It is being reported that Union government has which issued three letters to the central bank in the last one month for consultation under Section 7 of the RBI Act on the issue of Non-Performing assets (NPA).
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Section 7 of the RBI Act empowers the central government to issue directions to the RBI in public interest.Section 7 has two parts — consultation and then issuing a direction to the RBI for taking some action in public interest.
This section has, however, never been invoked by the government so far.
Sources said while the communication from the government was for consultation under Section 7, no directions were issued.
It was speculated that if the government issued directions under this Section, RBI Governor Urjit Patel would quit as this would be seen to be infringing with the autonomy of RBI.
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