The Reserve Bank of India headquarters in Mumbai. Photo: AFP
The Reserve Bank of India headquarters in Mumbai. Photo: AFP

As the Indian central bank deliberates on governance in the wake of the recent shock exit of its governor Urjit Patel, deputy governor Viral Acharya has said that if the government wants to emulate the US or UK model, it will have to overhaul the Reserve Bank of India board.

Acharya said that if the RBI is to pattern itself after the Bank of England (BoE) or US Federal Reserve, the board will have to be reconstituted and members elected in such a way that there is no conflict of interest, The Economic Times reports.

A BoE director cannot have any financial or other interests that may restrict his or her ability to discharge the functions required of a member of the board. While US Fed board members represent various sectors, they cannot hold any other office during their terms or for two years thereafter.

Acharya voiced his views in the course of the discussion of RBI governance at last week’s board meeting.

Credit registry of small borrowers

Earlier at a public function in Mumbai, Acharya said that to ease the credit burdens of micro-businesses with loan amounts of up to 250 million rupees (US$3.5 million), the RBI should do it through a public credit registry rather than doling out money across the board.

The registry would provide banks the entire profile of each borrower, including past loan details, and also regular income flows. However, he also called for separate legislation to ensure the privacy of the borrowers.

The government has been applying pressure on the RBI to support small businesses hit by demonetization and the goods and services tax.