The much-awaited name of Reserve Bank of India (RBI) Governor will be announced soon after the Monetary Policy Committee (MPC) is ready for action. Though the panel is already in place, the Government is yet to finalise three non-RBI members before the panel swings into action.
“The name of central bank’s Governor would be announced after the MPC is completely ready for operation. The names of all members are yet to be declared by the Government. We hope it will happen very soon but not before the forthcoming RBI monetary policy review on August 9,” a Government functionary said.
When asked about the timeline on the announcement of its members’ name, he said, “It is very difficult to give you the timeline for the announcement at this point in time but I expect it will happen soon”. “The search panel is still on the job in which it takes its own time to select the MPC members. It is a long process and it can’t be happened overnight,” he added.
Soon after RBI Governor Raghuram Rajan’s exit announcement from the central bank, the media kept on speculating as many as 12 names of economists and top bureaucrats from the Government, but it failed to get any clue about the appointment from the Prime Minster’s Office (PMO), where it has been pending since Rajan’s decision in June after BJP leader Subramanian Swamy’s repeated scathing attack on him.
The significant move came to the light at a time when Rajan made his comment early this week, saying that he would like MPC to be set up before his tenure ends. On Monday, the RBI chief had said at a meeting of central bankers and regulators in Indonesia that he was trying to ensure that the MPC is established before his three-year tenure which ends on September 4 this year.
The new MPC framework, which was announced by Finance Minister Arun Jaitley in his Budget this year, has a six member panel - three from the RBI including the Governor as the panel’s head and rest three from non-RBI members. last month, the Government had communicated to the RBI in this matter to fast-track the search panel headed by the Cabinet Secretary to identify the three non-RBI members.
The issue of bad loan or non-performing assets (NPAs), which has been on the rising trend among all banks, mostly public sector banks, has become the main priority for both the RBI and Finance Ministry and the Government has been working very hard towards resolving the growing menace soon. It is expected that the soon-to-be appointed Governor may play vital role in this regard. “As NPA woes have been discouraging almost all banks, the Government is trying to resolve this as soon as possible. The recovery of bad loan is first priority for which the Government is making its all-out effort in this matter and the RBI should play a key role on this,” the official said.
In line with the Government, Banks Board Bureau (BBB) Chairman Vinod Rai has also recently said that resolution of stressed assets is the first priority of public sector banks while the issue of consolidation in the sector and other issues can be considered later.