves to be maintained by the central bank to easing of lending norms for small and medium enterprises.

(With inputs from PTI and Times of India)