On Wednesday the Reserve Bank of India (RBI) released the provisional data according to which, this year up till December 18 the Indian bank loans had grown to about 11.25 percent.
As on Dec. 18 the outstanding on loans was high up to 2.94 trillion rupees as against 2.64 trillion a year ago. As of Dec. 4 the bank credit had grown up to10.5 per cent. The central bank will be giving final figures for the week to Dec. 18 in its weekly statistical supplement on Friday.
Deposits had risen up 17.85 percent from a year earlier. According to supplement banks’ investments in government approved securities have increased to 24.21 percent during the year.
Thursday, December 31, 2009
Tuesday, December 29, 2009
Finance ministry floats draft paper on consolidation of PSU banks
Finally the finance ministry has prepared a discussion paper titled ‘Consolidation among public sector banks’ to sought out the issue of mergers of public sector banks. In this paper the ministry has drafted the guidelines for mergers of public sector banks. One of the major guideline mentioned in the paper is that the merger entity must get hold of 5 to 7 per cent market share across regions and should be able to establish a pan-India presence.
Other guidelines include that the merger banks must be IT compatible and have proper cultural fit.
The paper states at the time of merger one of two banks chief executive officer should be close to retirement as this will not lead to any type of clash at the top level.
In the paper out of the 19 public sector banks, besides the State Bank of India there are seven other banks have been classified as ‘strong’. These include Punjab National Bank, Bank of Baroda, Union Bank, Canara Bank and Bank of India, Corporation Bank and Vijaya Bank.
A finance ministry official pointed out, “Others have been left out of the ‘strong’ category based on various criteria, including levels of non-performing assets, capital adequacy and technology adoption.” He stated that the banks which have been included in the list do not mean they are ‘weak’ banks but they have to improve in some aspects of their functioning.
With the heads of some ‘string’ banks discussion on guidelines has already been done. Soon the discussion will be taken up with other banks also.
The paper points out it is mandatory that the IT networks of the merger banks should be compatible or one of them must have approved superior technology platform which will be adapted by the other bank in the due course of merger.
Then merging banks should do a proper assessment of the cultural fit of their staff. Giving an example the paper stated the Canara Bank staff are ‘homogenous’, whereas Mumbai-based banks such as Bank of Baroda, Union Bank and Bank of India have a more cosmopolitan staff mix.
The paper has pointed out the rigour of the dozen-odd steps that banks required to go through, at the time of merger process until the final consummation. Some of them are both the merger banks have to prepare proposals and get it approved by their boards, getting consent from the government, carrying out detailed due carefully, evaluation of agreement should be done as per Reserve Bank of India and Securities & Exchange Board of India guidelines, to advertise about merger in newspapers and get the approval of shareholders.
The ministry official clearly stated that the initiative for mergers has to come from banks. “We will act as a facilitator.” At present no merger proposal is pending with the government.
Recently Finance minister Pranab Mukherjee had told the Parliament that the government will not interfere in the working nor any directive issued to any bank for merger or consolidation.
An anonymous chairman and managing director of a large public sector bank told Financial Chronicle the discussion has been done with the government on the issues in the paper. The chairman told, “We told the government that, to begin with, the stronger banks should merge, especially those which have a better cultural fit. Our advice is that all aspects should be evaluated beforehand so that, once the merger process is initiated by two banks, it should be taken to its logical conclusion. Any mid-course failure will send wrong signals.”
Other guidelines include that the merger banks must be IT compatible and have proper cultural fit.
The paper states at the time of merger one of two banks chief executive officer should be close to retirement as this will not lead to any type of clash at the top level.
In the paper out of the 19 public sector banks, besides the State Bank of India there are seven other banks have been classified as ‘strong’. These include Punjab National Bank, Bank of Baroda, Union Bank, Canara Bank and Bank of India, Corporation Bank and Vijaya Bank.
