Govt starts process of appointing new RBI Deputy Governor

Government has initiated the process for appointment of a new RBI Deputy Governor in place of Urjit Patel who was recently elevated to head the central bank.
The Reserve Bank has currently three Deputy Governors as against the requirement of four.
As per the norms, two of the Deputy Governors are taken from within the RBI, while two are hired from outside -- one banker and one economist.
Patel was from the economist pool.
The candidate should have at least 25 years of relevant experience and be below the age of 60 years.
Inviting applications, the Finance Ministry said the appointment will be be for a period of three years and the person will be eligible for re-appointment. The interested candidates should apply latest by October 21.

The post carries a pay scale of Rs 80,000 (pre-revised).

The candidate should have work experience in public administration including experience at the level of Secretary or equivalent in Government of India; or in an Indian or international public financial institution.
The Finance Ministry further said that the Financial Sector Regulatory Appointments Search Committee may also make nominations for the post. Also, the Committee may recommend relaxation in the eligibility and qualifications/ experience criteria, in respect of outstanding candidates.
"Overall, India's financial system remains stable although
banks, particularly the public sector banks, continue to face significant levels of stress," the FSR report said.

It further said the macro stress test shows that GNPA ratio of banks "may increase further" under assumed baseline macro scenarios.
The PSBs may record the highest GNPA ratio and lowest capital to risk-weighted asset ratio (CRAR) among bank-groups although the CRAR at the system as well as bank-group levels is expected to remain above the regulatory required minimum.
On macro-financial risks, it said that in the external sector, the narrowing of the CAD partly reflects the external spillovers in the form of sluggish trade growth.
"The decline in the flow of remittances is also a concern. Going ahead, capital flow, more than trade, is likely to influence the exchange rate," it said.

It also said that with the implementation of global regulatory reforms, most of the major international banks have become more resilient in terms of capital and liquidity. However, risks of divergence from the demanding global standards amidst discriminatory treatment of foreign financial institutions seem to have increased.
Globally, some risks inherent in banks may be getting transferred to other segments of the financial markets due to increased regulatory scrutiny and elevated capital requirements for banks.
As per the RTP 2015-16, the performance of banking sector remained subdued during 2015-16 amidst rising proportion of banks' delinquent loans, consequent increase in provisioning and continued slowdown in credit growth. However, banks' retail portfolios registered double-digit growth during the year.

During 2015-16, banks' interest earnings and non-interest incomes were adversely affected, which led to a more than 60 per cent drop in net profits for the banking sector.
Banks' return on assets (RoA) and return on equity (RoE) showed a substantial decline as compared to the previous year even as the PSBs reported negative RoA, it said.