RBI vs govt: 18 wise men tasked with supervision of the Mint Street 


RBI vs govtThe 18 wise men tasked with supervision of the Mint Street

As an unprecedented fight plays out between the RBI and the government, it is the central bank’s 18 board members who are being keenly seeks for their next course of action — they are not only central bankers and government officials but also business leaders, economists, and activists. The RBI board is scheduled to meet next on November 19 between an ongoing tussle with the government on multiple fronts.

Going by the public utterances of the RBI and government officials so far, the contentious matters are how to manage the huge surplus the RBI has accumulated, how should it deal with errant lenders and borrowers amid a persisting bad loan crisis and what could be the ‘public interest’ for the government to dictate directions so that it is not seen as an attack on the central bank’s autonomy.

According to the RBI website, its central board presently has 18 members, though the provision is that it can go up to 21. The members comprise Governor Urjit Patel and his four deputies as ‘full-time official directors’, while the rest 13 have been nominated by the government, including two Finance Ministry officials — economic affairs secretary Subhash Chandra Garg and financial services secretary Rajiv Kumar.

There are also Swadeshi ideologue Swaminathan Gurumurthy and cooperative banker Satish Marathe, nominated by the government as “part-time non-official directors”. The entire board is chosen by the government under the RBI Act, which mandates the central board with “general superintendence and direction of the Reserve Bank’s affairs”.

The government can nominate 10 ‘non-official’ directors from several fields and two government officials. The four non-official directors are one each from the four regional boards of the RBI. Besides Patel, the four official directors are N S Vishwanathan and Viral Acharya, both of whom have gone public with their direct or indirect criticism of any attempt to undermine the RBI’s autonomy, as also B P Kanungo and M K Jain. Patel became Governor in September 2016 after serving as Deputy Governor since January 2013. Previously, he had served at the International Monetary Fund (IMF) and was also on deputation from the IMF to the RBI during 1996-1997.

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