The Finance Ministry has asked the Reserve Bank of India’s Deputy Governor Subir Gokarn to continue till December 31. His three-year term was scheduled to end on November 23.
The Financial Services Secretary D. K. Mittal announced his extension saying that there should not be vacancy. A search committee has been constituted to advise whether Gokarn will get another two-year term or there will be a new Deputy Governor.
The Reserve Bank of India Act of 1934 prescribes appointment of a Governor and a maximum of four Deputy Governors. All of them are appointed by the Central Government. One of these Deputy Governors is preferably from the category of eminent economists and Gokarn belongs to that category. The other three Deputy Governors are, K. C. Charabarty, Anand Sinha and H. R. Khan.
The Act also provides that the Governor and a Deputy Governor will hold office for term not exceeding five years as the Central Government may fix when appointing them, and will be eligible for reappointment.
Recently, Chakrabarty was reappointed for a further two years. The Governor and the Deputy Governors can continue till they attain the age of 62 years or until further orders.
Mittal also informed that the Finance Ministry will soon finalise on pumping additional money into state-run banks. This year the Budget provided for around Rs 15,000 crore for bank recapitalisation. Various banks, including State Bank of India, may be benefited by this move.
The Government is also considering a proposal for banks to issue rights shares worth Rs 15,000 crore to raise additional capital, Mittal added. The banks need to raise funds to increase lending and to meet new capital requirements under the Basel III rules that are being implemented in stages.
Though the Planning Commission had advised to defer this expenditure for next year, the Finance Minister P. Chidambaram, on November 15, had reaffirmed that the Government will infuse additional capital.
Among the various banks, Indian Overseas Bank, Central Bank of India, and Bank of Maharashtra will benefit from recapitalisation, he added.