The governance of Reserve Bank of India

Abstract

In a recent interview I had with Y.V. Reddy, a former governor of Reserve Bank of India (RBI), about financial inclusion, the first observation he made was: “The RBI board has representatives from agriculture, social services and even scientists. Most central banks are monetary authorities packed with economists. RBI is not just a monetary authority worried exclusively about issues of inflation, but much beyond." RBI not only has a central board, but also has four regional boards. The regional boards are required to look at issues that come up in the respective regions, and deal with local financial institutions like cooperatives. The chairs of the regional boards are on the central board. In addition to these four people, the Union government nominates 10 more directors on the central board. In the past, the incumbent board member would continue beyond his or her term till the new board was appointed, ensuring that there was no void, even if there was a delay in fresh appointments. This was changed to put a hard stop to the term of the board member irrespective of whether a replacement was found. Thus the RBI board started having vacancies. Read more at: https://www.livemint.com/Opinion/KYJxertsdLx3mK0Vzx505O/The-governance-of-Reserve-Bank-of-India.html