In a rare move the union government has appointed a person with strong political leanings to the board of the Reserve Bank of India, an institution which has so far maintained as apolitical an image as possible.
In a notification late on Tuesday evening, the government said that it has approved the appointment of S Gurumurthy as part-time, non-official director on the Central Board of the Reserve Bank of India.
The Appointments Committee Of The Cabinet has approved the proposal of the Department of Financial Services for the appointment of Shri Swaminathan Gurumurthy, as part-time non-official director on the Central Board of the Reserve Bank of India under Section 8(1)(c) of the RBI Act 1934, for a period of four years from the date of notification of the appointment...Government Notification
Gurumurthy tweeted that this would be his first directorship ever.
Story of my appointment as director RBI. This is the first directorship ever. Never accepted any private or PSU directorship. Not even audit of PSUs or Pvt cos. Wanted to be free to speak. But when pressure built up I am needed to do something in public interest I had to accept.
Along with Gurumurthy, Satish Kashinath Marathe has also been appointed as a part-time non-official director on the board of RBI, said a separate government notification.
Gurumurthy - A Political Appointee?
Gurumurthy comes to the RBI board with strong political affiliations.
Gurumuthy is a chartered accountant, an economist and a commentator on political and economic affairs. He has affiliations with the right-wing Rashtriya Swayamsevak Sangh and is the convener of the Swadeshi Jagaran Manch. He is also a vocal supporter of the current BJP government in the centre and of Prime Minister Narendra Modi.
Gurumurthy was a supporter of the government's demonetisation exercise. In an article written for Hindu newspaper on November 9, 2017, Gurumurthy termed demonetisation as “a fundamental corrective to the economy much like liberalisation of the 1990s.”
Gurumurthy has taken to his twitter account to complain about the RBI's policies a number of times. In a September 2017 post, he criticised the RBI's attempts to get banks to increase provisioning norms.
I said the RBI is destroying Indian business & also trying to force the govt to privatise the PSU banks. The RBI is is agenda driven. This is wrong. RBI has to devise policies which will work in and for India. https://t.co/fGldvVrXF5
In a more recent post, he again questioned whether the central bank's decision to follow Basel capital adequacy norms was appropriate.
Raghuram Rajan destroyed the RBIs independence by making it subservient to global thought rather than pursue India centric solutions. The RBI can't now move away from that line for fear of going against global financial opinion. RBI has lost its capacity to think for India https://t.co/sTMLddKbrW
Marathe - The Cooperative Bank View
Founder of Sahakar Bharati, an NGO that works to support cooperatives, Satish Marathe has had a long career in banking.
Starting with Bank of India, he then went on to become chairman of The United Western Bank Ltd. In September 1991, he was appointed chief executive officer of Janakalyan Sahakari Bank Ltd. He currently serves on the boards of Thane Bharat Sahakari Bank Ltd. and Rajkot Nagarik Sahkari Bank Ltd.
He has also served as honorary secretary of Indian Banks' Association and vice president of Private Sector Bank's Association.
In his youth Marathe was associated with the Akhil Bharatiya Vidyarthi Parishad, one of India's largest student organisations. He served as its treasurer for four years. The ABVP is affiliated to the Rashtriya Swayamsevak Sangh.
“The RBI is one of the best central banks in the world. It has led India through difficult times successfully, particularly during Dr Reddy's period,” Marathe told BloombergQuint.When asked about the role he hoped to play on the central bank's board Marathe said “I have a strong background of the cooperative sector. I have worked in it for more than 40 years. We need to do a lot in the rural and agricultural sectors.”
The RBI Central Board
The RBI central board is split into official and non-official directors. The official directors include the governor and not more than four deputy governors. In addition, the RBI Act allows ten directors nominated by the government. These include experts from various fields and two government officials.
In recent years, the external appointees on the board have been well known economists and industrialists, who have not had obvious political leanings. For instance, the current appointees include N Chandrasekharan, chairman of Tata Sons, Bharat Doshi who was a veteran of the Mahindra Group, and noted economist Ashok Gulati.
Gurumurthy has the qualifications because he is an economist and a chartered accountant, said a person who has been associated with the central bank in the past. However, what could be a matter of the concern is the open political leanings, said this person.
The RBI central board is typically not a decision making body and is more a forum for discussion. However, decisions such as the recent demonetisation decision or a move to change the RBI's dividend policy would go through the central board. Interest rate decisions are outside the purview of the board.
Both newly appointed directors will attend their first RBI board meeting tomorrow.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
