RBI Dy Guv Kanungo may get extension; interviews to find successor nixed

The move comes at a time when the central bank is working on digital currency

In a fresh twist in the appointment process of deputy governor for the Reserve Bank of India (RBI), the government has cancelled the interviews for the selection, paving the way for incumbent Deputy Governor B P Kanungo's extension.

The interviews, scheduled for March 10, were postponed at the last minute. While 12 out of 13 executive directors, who were eligible for the interview, were called, five of them decided to opt out.

Now central banking sources indicate that the interviews have been cancelled. The selection process was initiated to find a replacement for Kanungo whose present term ends on April 1, 2020.

As a deputy governor, Kanungo looks after the department of currency management, payment and settlement, foreign exchange, among others. He was appointed deputy governor in 2017 for three years. His term was extended by one more year in 2020.

The extension of Kanungo's term is significant at a time when the government is planning to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 in the Parliament.

Finance Minister Nirmala Sitharaman’s recent comment that India is not shutting down all options and may allow a window for experiments on the blockchain or cryptocurrency, has cheered the industry as there were reports of a complete ban being imposed on cryptocurrency. RBI which has its often voiced its concern over cryptocurrency is now planning to launch its own digital currency. The central bank also said its digital currency will be different from cryptocurrency and that the benefits of blockchain technology need to be capitalised.

RBI has four deputy governors, of whom two are usually appointed from within the ranks of the central bank. Of the remaining two, one is a commercial banker and the other, an economist.

Currently, Deputy Governor M K Jain is a commercial banker. M D Patra, who is also from the central bank, is the economist deputy governor. M Rajeshwar Rao is the other deputy governor from within the ranks of the central bank, apart from Kanungo. Rao who was appointed in October last year, looks after the Department of Regulation, among others.

Jain, who looks after the Department of Supervision, was appointed in June 2018 for three years. His term will expire in June this year, and he is likely to get an extension.

RBI Governor Shaktikanta Das’ term will also come up for renewal this year. Das was appointed in December 2018 for three years after the surprise resignation of Urjit Patel 9 months before his term ended, allegedly over differences with the government.