Shaktikanta Das Bows Out As RBI Governor After Delivering A Captain's Knock

On Tuesday, Shaktikanta Das will complete six years as Reserve Bank of India Governor, becoming one of the longest-serving chiefs of the Indian central bank.

He is already the second longest-serving RBI Governor of India. Bengal Rama Rau, who acted as RBI Governor between July 1949 and January 1957, continues to be at the top of the list.

This will be replaced by Sanjay Malhotra, secretary (Revenue) in the Ministry of Finance.

Das served as a secretary in the Department of Revenue and Department of Economic Affairs of the Finance Ministry, where he directly worked on eight Union Budgets. He was also a member of the 15th Finance Commission and a Sherpa for India at the G20. Das has also served as India’s alternate governor in the World Bank, Asian Development Bank, New Development Bank, and Asian Infrastructure Investment Bank.

A cricket enthusiast, Das took over as RBI Governor in December 2018, after then-central bank chief Urjit Patel resigned before his tenure ended.

The new appointment came at a critical time when the broader economy was facing severe stress due to the unfolding IL&FS crisis. While the government did the heavy lifting in containing the large infrastructure financing firm, RBI was saddled with managing a credit freeze in the broader money markets.

The credit squeeze quickly spread, with housing finance lender Dewan Housing Finance Ltd falling into deep stress and being admitted into insolvency. Das also oversaw the bankruptcy proceedings against two other large non-banks, SREI Infrastructure and Reliance Capital.

Apart from these, Das was also expected to find a solution for the Punjab & Maharashtra Cooperative Bank crisis. While the PMC crisis came to the fore during Patel's tenure, Das led the rescue effort that resulted in Centrum Group taking over the cooperative lender and creating the Unity Small Finance Bank.

Another successful rescue operation under Das was that of Yes Bank in March 2020. The RBI played a crucial role in protecting depositors of Yes Bank while mounting a rescue effort led by the banking and finance institutions.

One of Das' biggest wins was mending the relationship between Mint Street and the North Block.

The relationship between RBI and the finance ministry had rapidly deteriorated, especially after a public spat between then Finance Minister Arun Jaitley and Governor Patel. This was because of the government criticising the RBI on the back of the Nirav Modi scandal and Patel defending the central bank.

In the years since, Das worked on collaborating with the government on key issues facing India. This included the NPA crisis, the Covid crisis, as well as geopolitical issues such as the Russia-Ukraine conflict and the Israel-Palestine conflict.

Moreover, under Das, the RBI has given all-time high dividend payments to the government in the form of surplus transfers. In the financial year ending March 2019, the RBI transferred a surplus worth Rs 1.76 lakh crore, while in March 2024 this transfer was at Rs 2.11 lakh crore.

The RBI became an inflation-targeting central bank under Governor Patel. However, it was Governor Das who has spent the maximum time running the monetary policy committee.

Under his leadership, the MPC has successfully managed any fallout of high inflation affecting the broader country. However, over the last two years, high food inflation seems to have tested the MPC's efficacy.

In November 2022, the MPC had to write to the government explaining why inflation remained above the tolerance band for more than three quarters. The RBI and the MPC work with a 4% target for consumer price index inflation, with a tolerance band of 2% on the either side.

While most baskets measured under CPI remain tepid, high food inflation continues to worry the MPC. In the latest monetary policy announcement, which came on Dec 8, Das told reporters that the proverbial inflation horse "made a valiant attempt to bolt, but our effort is to keep it on a tight leash.".