A finance ministry official pointed out, “Others have been left out of the ‘strong’ category based on various criteria, including levels of non-performing assets, capital adequacy and technology adoption.” He stated that the banks which have been included in the list do not mean they are ‘weak’ banks but they have to improve in some aspects of their functioning.
With the heads of some ‘string’ banks discussion on guidelines has already been done. Soon the discussion will be taken up with other banks also.
The paper points out it is mandatory that the IT networks of the merger banks should be compatible or one of them must have approved superior technology platform which will be adapted by the other bank in the due course of merger.
Then merging banks should do a proper assessment of the cultural fit of their staff. Giving an example the paper stated the Canara Bank staff are ‘homogenous’, whereas Mumbai-based banks such as Bank of Baroda, Union Bank and Bank of India have a more cosmopolitan staff mix.
The paper has pointed out the rigour of the dozen-odd steps that banks required to go through, at the time of merger process until the final consummation. Some of them are both the merger banks have to prepare proposals and get it approved by their boards, getting consent from the government, carrying out detailed due carefully, evaluation of agreement should be done as per Reserve Bank of India and Securities & Exchange Board of India guidelines, to advertise about merger in newspapers and get the approval of shareholders.
The ministry official clearly stated that the initiative for mergers has to come from banks. “We will act as a facilitator.” At present no merger proposal is pending with the government.
Recently Finance minister Pranab Mukherjee had told the Parliament that the government will not interfere in the working nor any directive issued to any bank for merger or consolidation.
An anonymous chairman and managing director of a large public sector bank told Financial Chronicle the discussion has been done with the government on the issues in the paper. The chairman told, “We told the government that, to begin with, the stronger banks should merge, especially those which have a better cultural fit. Our advice is that all aspects should be evaluated beforehand so that, once the merger process is initiated by two banks, it should be taken to its logical conclusion. Any mid-course failure will send wrong signals.”
Monday, December 28, 2009
RBI amended mobile banking guidelines increased transaction limit
The Reserve Bank of India has relaxed mobile banking guidelines in order to boost it.
Some of the leading telecom companies like Bharti Airtel are active in taking up pilot project for mobile banking.
The mobile number of users is four and a half times the total number of bank accounts in this country, therefore mobile banking is being largely looked at as a good option for providing transfer facility across the length and breadth.
Some of the operative parts of these guidelines which were introduced after the October 2008 circular and have been amended to a large extent are:
Now RBI has increased the daily transaction limit to Rs 50,000 per customer for both funds transfer as well as transactions which involve purchases of goods and services. At present the transactions are limited to Rs 5,000 and 10,000 respectively.
Secondly, RBI has also relaxed the technology and security standards and banks have been permitted to undertake transactions up to Rs 1,000 without end to end encryption. This way in some of the cost of transaction will be reduced.
The remittance of funds for disbursements in cash is the other major feature of the circular. This feature is directly related to facilitating the use of mobile for cash. In India around 90% of the user base has prepaid mobile phones thus the cash transaction is preferred where user puts in money, gets the credit and uses it.
However mobile phone companies are having discussions for extending this facility for direct transfer in case the individual is staying in Delhi and adds Rs 1,000 the money can be delivered somewhere in the hinterland of Bihar or UP
For this RBI has stated that there are separate guidelines for disbursal of these funds. The maximum amount of these transactions will be Rs 5,000 per transaction to which banks are permitted to put a cap on the rapidity of such transactions subject to a maximum of Rs 25,000 per month per customer. The funds can be transferred through both, an agent or an ATM.
As it is not possible to go to ATM easily and the number of ATMs is also less in some of parts of the country, large parts of the country particularly rural and suburban areas do not have access to ATMs. Thus banks can appoint agents for such transfers.
Then some of the agents can be mobile operators, the service providers and the handset resellers in the hinterland.
According to bankers this can help in financial inclusion in a big way. Also, this will take over from retail payment from cash and cheque based transaction to mobile based transaction which will be convenient and will also reduce the cost.
