The Reserve Bank of India (RBI) has sent a note to the government recommending the re-appointment of Shyamala Gopinath as one of the central bank’s deputy governors once she completes her five-year term in September.
Gopinath will be the third RBI deputy governor on the way out of Mint Road in less than a year. V Leeladhar retired in December 2008 and was replaced by K C Chakrabarty in June. Rakesh Mohan also quit the central bank in June. A replacement for Mohan has not been announced.
Both Leeladhar and Mohan were from outside RBI, a banker and an economist, respectively. Though there was no norm on how many deputy governors would be chosen from RBI internally, it has now been decided to have at least two of them from within the central bank. The third deputy governor would be a public sector bank chief, while the fourth would be an economist.
If the government accepts RBI’s recommendation, the 60-year-old Gopinath, who was appointed as a deputy governor in September 2004, can serve in the central bank for two more years as the retirement age of a deputy governor is 62.
According to the RBI Act, a deputy governor can serve until 62 or for a maximum of five years, whichever is earlier. So, for Gopinath to continue, the government needs to re-appoint her rather than merely extending her tenure, a banking source explained. It is mandatory for the government to appoint a search committee and shortlist at least three candidates for the appointment of a RBI deputy governor.
There have been instances of a deputy governor serving for more than five years, as was the case with C Rangarajan, who served the apex bank in this capacity for over a decade.
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But this is the first time that RBI is seeking re-appointment of a deputy governor after the Delhi High Court’s observations in 2007 which emphasised on having a proper set of norms and criteria for the appointment of deputy governor in RBI.
The Delhi High Court made those comments while pronouncing judgment to a case filed by P K Biswas — an executive director of RBI — who challenged the appointment of Usha Thorat as deputy governor. Biswas challenged the appointment on the grounds that despite being senior to Thorat, his case was ignored and was not considered for promotion.
Though the high court dismissed Biswas’ plea, it said that guidelines should be prepared laying down the norms and criteria for consideration of the eligible candidates for the deputy governor’s post.
If government wants to replace Gopinath internally, then the three senior most executive directors of RBI — V K Sharma, C Krishnan, and Anand Sinha — were likely to be the eligible candidates, the sources said.
In RBI, Gopinath is in charge of market-related portfolios such as the financial markets department and the foreign exchange management department in addition to internal debt management and the department of non-banking supervision.