Government has right to nominate representative on RBI board, says Finance Secretary Rajiv Mehrishi

Defending the Finance Ministry's decision to nominate Additional Secretary on the board of RBI, Finance Secretary Rajiv Mehrishi on Monday said government has the right to decide who will represent it at the board meetings.

"I have only one point to make, surely the government has the right to decide who represents it," Mehrishi said when asked to comment on the recent government order.

"In exercise of the power conferred by clause (d) of sub-section (1) of Section 8 of the RBI Act 1934, the central government hereby nominates Ajay Tyagi, Additional Secretary (Investment) Department of Economic Affairs Ministry of Finance, to be director on the Central Board of Directors of RBI with immediate effect until further order vice Rajiv Mehrishi," a Finance Ministry notification of June 22 said.

As per the RBI website, there are 17 board members including RBI Governor and four Deputy Governors. Finance Secretary Rajiv Mehrishi's name is part of the central board of directors as reflected on the website.

However, in a clarification, the RBI spokesperson said that Ajay Tyagi has not been appointed official director on the central bank's board.

"The understanding with the Finance Ministry is that he would be a substitute for Mehrishi, the official director, only when he is unable to attend the board meeting," the spokesperson said.

Besides, Finance Secretary, Financial Services Secretary is the another senior government official on the board of RBI who represents government.