The bankers said these guidelines are mainly focused on metros. If they were able to get hold of this market, it will increase in transactions. Currently in India, transactions through mobiles are of not importance. Therefore these guidelines can boost the overall transactions.
Thus these guidelines are being looked as most important factor and companies like Bharti Airtel among others will be benefited from this proposal giving them reason to cheer.
Some of the leading telecom companies like Bharti Airtel are active in taking up pilot project for mobile banking.
The mobile number of users is four and a half times the total number of bank accounts in this country, therefore mobile banking is being largely looked at as a good option for providing transfer facility across the length and breadth.
Some of the operative parts of these guidelines which were introduced after the October 2008 circular and have been amended to a large extent are:
Now RBI has increased the daily transaction limit to Rs 50,000 per customer for both funds transfer as well as transactions which involve purchases of goods and services. At present the transactions are limited to Rs 5,000 and 10,000 respectively.
Secondly, RBI has also relaxed the technology and security standards and banks have been permitted to undertake transactions up to Rs 1,000 without end to end encryption. This way in some of the cost of transaction will be reduced.
The remittance of funds for disbursements in cash is the other major feature of the circular. This feature is directly related to facilitating the use of mobile for cash. In India around 90% of the user base has prepaid mobile phones thus the cash transaction is preferred where user puts in money, gets the credit and uses it.
However mobile phone companies are having discussions for extending this facility for direct transfer in case the individual is staying in Delhi and adds Rs 1,000 the money can be delivered somewhere in the hinterland of Bihar or UP
For this RBI has stated that there are separate guidelines for disbursal of these funds. The maximum amount of these transactions will be Rs 5,000 per transaction to which banks are permitted to put a cap on the rapidity of such transactions subject to a maximum of Rs 25,000 per month per customer. The funds can be transferred through both, an agent or an ATM.
As it is not possible to go to ATM easily and the number of ATMs is also less in some of parts of the country, large parts of the country particularly rural and suburban areas do not have access to ATMs. Thus banks can appoint agents for such transfers.
Then some of the agents can be mobile operators, the service providers and the handset resellers in the hinterland.
According to bankers this can help in financial inclusion in a big way. Also, this will take over from retail payment from cash and cheque based transaction to mobile based transaction which will be convenient and will also reduce the cost.
The bankers said these guidelines are mainly focused on metros. If they were able to get hold of this market, it will increase in transactions. Currently in India, transactions through mobiles are of not importance. Therefore these guidelines can boost the overall transactions.
Thus these guidelines are being looked as most important factor and companies like Bharti Airtel among others will be benefited from this proposal giving them reason to cheer.
Monday, December 7, 2009
SBI launched SBI Freedom, a telephone banking facility in Chandigarh
In India public sector banks (PSBs) have steady customer base. The Reserve Bank of India the regulatory body of the banking system has given permission to one of the PSB to introduce telephone banking facility so that banks can offer latest facility to their customers.
On Friday State Bank of India launched a service called SBI Freedom, and the facility is fully functional in its Chandigarh circle.
Currently PSBs are offering internet banking facility to their customers and many of them have linked their branches through the internet.
The bank’s chief general manager for the circle, SK Sehgal, said, “With this launch, our customers will be able to use facilities like balance enquiry, mini statement, fund transfer, cheque book issuance, mobile recharge and bill payment at any time and place through the use of their cell phones. We are also working at adding rail and air ticket booking and shopping to this service.” In the beginning this facility will be available only on Java-enabled mobile phones with GPRS connections. Sources said services for other phones are under process.
The bank has set a limit of Rs 5,000 for daily fund transfers and Rs 10,000 for bill payments.
To enable the services the customers can get the software installed at any of the bank’s branches for free through Bluetooth technology.
An SBI official told, “A customer is registered when he or she sends an SMS to 567676 prefixed with the area code. The service is activated either after the password is verified at an ATM or by the bank branch when the customer appears in person. This makes the system foolproof”.
The official pointed out that people living in remote areas will be benefited the most from this service. “We also expect students to avail of the facility,” he added.
