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RBI trying to improve governance of private banks, but RBI’s own Governing Central Board remains empty

Summary:
RBI released further norms to improve governance in Private and foreign banks, which is welcome. However, RBI’s own governance is bit of a problem. RBI also announced that Mr Ajay Seth, Secretary, Department of Economic Affairs, has been nominated on RBI Central Board as a replacement for Tarun Bajaj. Curious, one glanced at RBI’s Central Board and saw just 11 of the 21 positions are occupied: Names and addresses of the Central Board of Directors of the Reserve Bank of India (as seen on 29 Apr 2021) 1. Shri Shaktikanta Das Governor @7. Shri Natarajan Chandrasekaran 2. Shri Mahesh Kumar Jain Deputy Governor @8. Shri Satish Kashinath Marathe 3. Dr. M. D. Patra Deputy Governor @9. Shri Swaminathan Gurumurthy 4. Shri M. Rajeshwar Rao Deputy Governor #10. Shri Debasish Panda *5. Ms.

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RBI released further norms to improve governance in Private and foreign banks, which is welcome.

However, RBI’s own governance is bit of a problem.

RBI also announced that Mr Ajay Seth, Secretary, Department of Economic Affairs, has been nominated on RBI Central Board as a replacement for Tarun Bajaj.

Curious, one glanced at RBI’s Central Board and saw just 11 of the 21 positions are occupied:

Names and addresses of the Central Board of Directors of the Reserve Bank of India (as seen on 29 Apr 2021)
1. Shri Shaktikanta Das
Governor
@7. Shri Natarajan Chandrasekaran
2. Shri Mahesh Kumar Jain
Deputy Governor
@8. Shri Satish Kashinath Marathe
3. Dr. M. D. Patra
Deputy Governor
@9. Shri Swaminathan Gurumurthy
4. Shri M. Rajeshwar Rao
Deputy Governor
#10. Shri Debasish Panda
*5. Ms. Revathy Iyer #11. Shri Ajay Seth
*6. Prof. Sachin Chaturvedi

This number is again closer to the eventful night of 8 November 2016.

One understands it is tough time for these positions to be filled. But these vacancies are known well in advance. AT the time of its annual report in Aug-2020, the Board had 15 members. Since then following have retired from the Board:

  • Prasanna Kumar Mohanty
  • Dilip S. Shanghvi
  • Ashok Gulati
  • Manish Sabharwal

RBI informs when a new member is appointed. Likewise, RBI should inform which member’s tenure is over. So that we know this position needs to be filled.

The central bank needs guidance to run the economy in such tough times and needs more helping hands. Instead we see the opposite. Another Deputy Governor (B.P. Kanungo) retired and no appointment was done. Though, the position of the two government nominees on the RBI Board seldom remains vacant..

Amol Agrawal
I am currently pursuing my PhD in economics. I have work-ex of nearly 10 years with most of those years spent figuring economic research in Mumbai’s financial sector.

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