 "R Gandhi")
When R Gandhi was made a deputy governor of the Reserve Bank of India in 2014, some were surprised. After all, there were other candidates senior to him in the fray and he had a relatively low profile.
But a look at the work he undertook at the RBI convinced everyone about the decision. Among his many achievements, one stands out. Gandhi was the driving force for the design and implementation of real time gross settlement system, or RTGS, the payments architecture that enables transfer of funds and securities from one bank to another in real time.
Gandhi was given the charge of seeing the evolvement of new payments systems that would revolutionise banking and the financial services industry. Making peer-to-peer lending operational with adequate safeguards was also entirely his responsibility.
No wonder, then, that Urjit Patel, who took charge as the governor of RBI on earlier this week, decided to allocate the critical monetary policy department to Gandhi, which automatically makes him a member of the monetary policy committee. Most of the departments that Patel used to handle, including the critical monetary policy department, forecasting and modelling unit, department of economic policy & research, financial markets regulation and market intelligence, have been handed over to Gandhi.
Hailing from Tamil Nadu’s Tirunelveli district, Gandhi joined the RBI in 1980 after completing his master’s in economics from the Annamalai University. He was elevated to the post of deputy governor on 3 April 2014 for a period of three years.
In his over thirty years at the RBI, he has built expertise in payment systems and information technology, financial markets (money, securities, forex and capital market) operations and regulation, currency operations and management, personnel and human resources management, industrial credit and international banking.
Besides, he has also had a three-year stint at the Securities and Exchange Board of India (he was on deputation from the RBI), was the head of two regional offices of the central bank and served as the director of the Institute for Development and Research in Banking Technology, Hyderabad.
In his role as deputy governor, Gandhi has time and again urged the banks to curb risky practices. For example, in October 2014, Gandhi warned the banks to cut down on their exposure to the real estate and infrastructure space. These two sectors alone accounted for 25 per cent of bank loans at that time and the RBI was worried.
“Banks cannot put all their eggs in one basket. They will have to definitely have a diversified portfolio,” Gandhi said at a capital market conference in Mumbai.
Subsequently, the RBI brought out various measures that would limit the banks’ ability to increase exposure to a particular group of companies, and, thereby, restrict them from lending too much to any single sector.
It was the Gandhi committee in August 2012 that recommended the central bank to bunch up its outstanding bond issuances and suggested that foreign investors be given more play in the local bond market. Till then, 92 dated securities accounted for a total outstanding of Rs 25.7 trillion. Out of this, 53 securities had outstandings below Rs 20,000 crore each.
The RBI acted on both the recommendations a few years later with remarkable results. Gandhi was also responsible for tackling the fake currency menace. He directed his efforts towards adding new safety features to currency notes in order to make them hard to copy even for the most enterprising forgers.
The deputy governor, 60, mostly keeps quiet at meetings and lets his work speak for him. In monetary policy conferences, he could be seen sitting quietly at the dais along with other deputy governors, never giving his opinion unless prompted by the governor.
But when he does speak, he minces no words. For example, Gandhi’s recent warnings to banks for neglecting the small and medium enterprises segment were stark.
“If only you become socially relevant and not just economically relevant, you have a chance of existence,” Gandhi said at a meeting of bankers last month. “Banking is necessary, banks are not,” he warned.
