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Chakrabarty quits RBI

Chakrabarty: Shock decision

Mumbai, March 20: Kamlesh Chandra Chakrabarty, the outspoken deputy governor of Reserve Bank of India (RBI), sent shock waves through the world of banking today when he announced his resignation just three months before he was due to retire.

Sources confirmed to The Telegraph that Chakrabarty had requested to be relieved of his duties “slightly earlier” on April 25, citing personal reasons. He is scheduled to retire on June 30.

Chakrabarty was appointed as RBI deputy governor for a three-year term on June 15, 2009 and was subsequently given a two-year extension.

He is now the senior most deputy governor in the RBI, handling a host of portfolios. These include customer service department, the department of banking supervision, department of currency management, the financial stability unit, the human resources management department, rural planning and credit department, the secretary’s department, premises department, urban banks department, legal department and co-ordination work.

The RBI now has three deputy governors — H.R. Khan and Urijit Patel and Chakrabarty. Generally, there are four deputy governors at Mint Street with two being promoted from within its ranks, one coming from the commercial banking sector, and the other being an economist. The government has yet to find a replacement for Anand Sinha who retired in January.

With the resignation of Chakrabarty, the pressure will now be on the Centre to find a quick replacement. The speculation is that some of the top PSU bankers — S.S. Mundra, chairman and managing director of the Bank of Baroda, V.R. Iyer, chairperson of Bank of India, R.K. Dubey, chairman and managing director, Canara Bank, and K.R. Kamath, chairman and managing director of Punjab National Bank (PNB) — are in the running for the post of deputy governor.

Chakrabarty has often sparked controversy with his blunt and outspoken comments. Known for his insightful views on financial inclusion, it may be recalled that he was stripped of an important portfolio like urban and rural cooperative banks in 2010 (when Duvvuri Subbarao was the governor) for criticising the monetary policy.

The RBI deputy governor had then said that the central bank should be more aggressive when it comes to controlling inflation by raising interest rates. At that time, he was penalised and given charge of a couple of insignificant portfolios such as Raj Basha, customer services, department of information technology and the inspection department.

Chakrabarty earlier served as the chairman of the board and managing director of Punjab National Bank from 2007-2009. Earlier, he served as general manager of the Bank of Baroda.

He also had a famous run-in with the former State Bank of India (SBI) chairman Pratip Chaudhuri who had demanded that the RBI should scrap the cash reserve ratio (CRR) — a statutory deposit that banks must keep with the central bank — because it was an outdated concept.

Chakrabarty had then riposted that the country’s largest bank would either have to comply with the RBI norms or go and do business elsewhere.

“If the SBI chairman is not able to do business according to our regulatory environment, he has to find out some other place,” he had said in 2012.

After the brouhaha, RBI governor Subbarao had humurously remarked: “I have appointed a committee to see if we should do away with the CRR. Members of the committee will be Dr Chakrabarty and Pratip Chaudhuri. The two will be locked in a room and they can’t submit the report till my term is over.”

 
 
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