Governor Shaktikanta Das’ comments came at his predecessor’s farewell

The fiduciary responsibility of the RBI’s board members lies with the central bank, its Governor Shaktikanta Das is learnt to have said.

Mr. Das, who took charge in December, had made the remark while interacting with other board members during the farewell of his predecessor Urjit Patel in a South Mumbai hotel a few weeks ago.

“Even if the government has nominated members to the board, the members’ fiduciary responsibility lies with the Reserve Bank —that was his message to the board members,” said a source.

The governor’s comment at the farewell of his predecessor assumes significance as Dr. Patel resigned after reportedly having differences with the government over various issues.

At present, the central bank has 18 board members including the governor and the four deputy governors. There are 11 members, who are experts in their field, nominated by the government, besides two government officials — the Secretary of Economic Affairs and Secretary of Financial Services. The RBI board is not involved in monetary policy making or any particular policy-related issues, but provides a broader vision to the central bank.

However, the board of the central bank had raised various policy related issues during the previous governor’s tenure such as the issue of economic capital framework, governance of RBI, lifting prompt corrective action framework from several banks and a special package for the micro, medium and small enterprises.

Heated board meeting

The October 2018 board meeting became a heated one, going on for a marathon 10 hours, as the government-nominated members raised some of these issues.

While some truce was attempted in the next board meeting in November, Dr. Patel resigned in December citing personal reasons. The fallout with the board is believed to be the reason behind Mr. Patel’s abrupt resignation.

The new governor started off with an approach of consulting stakeholders, which his predecessor is said to have lacked.

“I will try and uphold the professionalism, the core values, the credibility and the autonomy of Reserve Bank,” Mr. Das, a career bureaucrat who was also the finance secretary and was on the board of RBI, said after he took charge of the central bank on December 12, 2018.