The Reserve Bank of India (RBI) has reallocated the portfolios of deputy governors, moving a major chunk of the responsibility to three of them.
Deputy governors Subir Gokarn, Usha Thorat and Shyamala Gopinath will get additional portfolios, which were until now under K C Chakrabarty, RBI said in a statement today. The central bank did not give any reason for the reshuffle and said the changes will be effective tomorrow.
Gokarn, who is in-charge of the monetary policy department, will also get human resources and department of administration and personnel management. Thorat will get rural planning and credit department, and urban banks. Shyamala Gopinath will get additional charge of payment and settlement.
Chakrabarty will continue to look after customer services, inspection, information and technology and the rajbhasha department.
The reshuffle follows a no-holds barred attack last week by a senior RBI official on the monetary policy announced by the bank. The official had criticised the policy before reporters just two days after its announcement, saying the country needed a more aggressive policy. He had said the current level of rates were woefully low, and if the central bank was serious about pulling down inflation from its current level, it should have raised the rates more.
RBI has re-allocated the portfolios of deputy governors for the first time since June 2009, after one of the deputy governors then, Rakesh Mohan, quit to pursue academic interests.
RBI Governor D Subbarao had then decided to keep some of Mohan’s portfolios, such as the monetary policy department and department of economic analysis and policy, with himself. Gokarn, who took charge as deputy governor of RBI in November, was given the portfolios Mohan was handling.
RBI has four deputy governors, of which two are promoted from within the bank. Of the remaining two, one comes from a commercial bank and the other is an economist. Chakrabarty is the commercial banker who headed Indian Bank and Punjab National Bank before joining the central bank in June 2009.
Theses two questions are posed to the senior RBI official, who said that the current level of rates was woefully low, and if the central bank was serious about pulling down inflation from its current level, it should have raised the rates more: (i) based on the fact that now (March 2010) Rs.790k crore of rupee in circulation, is backed mainly by Rs.745k crore of foreign securities, will it be prudent to withdraw the rupee and circulate foreign currency (an obvious, but small, loss is by way of interest income of RBI on the foreign securities) itself in India?, and (ii) based on another fact that the state-run banks account for about 70 per cent of all bank loans in the country, why RBI cannot effectively use the text-book solution of moral persuasion, as loans are drivers of deposit-growth?
Mr. Chakrabarty was right in stating that 0.255 increase in repo rate can in no way contain inflation. The RBI being the handmaiden of the Finance Ministry bowed to their diktats and did not not do the right thing by taking adequate measures to contain inflation. One person who talked the truth is now punished. It is in the name; RESEVE BANK is too reserved and does'nt serve the purpose for which it is created,viz, monetary and inflationary regulation.Instead, it plays to the tunes of the Finance Ministry and Governors are appointed from the cadre of Finance Ministry. What freedom of action can we expect from them?
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Deputy governors Subir Gokarn, Usha Thorat and Shyamala Gopinath will get additional portfolios, which were until now under K C Chakrabarty, RBI said in a statement today. The central bank did not give any reason for the reshuffle and said the changes will be effective tomorrow.
