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Traditionally, the board of directors of the RBI had a strong presence of prominent industrialists such as Ratan Tata, Narayana NR Murthy and Azim Premji. He also included highly indebted group leaders such as K P Singh of DLF and G M Rao of GMR Group. However, there has never been a conflict of interest as the details of banking regulation or monetary policy have never been addressed. This is because, so far, the RBI's board of directors has only given a general direction that the central bank should adopt.
But at the board of directors' meeting on October 23, it appears that some directors have spoken on certain rules of the RBI. According to a former senior central banker, there would be conflict of interest if these businessmen had prior information about the RBI's regulations. He reacted to reports that some directors wanted the RBI central council to play a more active and deliberate role on regulations. At the next meeting of the RBI's board of directors on November 19, the board of directors would like to impose five decisions, including issues such as regulatory forbearance and allowing fragile banks to lend.
Sources close to the central bank also point out that, contrary to the advice provided under The Companies Act, the RBI Act of 1934 confers on the governor powers conferred on him. They refer to Article 3 of Article 7 of the Human Rights Act, which is the subject of lively debate. While the first clause gives the government the power to give instructions to the RBI, the third part states that the governor shares the power.
This section 3 provides that "Except as otherwise provided by the regulations made by the central council, the governor and, in his absence, the deputy governor appointed by him in that office, he shall also have the power of general supervision and direction business and affairs of the bank, and may exercise all powers and perform all acts and actions that may be performed or performed by the bank. "One source said," The choice of words "will also have powers" indicates that they are competing the table. "
According to sources, the Governor's powers are recalled in the 1949 General Regulations of the Reserve Bank of India, which also addresses the issue of the conflict of interest between the decisions of the board of directors and the individual interests of directors. "You can imagine what would happen if a problem like the February 12 circular on the recognition of non-performing badets came under a board that included owners of heavily indebted companies," said a source.
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