Out of the 30 lakh customers in Chandigarh circle, 7 lakh are expected to get subscribed to the new system.
Punjab National Bank’s Chandigarh circle head, AK Loomba, stated, “We are also working on developing this kind of a service. But first, we will try to understand its limitations.”
On Friday State Bank of India launched a service called SBI Freedom, and the facility is fully functional in its Chandigarh circle.
Currently PSBs are offering internet banking facility to their customers and many of them have linked their branches through the internet.
The bank’s chief general manager for the circle, SK Sehgal, said, “With this launch, our customers will be able to use facilities like balance enquiry, mini statement, fund transfer, cheque book issuance, mobile recharge and bill payment at any time and place through the use of their cell phones. We are also working at adding rail and air ticket booking and shopping to this service.” In the beginning this facility will be available only on Java-enabled mobile phones with GPRS connections. Sources said services for other phones are under process.
The bank has set a limit of Rs 5,000 for daily fund transfers and Rs 10,000 for bill payments.
To enable the services the customers can get the software installed at any of the bank’s branches for free through Bluetooth technology.
An SBI official told, “A customer is registered when he or she sends an SMS to 567676 prefixed with the area code. The service is activated either after the password is verified at an ATM or by the bank branch when the customer appears in person. This makes the system foolproof”.
The official pointed out that people living in remote areas will be benefited the most from this service. “We also expect students to avail of the facility,” he added.
Out of the 30 lakh customers in Chandigarh circle, 7 lakh are expected to get subscribed to the new system.
Punjab National Bank’s Chandigarh circle head, AK Loomba, stated, “We are also working on developing this kind of a service. But first, we will try to understand its limitations.”
Tuesday, November 24, 2009
Banks reduce rates in spite of RBI signal
The Reserve Bank of India (RBI) in its second quarter monetary policy gave a clear signal to the bank about its decision of its exit from accommodative stance. It was believed that due to RBI decision the interest rates will move only upward.
But in the recent months almost all the banks have reduced the interest rates. Thus a month back a loan which could be taken at 8% is now available at a rate which is 100-150 basis points lower.
However, there has been decline in the cost of one-year loans by about 100 basis points to 7-9 per cent over the last four weeks, whereas loans for five years which used to cost 10 per cent, is now become cheaper by about 50-75 basis points cheaper.
After the RBI policy the two largest public sectors lender State Bank of India (SBI) and Punjab National Bank (PNB), reduced its deposit rates by 25-50 basis points, and also extended special home loan schemes for few more months.
Following this Axis Bank announced to offer home loans at 8 per cent for the first year. A few days back HDFC Bank has slashed the interest rate on used car loans similarly PNB has also reduced auto loan rates by 50 basis points. Even the National Bank for Agriculture and Rural Development has reduced their refinance rate, whereas Punjab & Sind reduced interest rates of farm loans.
“One of the main reasons for softening of interest rates is weak credit demand. Also, there is adequate liquidity in the system. A bulk of the lending is happening for the short-term,” said Partha Mukherjee, president (Credit), Axis Bank.
By the end of October, the year-on-year growth of bank credit has dropped to a new 12-year low of 9.8 per cent. Correspondingly on Friday, banks invested Rs 54,470 crore through the Reserve Bank’s reverse repo window, mainly used to absorb excess liquidity, as against over Rs 1,00,000 crore between April and September.
Canara Bank chairman and managing director A C Mahajan stated, “Short-term interest rates have declined because of low credit flow, excess liquidity and the absence of investment options. But they will go back to the original levels once credit flow improves”.
The reserve repo rate being at 3.25 per cent and after investing in a liquid fund scheme obtained an annualized return of 5 per cent, according to banks short-term credit at 7 per cent a year is the better option. On the other hand RBI is not happy with banks increasing their coverage to liquid mutual funds.
“The rates are liquidity-based and not market-linked. It has to be compared with a bank’s treasury operations,” said a public sector bank chief.
