Economists criticise RBI move to outsource jobs

Economists warned that the new company floated by RBI could be a hunting ground for FIIs and other speculators.

The Reserve Bank of India's move to outsource jobs and functions to private parties was criticised by a section of economists saying that this would spell disaster for the national economy.

HT Image

Amiya Bagchi, Director of Institute of Development Studies, Kolkata, said the RBI could not be a copybook institution of central banks of countries like the US, UK and other developed countries.

The RBI, he said, could not absolve itself of the developmental role it played to the immense benefit of the country.

Referring to outsourcing of clearing operations, Bagchi warned that the new company floated by RBI could be a hunting ground for FIIs and other speculators.

Against the backdrop of impending capital account convertibility, which the government has asked RBI to prepare a roadmap, he said India might emerge as a favourite ground for illegal money laundering.

Ratan Khasnobis of the Calcutta University said management of foreign exchange operations would no longer remain a major function of RBI.

He said RBI would issue guidelines and the entire operation would be conducted by authorised dealers.

The economist also said supervisory role of RBI would gradually become weak.

Khasnobis said the Currency Board would replace RBI as the supplier of legal tender.