Following the resignation of Viral Acharya as RBI Deputy Governor six months before his tenure ends, the government and the Reserve Bank of India will set up a selection panel after the Budget to look for his replacement. The General Budget will be presented on July 5.
Acharya has asked to be relieved from July 23 in his resignation letter. The post will be advertised and applications will be invited for the same, while sources said Principal Economic Advisor at the Finance Ministry Sanjiv Sanyal may also be fielded.
The post has generally gone to an economist outside the central bank and this is where Sanyal could be a contender, sources said adding however the choice will be subject to the decision of the selection panel and will be transparent.
Prior to Acharya, the post was held by Urjit Patel who later became RBI Governor. Sanyal was Deutsche Bank AG’s global strategist in Singapore until 2015.
Sources said the selection is not on nomination basis so it all depends on who all are shortlisted once the post is advertised and it will be open to all eligible candidates including economists, top bankers, ex-bankers, bureaucrats and also from RBI’s own top management.
Sources said the applicant has to have the skills to head the RBI’s monetary policy and research departments which Acharya was heading.
The central board of directors is the main committee of the central bank. The government of India appoints the directors for a four-year term.
The board consists of a Governor, and not more than four Deputy Governors and four directors to represent the regional boards and the Economic Affairs Secretary and the Financial Services Secretary from the Ministry of Finance and 10 other directors from various fields.
The RBI “under Raghuram Rajan’s governorship” wanted to create a post of a Chief Operating Officer (COO), with the rank of Deputy Governor, and wanted to re-allocate work between the five of them (four deputy governors and COO).
The bank is headed by current Governor Shaktikanta Das with four Deputy Governors – B.P. Kanungo, N. S. Vishwanathan, Acharya and Mahesh Kumar Jain.
Vishwanathan and Kanungo were Executive Directors of the Reserve Bank before being elevated to the post of Deputy Governors. Jain was IDBI Bank Chief Executive Officer (CEO) before joining RBI.
Two of the four Deputy Governors are traditionally from RBI ranks and are selected from the bank’s Executive Directors. One is nominated from among the chairpersons of public sector banks and the other is an economist.
An Indian Administrative Service officer can also be appointed as Deputy Governor of the RBI and later as the Governor as in the case of Y. Venugopal Reddy and Duvvuri Subbarao.
Acharya, a key member of the rate-setting Monetary Policy Committee (MPC), has put in his papers six months ahead of the completion of his three-year tenure.
The Reserve Bank of India, in a statement, on Monday, said: “A few weeks ago, Acharya submitted a letter to the RBI informing that due to unavoidable personal circumstances, he is unable to continue his term as a Deputy Governor of the RBI beyond July 23. Consequential action arising from his letter is under consideration of the Competent Authority.”