Independent directors may take decisions if Govt-RBI standoff continues

Only the 11 independent directors are eligible to vote with the RBI governor having a second or casting vote in the event of a tie

The Reserve Bank of India’s (RBI’s) board meeting on November 19 will be one of the most anticipated events in the recent history of the central bank. Coming after a public stand-off between the government and the RBI for over a month, both sides will present their views on the problem areas.

At the core of the dispute are a few key issues. One, 11 public sector banks (PSBs) are under the RBI’s prompt corrective action, which curtails their lending ability. The finance ministry wants the RBI to relax some of the constraints. The government is also concerned about liquidity and wants the RBI to open a special refinance window for non-banking finance companies and mutual funds. The RBI’s dividend payment is also a bone of contention.

While Department of Economic Affairs Secretary Subhash Chandra Garg has clarified that the government is not asking RBI to transfer Rs 3.6 trillion or Rs 1 trillion, it is proposing to discuss and fix an appropriate economic capital framework, and excess reserves beyond the central bank’s requirements could then be transferred to the exchequer. There are also other concerns such as regulation of state-owned banks and setting up of a payment regulator, where the two sides are not aligned. The RBI, too, wants to remove its nominee directors from PSB boards, which it sees as an inherent conflict of interest, while the Centre wants it to supervise banks.

On October 26, RBI Deputy Governor Viral Acharya in his speech on protecting the central bank’s independence, said governments that do not respect it would incur the wrath of financial markets. The speech didn’t go down well with the government and Garg took a jibe a week later saying the rupee had appreciated against the dollar, crude oil had declined, stock markets were up 4 per cent in a week, and bond yields were below 7.8 per cent. He asked, “Wrath of the markets?”

Garg is expected to make a presentation to the RBI board on the government’s concern areas. If the two sides do not come to an agreement then some of the issues may be put to vote, perhaps the first time in the central bank’s history. The board composition then becomes relevant. Of the 18 board members, four RBI deputy governors and the two nominee government officials – Garg and Department of Financial Services Secretary Rajiv Kumar – cannot vote.

Only the 11 independent directors are eligible to vote with the RBI governor having a second or casting vote in the event of tie. Here's a closer look at the board members.

Members with voting rights

N Chandrasekaran

Chairman, Tata Sons

Appointed: March 2016

 

Before taking over as chairman of the country’s largest private sector group, Chandrasekaran was the MD and CEO of India’s largest company Tata Consultancy Services, and was also a board member on other group companies.

S Gurumurthy

Co-convener, Swadeshi Jagran Manch and editor, Thuglak

Appointed: August 2018

 

The torchbearer of “Bharatiya economics”, chartered accountant Gurumurthy, has provided policy inputs to the government as co-convener of the Swadeshi Jagran Manch, an economic think tank affiliated to the RSS, in the past four years. He has also been a journalist with the Indian Express.

Dilip S Shanghvi

Managing director of Sun Pharmaceutical Industries

Appointed: January 2018

 

Shanghvi heads one of India’s leading pharmaceutical companies. He is also a chairman of Sun Pharma Advanced Research Company.

Manish Sabharwal

Chairman and co-founder, Teamlease Services

Appointed: February 2017

 

Prior to Teamlease, Sabharwal had co-founded an HR outsourcing firm, which was acquired by Hewitt. As a member of the National Skill Mission and Central Advisory Board of Education, he has worked on several committees on education, employment and employability.

Sachin Chaturvedi

Director General, Research and Information System for Developing Countries

Appointed: October 2018

 

Chaturvedi was Global Justice Fellow at the MacMillan Center for International Affairs at Yale University. He was a consultant to the UN Food and Agriculture Organisation, UNESCO and OECD.

Bharat Doshi

Former executive director and group CFO, Mahindra & Mahindra

Appointed: March 2016

 

Doshi was a member of the RBI’s working group on NBFC and was also a member of the Committee on Comprehensive Financial Services for Small Businesses and Low-Income Households.

Satish Marathe

Former chairman, United Western Bank

Appointed: August 2018

 

Marathe is director of the National Cooperative Development Corporation member, executive committee of the National Council for Co-operative Training. Before United Western Bank, he was CEO of Janakalyan Sahakari Bank.

Sudhir Mankad

IAS officer

Appointed: March 2016

 

Mankad, former chief secretary of Gujarat, has worked in education and finance departments. He is chairman of the Gujarat Institute of Desert Ecology and the Indian Institute of Public Health.

Prasanna Kumar Mohanty

IAS officer

Appointed: January 2018

 

Mohanty was the last chief secretary of undivided Andhra Pradesh government, and was a secretary in the central government before that. He was the mission director for the Jawaharlal Nehru National Urban Renewal Mission, and has served on many expert government committees.

Revathy Iyer

Former Deputy, Comptroller & Auditor General (CAG)

Appointed: October 2018

 

Iyer joined the Indian Audit & Accounts Service and worked at the CAG for several years, responsible for auditing government accounts. Has also served as joint secretary in the Department of Atomic Energy.

Ashok Gulati

Economist, academic and policy adviser

Appointed: February 2017

 

Gulati is the Infosys Chair Professor for Agriculture at Indian Council for Research on International Economic Relations. He has served on Atal Bihari Vajpayee’s Economic Advisory Council.