NEW DELHI (TIP): In a move that may dilute powers of RBI chief, the government today proposed taking away his authority to veto the interest rate decision of the central bank’s monetary policy committee.

The revised draft of Indian Financial Code (IFC), released today by the Finance Ministry, has also proposed that the all-powerful committee would have four representatives of the government and only three from the central bank, including the ‘RBI Chairperson’.

The draft talks of ‘RBI Chairperson’ and not ‘RBI Governor’. RBI is headed by a Governor, at present.

The IFC, which is conceived as an overarching legislation for the financial sector, proposes a monetary policy committee which will be entrusted with the task of deciding the key policy rate and chasing the annual retail inflation target to be decided by the government in consultation with RBI. “Inflation target for each financial year will be determined in terms of the Consumer Price Index (CPI) by the Central Government in consultation with the Reserve Bank every three years,” said the draft on which the Finance Ministry has invited comments till August 8.