Mumbai: The process of appointment of a deputy governor at the Reserve Bank of India (RBI) in place of V. Leeladhar, who retired in December, has taken a dramatic turn, with the search committee calling for interviews of three senior bankers who had earlier opted out of the race.
The government is also in the process of amending a key feature of the high-profile appointment. Earlier, it was offering a three-year term for this post. Now, it has made it clear that this contractual appointment can get an extension after the completion of the first term.
Interestingly, the search panel—RBI governor D. Subbarao, finance secretary Arun Ramanathan, secretary of the department of personnel and training Rahul Sareen, former State Bank of India (SBI) chairman Janki Ballabh and the bank’s former managing director Vepa Kamesam—interviewed three bank chief executives (CEOs) on Tuesday in New Delhi: Bank of India’s (BoI) chairman and managing director (CMD) T.S. Narayanasami, IDBI Bank Ltd’s CMD Yogesh Agarwal and Canara Bank CMD A.C. Mahajan.
Also Read Four opt out of RBI deputy governor race
It wasn’t immediately clear whether the round of fresh interviews sought with three more bank CEOs means that the search committee did not find any of the three CEOs that it had met on Tuesday suitable for the job. According to one of the three bankers who appeared for the interview, each spent around half an hour with the panel.
“Yes, more people have been called for interviews on 10 February,” said a finance ministry official, who did not wish to be identified.
The three bank CEOs who will meet the panel next week are Punjab National Bank’s (PNB) K.C. Chakrabarty, Union Bank of India’s M.V. Nair and Bank of Baroda’s (BoB) M.D. Mallya.
These three CEOs, along with SBI chairman O.P. Bhatt, had earlier expressed their lack of interest in the post, leaving Narayanasami, Agarwal and Mahajan in the race. The government seeks to establish such interest before making important appointments.
This time around, these three bankers are expected to meet the search panel and it is likely that the assurance of an extension after the completion of the three-year term has prompted them to change mind.
Also See To Err Is Human; To Correct (Graphic)
Chakrabarty, Nair and Mallya have about four years left before they retire. Bank chairmen retire at 60. So, had the government stuck to the three-year term, any of these three bankers would have lost at least one year had they agreed to become deputy governor of RBI.
So far, a deputy governor’s retirement age has been 62 and this is for the first time the government is looking to make a contractual appointment to this post.
PNB is Chakrabarty’s second stint as CEO; he was chairman of Indian Bank between 2005 and mid-2007. Similarly, before assuming the charge at BoB in May 2008, Mallya was the chief of Bank of Maharashtra and Nair became the head of Dena Bank in 2005 before shifting to Union Bank in April 2006.
Narayanasami, who is also the chairman of Indian Banks’ Association, a national banker lobby, became the chairman of Andhra Bank in April 2004. He also headed Indian Overseas Bank between June 2005 and May 2007 before moving to BoI. Mahajan, who became CEO of Canara Bank in July 2008, was previously the head of Allahabad Bank.
IDBI’s chairman was appointed to the post in July 2007. He was previously managing director of SBI.
As deputy governor, Leeladhar used to oversee the regulator’s banking operations and supervision division—a critical function at a time when commercial banks are finding it difficult to meet the loan demands of firms and individual borrowers as all other sources of funds have dried up.
However, a commercial banker does not necessarily need to head this division. Before Leeladhar, the division was looked after by K.J. Udeshi, an RBI insider, who replaced another insider, G.P. Muniappan.
Graphics by Ahmed Raza Khan / Mint