Money & Banking

FinMin may amend RBI Act for appointing 5th Deputy Governor, COO

Shishir Sinha New Delhi | Updated on October 06, 2014 Published on October 06, 2014


Likely to move Bill during Budget session

The Finance Ministry is considering amendments to the RBI Act 1934 to enable the central bank appoint a fifth Deputy Governor and a Chief Operating Officer (COO).

Finance Ministry sources confirmed to BusinessLine that both the sides had reached an informal agreement to appoint a COO and create the post of a fifth Deputy Governor in the RBI, but with a condition.

“The condition is that COO would be from among the two Deputy Governors from the RBI’s quota, while the key criteria for appointment of fifth Deputy Governor would be a person with at least 25 years of experience in public administration and governance,” a senior Finance Ministry official said.

In order to formalise the arrangement, the Finance Ministry is likely to move a Bill to amend the RBI Act during the Budget session. Traditionally, two Deputy Governors are from the ranks of the RBI, one is an economist and the fourth one is from the commercial banking space. At present, among the four Deputy Governors, HR Khan and R Gandhi are from the ranks of the RBI, Urjit Patel is a well-known economist, while SS Mundra was earlier Chairman and Managing Director of Bank of Baroda.

There is feeling that 25-year experience criteria, if approved, will mainly help Indian Administrative Service (IAS) officers, as it is they who usually have such a qualification. However, even without this condition, there have been instances, such as that of YV Reddy (an IAS officer of 1964 batch), who served first as Deputy Governor (September 1996-August 2001 and September 2001-July 2002) and was then appointed Governor (September 2003-September 2008).

The COO’s appointment is part of the RBI’s human resources (HR) restructuring exercise. The proposal envisages grouping various departments into five clusters to be headed be a Deputy Governor.

The proposal also talks about creation of an additional position of a COO in the rank of Deputy Governor to head one of the five functional clusters.

On August 14, the RBI said that its board meeting on August 10 approved the broad contours of the proposals.

The board also asked the RBI to initiate a dialogue with the Government on the additional post of Deputy Governor and the legislative changes that would be required.

Published on October 06, 2014
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