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Former RBI deputy Governor KC Chakrabarty passed away

Our Bureau Mumbai | Updated on March 26, 2021

Former Reserve Bank of India (RBI) Deputy Governor (DG) KC Chakrabarty passed away in Mumbai on Friday due to a heart attack. He was 69.

An outspoken and witty commercial banker, Chakrabarty was elevated as RBI DG in 2009 after being at the helm of Punjab National Bank from 2007 to 2009.

Prior to taking charge of PNB, he was Chairman & Managing Director of Indian Bank for two years. He was also the Chairman of the Indian Banks’ Association (IBA) for a brief period.

In a speech at the 2013 Bankers’ Conference (BANCON), he chastised Bankers that it was during the pre-crisis years (when Banks with higher credit growth in 2004-08 ended up with higher growth in non-performing assets during 2008-13 period) that deficiencies in credit appraisal crept in, credit monitoring was neglected and recovery efforts slowed.

“Evidence suggests that the banks were not taking adequate cognisance of the build-up of leverage while sanctioning or renewing limits….Ironically, the banks were found to be lending more to sectors that had high impairments, pointing to possible lacunae in credit appraisal standards. Restructuring was extended to companies that were facing larger problems of over-leverage and inadequate profitability pointing to possible lack of due diligence in assessing viability while restructuring,” Chakrabarty said in his speech.

He observed that public sector banks suffer from some structural deficiencies related to the management and governance arrangements. Instances of lax credit management (credit appraisal, credit supervision, etc.) and poor governance and management standards which, though persisting even before the crisis, were not dealt with in time and eventually impacted much more emphatically than was anticipated.

A Doctorate in Statistics from the Banaras Hindu University (BHU), Chakrabarty started his career in teaching and research at BHU and later joined Bank of Baroda, where he rose to the position of General Manager.

His comments on combating inflation in 2010 reportedly did not go down well with the Governor. He was banker who did not pull any punches.

Chakrabarty abruptly put in his papers about two months ahead (April 25, 2014) of the completion of his five-year term at RBI (June 15, 2014).

Published on March 26, 2021

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