The World Bank and the
earlier FSLRC strongly recommend that India transfer the Ministry of
Finance's (MoF) appellate power over the RBI to an independent
agency, specifically a specialized judicial tribunal like the proposed Financial
Sector Appellate Tribunal (FSAT). The core motivation is to ensure fairness,
transparency, and regulatory autonomy.
The current structure—where the MoF, part of the executive
branch, reviews the decisions of the RBI, the regulator it oversees—creates a
conflict of interest, as demonstrated by cases like HLL (Hindustan Lever
Limited) and UCB (urban cooperative bank). It compromised the RBI's
independence and the perceived fairness of the process. The current system
allows for an appeal to the central government (MoF) or a writ petition in the
High Court. It was argued that the appellate body should be a judicial
tribunal with specialized domain expertise in the complex world of
finance.
This transfer would mitigate the harmful concentration of
legislative, executive, and judicial powers (making rules, supervising, and
imposing penalties) within the RBI. Separately, some economists suggest a
deeper structural reform where the RBI focuses solely on monetary policy,
spinning off other functions into a unified agency, with all appeals then going
to a single FSAT.
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Link
- https://economictimes.indiatimes.com/prime/economy-and-policy/should-govt-give-up-its-appellate-power-over-rbi-to-a-sat-like-tribunal/primearticleshow/125458899.cms
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