Who is Viral Acharya?
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Mumbai: Viral Acharya, a 42 year-old professor at the Stern Business School of the New York University, has been named as a deputy governor of the Reserve Bank of India (RBI) on Wednesday. Acharya, who is a C.V. Starr Professor of Economics at Stern has been with the university since 2009, prior to which, he was teaching at the London Business School (LBS).
A 1995 graduate from the Indian Institute of Technology (IIT) in Mumbai, Acharya also earned a Ph.D in finance from NYU-Stern in 2001. He was the academic director of the Coller Institute of Private Equity at LBS (2007-09) and a senior Houblon-Normal research fellow at the Bank of England (summer 2008), according to a bio available on the NYU-Stern website.
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This is not Acharya’s first appointment with a financial sector regulator. He has been a member of advisory scientific committee of European Systemic Risk Board (ESRB), economic advisory committee of the Financial Industry Regulation Authority (FINRA), advisory committee of Financial Sector Legislative Reforms Commission (FSLRC) of India, International Advisory Board of the Securities and Exchange Board of India, or Sebi.
He has also been on the advisory council of the Bombay Stock Exchange (BSE) Training Institute, and Academic Research Council Member of the Center for Advanced Financial Research And Learning (CAFRAL, India); and has been an academic advisor to the Federal Reserve Banks of Chicago, Cleveland, New York and Philadelphia, the Board of Governors and the Bank of Canada.
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In addition, he is a research associate of the National Bureau of Economic Research (NBER) in corporate finance and research associate of the European Corporate Governance Institute (ECGI).
Acharya is a firm supporter of the idea of a bad bank to clean up the toxic loans on the books of Indian banks. In an interview with Bloomberg Quint earlier this month, Acharya had discussed the idea of separating bad loans from the books of banks.
“I am absolutely proposing either explicitly or implicitly that we separate the healthy parts of the troubled banks from the healthy parts. Either as a bad bank which has those bad assets left in the original balance sheet once you have separated the good parts, or you could run it to full maturity, so we are not looking for sellers or buyers. Or you could actually pool all the bad parts together and make an asset restructuring company that looks for buyers for these assets,” Acharya had said in his interview.
The idea was first mooted in his research paper on Indian banks, which came out in 2015. The paper had concluded that the burden of cleaning up the banking system of bad loans through radical reforms lied upon the government.
Acharya’s primary research interest is in theoretical and empirical analysis of systemic risk of the financial sector, its regulation and its genesis in government-induced distortions, an inquiry that cuts across several other strands of research —credit risk and liquidity risk, their interactions and agency‐theoretic foundations, as well as their general equilibrium consequences.
He has published articles in multiple international journals on economics in finance, including the American Economic Review, Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Review of Finance, Journal of Business, Journal of Financial Intermediation, Rand Journal of Economics, among others. He is currently associate editor of the Journal of Finance, Review of Corporate Finance Studies and Review of Finance, and was an editor of the Journal of Financial Intermediation (2009-12), according to his bio.