Bank of India executive director B A Prabhakar pointed out that in the first half the pressure of government borrowings which had increased, has now eased. He added, “This takes away the trigger for bond yields to move northward”.
Moreover the profit on 10-year paper has also dropped from 7.35 per cent on October 27 to 7.18 per cent on Friday. A section of bankers pointed out indication of easing of rates are coming from the bond markets but according to others the lower profits amounts to nearly 85 per cent of the government’s record borrowings of Rs 4,51,000 crore.
Thus, this is also the reason for cut in deposit rates over the last 12 months. Since April SBI has reduced deposit rates eight times in order to reduced the cost and improve margins.
“If there is no demand for credit, why should banks take deposits at a higher rate of interest? Unless credit expansion takes place, there is no use for deposits at a higher interest... The rate of interest is a function of demand and one of the options is to reduce it,” said Andhra Bank chairman and managing director R S Reddy.
Prabhakar explained as companies are able to strike external commercial borrowings and institutional investors are raising equity, interest rates are likely to remain low for a few more months.
“A shift from short-term to long-term borrowing will not happen until the fourth quarter, as interest rates are expected to rise once demand picks up,” said an executive with a large private sector bank.
But there is another side. “Customers are able to reduce their interest cost, but banks have to worry about the asset quality. At the present rate, the credit risk is not getting factored into the pricing,” said another banker.
But in the recent months almost all the banks have reduced the interest rates. Thus a month back a loan which could be taken at 8% is now available at a rate which is 100-150 basis points lower.
However, there has been decline in the cost of one-year loans by about 100 basis points to 7-9 per cent over the last four weeks, whereas loans for five years which used to cost 10 per cent, is now become cheaper by about 50-75 basis points cheaper.
After the RBI policy the two largest public sectors lender State Bank of India (SBI) and Punjab National Bank (PNB), reduced its deposit rates by 25-50 basis points, and also extended special home loan schemes for few more months.
Following this Axis Bank announced to offer home loans at 8 per cent for the first year. A few days back HDFC Bank has slashed the interest rate on used car loans similarly PNB has also reduced auto loan rates by 50 basis points. Even the National Bank for Agriculture and Rural Development has reduced their refinance rate, whereas Punjab & Sind reduced interest rates of farm loans.
“One of the main reasons for softening of interest rates is weak credit demand. Also, there is adequate liquidity in the system. A bulk of the lending is happening for the short-term,” said Partha Mukherjee, president (Credit), Axis Bank.
By the end of October, the year-on-year growth of bank credit has dropped to a new 12-year low of 9.8 per cent. Correspondingly on Friday, banks invested Rs 54,470 crore through the Reserve Bank’s reverse repo window, mainly used to absorb excess liquidity, as against over Rs 1,00,000 crore between April and September.
Canara Bank chairman and managing director A C Mahajan stated, “Short-term interest rates have declined because of low credit flow, excess liquidity and the absence of investment options. But they will go back to the original levels once credit flow improves”.
The reserve repo rate being at 3.25 per cent and after investing in a liquid fund scheme obtained an annualized return of 5 per cent, according to banks short-term credit at 7 per cent a year is the better option. On the other hand RBI is not happy with banks increasing their coverage to liquid mutual funds.
“The rates are liquidity-based and not market-linked. It has to be compared with a bank’s treasury operations,” said a public sector bank chief.
Bank of India executive director B A Prabhakar pointed out that in the first half the pressure of government borrowings which had increased, has now eased. He added, “This takes away the trigger for bond yields to move northward”.
Moreover the profit on 10-year paper has also dropped from 7.35 per cent on October 27 to 7.18 per cent on Friday. A section of bankers pointed out indication of easing of rates are coming from the bond markets but according to others the lower profits amounts to nearly 85 per cent of the government’s record borrowings of Rs 4,51,000 crore.
Thus, this is also the reason for cut in deposit rates over the last 12 months. Since April SBI has reduced deposit rates eight times in order to reduced the cost and improve margins.
