 "RBI governor Shaktikanta Das")
When taking over the stewardship of the Reserve Bank, taking along everybody and keeping the communication channels open were his key messages.
A year later, Shaktikanta Das can well claim brownie points for keeping the promises as he steers the RBI's efforts to revitalise the financial sector and boost growth that has hit a near-seven-year low.
The career bureaucrat-turned-central banker walked into the 19th floor corner room of the Reserve Bank on December 12, 2018 after his predecessor Urjit Patel suddenly quit following a litany of public spats with the North Bloc mandarins, leaving the relationship between the Mint Street and the government at a nadir.
A historic cash transfer to the government, getting some of the crippled state-run banks out of the RBI radar and putting in place a new NPA framework in June are among the major achievements under Das' watch who completes one-year as the governor on Thursday.
Since February 2019, the Das-led RBI has cut the repo rate by a whopping 135 basis points to support the sagging growth, including an unprecedented 35 bps reduction in August. The same central bank also massively slashed the growth forecast by a whopping 240 bps in between.
Earlier this month, the central bank stunned investors and markets by deciding to hold the rates, if not it would have the sixth straight repo rate cut, which is currently pegged at a nine-year low of 5.15 percent.
Sachin Chaturvedi, a member of the Central Board of RBI, describes Das as a person who brings in pragmatism, commitment, transparency and sincerity to the table.
"The governor has in many ways succeeded in getting the government and other functionaries together and has made the board a cohesive platform," Chaturvedi told PTI.
At the six-member Monetary Policy Committee meetings, Das has ensured that every board member makes presentations and then have discussions on the issues raised, he notes.
Das, a 1980-batch Tamil Nadu cadre IAS servant, had served as the economic affairs secretary, among other roles, before taking charge of the RBI.
From day one, he has ensured that he engaged with all stakeholders. Whether it's banks, NBFCs, MSMEs, industry bodies, foreign investors, credit rating agencies or money market dealers, he has strived to put across to them the views of the RBI-something everybody missed under the Patel era. Das, also a social media-savvy governor, has been working to allay concerns of stakeholders.
"He has been into economic policymaking during the last eight years of his bureaucratic career. Despite not having an economics background (Das is a History honours from St Stephen's), he is not behind the curve," says a person familiar with his working style.
Even the RBI staff feel the governor is a balanced person and very approachable as well.
As he completes one year at the helm, woes in the NBFC sector, overall health of the banking sector and steeply falling economic growth are among the major challenges that needs to be tackled sooner than later.
The scam at Punjab & Maharashtra Co-operative Bank, which raised questions over the dual regulations of multi- state co-operative banks, remains a pain area, and timely resolution of DHFL is another key challenge.
Das was appointed 25th governor after Urjit Patel unexpectedly stepped down on December 10, 2018, citing personal reasons. The resignation came after a tussle between RBI and government on host of issues such as transfer of excess reserves and providing liquidity support to MSMEs as well the issue of placing as many as 11 public sector banks under operational curbs due to high bad loans.
Personally also Patel was at loggerheads with the government as the latter initiated a discussion under the never-used-before Section 7 of the RBI Act which empowers the government to issue directions to the governor on issues of public or national interest.
In just 15 days of taking charge, Das, in consultation with government, constituted an expert committee, headed by his predecessor Bimal Jalan to decide on the contentious issue of the fixing an appropriate level of economic capital for the central bank.
The committee submitted its report in August 2019 following which the RBI central board transferred to government Rs 1,76,051 crore comprising Rs 1,23,414 crore of surplus for 2018-19 and Rs 52,637 crore of excess provisions. Das has been extra-careful in keeping the dialogue open with the government, which he has underlined many a time.
"Let me tell you, there is lot of interactions between the RBI and government. But, as far as decision-making is concerned or taking a final call on any issue is concerned, they are taken by RBI and the RBI is more than 100 percent autonomous in decision-making.
"Nobody interferes in my decision-making," Das said in September and had also asserted that RBI is not a cheerleader for anyone.
Within in a month of taking over, Das also allowed a one-time restructuring of existing MSME loans that were in default but standard.
Regarding the prompt corrective action (PCA) framework also, he took a more pragmatic view in January itself by taking out three of the 11 banks-- Bank of India, Bank of Maharashtra and Oriental Bank of Commerce -- from the regulatory restrictions.
On June 7, Das revised the framework for resolution of stressed assets by banks after the Supreme Court declared its February 12, 2018, circular as 'ultra vires' on April 2, 2019.
From a reform side, Das ensured that banks move to a repo-linked external benchmark for loan pricing which has fastened the monetary transmission process.
He also stuck to guns with respect to 75-year- retirement rule for CEOs of private sector banks.
To make 24x7 hassle-free payments, the RBI has also decided to have NEFT facility 24x7 from January 2020.
Moving away from economic jargons and just numbers to put across messages, the Das-led RBI has occasionally been using tough English words. A call for maintaining a Panglossian countenance amidst the rising clouds of gloom and independent MPC member Chetan Ghate coming up with his floccinaucinihilipilification of growth forecast are some of the salient examples.
To the criticism that he is yet to come out of the bureaucratic mold even after a year, he told reporters at the last policy meet that "somebody wrote in a newspaper that my heart is still in the government. But I clearly don't know where is the heart and where is the mind, I think they are both with me," Das quipped.
