Shaktikanta Das will remain the Governor of the Reserve Bank of India (RBI) for another three years. The Government of India on Friday extended his tenure for another term. “The Appointments Committee of the Cabinet has approved the reappointment of Shaktikanta Das as RBI Governor for three years beyond December 10, 2021, or until further orders, whichever is earlier,” read an official statement.
- The government has extended the term of RBI governor Shaktikanta Das for another three years.
- Shaktikanta Das was appointed as the 25th governor of RBI in December 2018, for three years.
- In the past, Das has also served as India’s Alternate Governor in the World Bank, Asian Development Bank, New Development Bank, and Asian Infrastructure Investment Bank.
Who is Shaktikanta Das?
Shaktikanta Das was appointed as the 25th Governor of the Reserve Bank of India on December 11, 2018, for three years replacing Urjit Patel. Shaktikanta Das is a 1980 batch IAS officer from the Tamil Nadu cadre. Earlier, he served as a Secretary in the Department of Revenue and the Department of Economic Affairs at the Ministry of Finance.
With an extension in tenure, he will continue in that position till December 2024. Before he was appointed the Reserve Bank of India (RBI) Governor, the former IAS officer was acting as a Member of the 15th Finance Commission and G20 Sherpa of India.
He has held many important positions in the Central and State Governments in the areas of Finance, Taxation, Industries, and Infrastructure among others. Shaktikanta Das also served as India’s Alternate Governor in the World Bank, Asian Development Bank (ADB), New Development Bank (NDB), and Asian Infrastructure Investment Bank (AIIB).
The 64-year-old RBI Chief Shaktikanta Das is a postgraduate from St Stephen’s College, Delhi University. He is the first RBI Governor to get an extension under the current BJP government; earlier ones either resigned or decided to go back to academics. During his long tenure in the Finance Ministry, he was directly associated with as many as eight Union Budgets.
Mr. Das is a postgraduate from St. Stephen’s College, Delhi University. He succeeded Urjit Patel, who resigned abruptly in 2018 amid growing differences with the government over a range of subjects including the RBI’s autonomy.
The RBI kept the key benchmark rates constant for the eighth consecutive time in its October monetary policy review and promised to maintain the status-quo on rates “as long as necessary to revive growth.” After being cut by 115 basis points (bps) in early 2020, the repo rate has been held at a record low of 4 percent since May 2020, while the reverse repo rate was reduced by 155 bps to 3.35 percent.
The Repo rate is the rate at which the RBI lends money to banks; while the reverse repo rate is when the central bank borrows money from banks.
Here are 10 things to know about this big story:
- “The Appointments Committee of the Cabinet has approved the appointment of Shaktikanta Das, former Secretary, Department of Economic Affairs, as Governor of the Reserve Bank of India (RBI) for three years,” news agency Indo-Asian News Service (IANS) reported an official order as saying.
- Mr. Das, a former secretary at the department of economic affairs, was appointed the governor for three years. He retired as the Economic Affairs Secretary in May 2017.
- He is a 1980 batch IAS officer from Tamil Nadu cadre.
- Mr. Das is known for being an experienced bureaucrat who has held key positions both under the ruling Bharatiya Janata Party as well the previous Indian National Congress-led government, reported news agency Reuters.
- His appointment is likely to cheer markets as investors expect communication between the government and the central bank to improve following a public spat that deepened an existing rift between the two sides, said, experts.
- “Bonds and rupee should react positively following this news,” said Ashish Vaidya, executive director and head of trading at DBS Bank.
- Mr. Patel resigned after a power tussle with the government wherein the Centre sought a part of RBI’s excess reserves ahead of the general elections next year.
- The last meeting of the RBI Board had ended on a conciliatory note, with the central bank agreeing to set up a panel on sharing surplus reserves and restructure loans of small businesses up to ₹ 25 crores.
- However, various reports had said that the friction between the RBI and the government would resurface at Friday’s meeting. The government’s nominees on the RBI Board had also been putting pressure on the central bank to allow some bad-debt-laden public sector banks to lend more easily.
- Tensions between the RBI and the Centre had become public last month when Deputy Governor Viral Acharya, giving an example of the Argentinian government’s interference in the central bank’s policies, said that undermining the top lender’s authority was “potentially catastrophic”.
Das, who was the face of demonetization holding almost daily briefings in Delhi, successfully blocked the challenges due to the Covid-19 pandemic as RBI Governor and announced a series of packages for all — the large industry, small units, individual borrowers, and others. The RBI, under him, pumped liquidity into the financial system to bolster growth and address stress in different sectors.
When the pandemic hit the country and the rest of the world, the RBI also announced a debt moratorium for six months and worked out a loan restructuring package for corporates when Covid hit the country in 2020.
Das successfully resolved the issue of transferring the surplus amount to the Government as a dividend soon after taking over as the Governor. His predecessor Patel had differed with the government on the issue of surplus amount. In August 2019, the RBI Board approved a transfer of Rs 1,76,051 crore to the government, including a surplus or dividend of Rs 1,23,414 crore, and a one-time transfer of excess provisions amounting to Rs 52,637 crore.
Das has supported the accommodative monetary policy to bolster growth at a time when the economy falters in 2020. The Monetary Policy Committee (MPC) of the RBI, led by him, brought down the Repo rate to four percent to push down interest rates in the banking system.
A 1980-batch Tamil Nadu cadre IAS officer, he was entrusted with the task of overseeing the re-monetization of the economy after the shock decision to withdraw 86 percent of the currency in circulation in November 2016. After his retirement, he was named in India’s G-20 sherpa and was appointed as a member of the 15th Finance Commission.
With the second term of three years, Das will head the RBI till December 2024.
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