Former Reserve Bank of India Governor has said that the power to decide on interest rates should be vested in RBI governor as the central bank is responsible to rein in inflation, media reported.
Commenting on the issue, Former RBI Governor C Rangarajan told the media, "Consistent with the new monetary policy framework, the responsibility and accountability to maintain inflation are with the Reserve Bank of India."
"Therefore, I would argue that a preferred alternative would be to have a monetary committee with a majority of members from RBI and then the question of veto would not arise. Then only the responsibility and accountability of RBI can be established," he added.
As per reports, the Government issued a revised draft of the Indian Financial Code (IFC) to propose a monetary policy committee headed by RBI 'chairperson' to decide on key interest rates by a majority vote. The draft has suggested to take away the veto power of the RBI governor while taking rate-related decisions.