“If there is no demand for credit, why should banks take deposits at a higher rate of interest? Unless credit expansion takes place, there is no use for deposits at a higher interest... The rate of interest is a function of demand and one of the options is to reduce it,” said Andhra Bank chairman and managing director R S Reddy.
Prabhakar explained as companies are able to strike external commercial borrowings and institutional investors are raising equity, interest rates are likely to remain low for a few more months.
“A shift from short-term to long-term borrowing will not happen until the fourth quarter, as interest rates are expected to rise once demand picks up,” said an executive with a large private sector bank.
But there is another side. “Customers are able to reduce their interest cost, but banks have to worry about the asset quality. At the present rate, the credit risk is not getting factored into the pricing,” said another banker.
Increase in smuggling of fake currency notes reported in TN
From the borders of eastern states of the country the Fake Indian Currency Notes (FICN) are being smuggled into Tamil Nadu especially in Chennai. Observing the increase in the smuggling the CB-CID and the city police have decided to carry out joint operation to crack down on these smuggling networks.
T Rajendran, Chennai City Police Commissioner told Express, “We have decided to send two special teams consisting of officers from the city police and CB-CID to Jharkhand and West Bengal from where most FICNs are smuggled into Chennai.”
In the last 10 months the Reserve Bank of India, has referred around 247 FICN cases including 207 cases from Chennai to the CB-CID, the nodal agency for prevention of smuggling of FICN. N Mohan, DSP, CB-CID, CC Wing informed that in all the 11 cases reported in Chennai, one common pattern has been found that all the seized fake notes were of high quality in the denominations of Rs 500 and Rs 1,000, that too with genuine features.
He said, it is believed these high quality notes have been printed outside India and are being smuggled into the country by a network through the permeable borders of West Bengal, Jharkhand, Bihar, and Jammu and Kashmir, and added that all the persons arrested in this connection in Chennai belong to these states. On Wednesday police had arrested two persons from Jharkhand and West Bengal.
Although no concrete evidence is available right now regarding the networks’ linked to the international smugglers particularly from Pakistan, Bangladesh and China, as that in custody were mostly laborers and small-time street vendors. Archana Ramasundaram, ADGP, CB-CID pointed out, “In order to ascertain the link of ISI agents in smuggling FICNs into Tamil Nadu, we have sent a letter to the Uttar Pradesh police to provide information that they have procured from an ISI agent’s son Javed Siddiqui alias Vicky Manihar.”
Mohan added, “We have asked for the prefix code and serial numbers of the notes seized from Siddiqui. If those details match with the prefix and serial numbers seized from the accused in Chennai, then we can prove that it was smuggled from Pakistan.’’
T Rajendran, Chennai City Police Commissioner told Express, “We have decided to send two special teams consisting of officers from the city police and CB-CID to Jharkhand and West Bengal from where most FICNs are smuggled into Chennai.”
In the last 10 months the Reserve Bank of India, has referred around 247 FICN cases including 207 cases from Chennai to the CB-CID, the nodal agency for prevention of smuggling of FICN. N Mohan, DSP, CB-CID, CC Wing informed that in all the 11 cases reported in Chennai, one common pattern has been found that all the seized fake notes were of high quality in the denominations of Rs 500 and Rs 1,000, that too with genuine features.
He said, it is believed these high quality notes have been printed outside India and are being smuggled into the country by a network through the permeable borders of West Bengal, Jharkhand, Bihar, and Jammu and Kashmir, and added that all the persons arrested in this connection in Chennai belong to these states. On Wednesday police had arrested two persons from Jharkhand and West Bengal.
Although no concrete evidence is available right now regarding the networks’ linked to the international smugglers particularly from Pakistan, Bangladesh and China, as that in custody were mostly laborers and small-time street vendors. Archana Ramasundaram, ADGP, CB-CID pointed out, “In order to ascertain the link of ISI agents in smuggling FICNs into Tamil Nadu, we have sent a letter to the Uttar Pradesh police to provide information that they have procured from an ISI agent’s son Javed Siddiqui alias Vicky Manihar.”
