Tyagi attended RBI's board meet but may not have taken oath

All central bank board members have to take oath of secrecy and sign a scroll

Ajay Tyagi, additional secretary in the finance ministry, attended the Reserve Bank of India (RBI)’s board meeting in Chennai earlier this month, but may not have taken oath of secrecy, which all central bank board members have to take apart from signing a scroll.

“All the board members of RBI have to take oath of secrecy and sign a scroll. It is a formal ceremony. If a board member is unable to attend a meeting then he or she sends his or her regret,” a source directly involved with the matter said, adding this is the first time in many years that such a thing has happened.

According to a government notification issued on June 22, Tyagi — an additional secretary (investments) in the department of economic affairs — “will be a director on the board of the RBI vice Rajiv Mehrishi.” Mehrishi is secretary, department of economic affairs, in the finance ministry.

When contacted, an RBI spokesperson said “…Shri Tyagi has not been appointed an official director on RBI Board by the government. The understanding with the finance ministry is that he would substitute for Mr. Mehrishi, the official director only when he is unable to attend”.

Government nominees are often unable to attend RBI board meetings, since they are preoccupied with other responsibilities but this is probably the first time that the government has decided to appoint somebody on the RBI board in lieu of its existing nominee.

While Tyagi and Mehrishi could not be reached on phone for a comment on the issue, Business Standard learnt about Tyagi attending the RBI meeting from a reliable source who was privy to such board meetings. Till the time of going to the press, Mehrishi did not respond to a text message sent by Business Standard asking for his view on the issue.

The source said Tyagi actively participated in the board meeting and raised many issues like the functioning of the committee of central board (CCB), etc.

The central bank is not comfortable that an additional secretary is on its board and has expressed its views to the government on the ground that since such a person is on “deputation”, he is unable to take any decision.

Typically, the government nominates two of its representatives on the RBI board – secretary, economic affairs; and secretary, financial services. Mehrishi, by virtue of his seniority, is the finance secretary. Hashmukh Adhia, who is secretary, financial services, is the other government nominee on the RBI board. Adhia was also not present at the Chennai board meeting on July 2.

RBI will have its next board meeting in Mumbai in August where a decision will be taken on the surplus that the central bank will transfer to the government. Typically, both the government nominees are present at the August board meeting.

Apart from the two government nominees, the other members on the RBI board are the governor and the four deputy governors and several other prominent personalities who are appointed by the government. Kiran Karnik, Y H Malegam, Anil Kakodkar and G M Rao are some of the other personalities who are part of the present RBI board.

The board of RBI is not responsible for monetary policy decisions, but is responsible for providing a broader vision to the central bank.