Saturday, September 1, 2007

#003 WHY RBI IS NEGLECTING ITS REGULATORY FUNCTIONS?

RBI jubiliantly announced that inflation rate during the week ended Aug. 18, 2007 was just 3.94%. It found that prices of fruits have gone down by 0.6%.

Does RBI know the grass roots and ground realities?

RBI's principal function is to enforce Banking Regulation Act and Reserve Bank of India Act. A Joint Hindu Family Business in Andhra Pradesh which is not authorised to collect deposits from public as per the law, mobilised nearly Rs. 2500 crore through its offices in more than one State and lost Rs. 1200 crore in accumulated losses. RBI did not know or did not chose to act! This may be function of a Department which is different from the Department which collects price statistics. But then, if there is

perfunctoriness in the main function itself, can we expect meticulousness where extreme exactitude is not expected?

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