Mohan added, “We have asked for the prefix code and serial numbers of the notes seized from Siddiqui. If those details match with the prefix and serial numbers seized from the accused in Chennai, then we can prove that it was smuggled from Pakistan.’’
Monday, November 23, 2009
Subir Gokarn appointed fourth deputy governor
Subir Vithal Gokarn, has been appointed as the fourth deputy governor of the Reserve Bank of India (RBI) by the government. Gokarn, Standard and Poor’s Asia-Pacific Chief Economist and a Business Standard columnist, has been appointed for a three-year term, is likely to take charge next week. Generally deputy governors can be appointed for a maximum of five years or till the age of 62, whichever is earlier.
Gokarn is replacing Rakesh Mohan, who resigned in June. The 50-year-old economist will possibly get the monetary policy department. The other three deputy governors are Usha Thorat, Shyamala Gopinath and KC Chakrabarty.
Usually two deputy governors of the central bank are appointed from outside, one of them being an economist.
After Mohan had resigned, RBI Governor D Subbarao had re-allocated the portfolios of deputy governors, but had held back the monetary policy department (MPD). Currently the department of economic analysis and policy and the department of statistics and information management are being looked after by the governor himself. Gokarn, who is also a macroeconomist like his predecessor, will possibly get some of the key departments that were being looked after by Mohan.
Gokarn was born in October 1959, will be one of the youngest deputy governors of the Indian central bank in recent times. After graduating from St Xavier’s College, Mumbai, and Delhi School of Economics, he did doctorate from Case Western Reserve University of Cleveland, Ohio. His doctoral thesis was “Capital market, liberalization and industrial performance – A study of South Korean manufacturing sector”.
Before joining S&P in 2007, Gokarn was working as the chief economist of Crisil, where the global rating agency holds a majority stake. He also worked as an associate professor of Indira Gandhi Institute of Development Research in Mumbai.
When Gokarn was working as chief economist at the National Council of Applied Economic Research, Mohan was the director-general of the New Delhi-based think-tank.
The economist has been selected for deputy governor position after a round of interaction with an appointment panel headed by the RBI governor. Gokarn’s appointment has taken longer time than expected because the government took time to prepare a database. Others in the race were Arvind Virmani, the government’s chief economic advisor, Ashoka Mody, assistant director at the International Monetary Fund’s European department, and Jahangir Aziz, JPMorgan India’s chief economist.
Gokarn is replacing Rakesh Mohan, who resigned in June. The 50-year-old economist will possibly get the monetary policy department. The other three deputy governors are Usha Thorat, Shyamala Gopinath and KC Chakrabarty.
Usually two deputy governors of the central bank are appointed from outside, one of them being an economist.
After Mohan had resigned, RBI Governor D Subbarao had re-allocated the portfolios of deputy governors, but had held back the monetary policy department (MPD). Currently the department of economic analysis and policy and the department of statistics and information management are being looked after by the governor himself. Gokarn, who is also a macroeconomist like his predecessor, will possibly get some of the key departments that were being looked after by Mohan.
Gokarn was born in October 1959, will be one of the youngest deputy governors of the Indian central bank in recent times. After graduating from St Xavier’s College, Mumbai, and Delhi School of Economics, he did doctorate from Case Western Reserve University of Cleveland, Ohio. His doctoral thesis was “Capital market, liberalization and industrial performance – A study of South Korean manufacturing sector”.
Before joining S&P in 2007, Gokarn was working as the chief economist of Crisil, where the global rating agency holds a majority stake. He also worked as an associate professor of Indira Gandhi Institute of Development Research in Mumbai.
When Gokarn was working as chief economist at the National Council of Applied Economic Research, Mohan was the director-general of the New Delhi-based think-tank.
The economist has been selected for deputy governor position after a round of interaction with an appointment panel headed by the RBI governor. Gokarn’s appointment has taken longer time than expected because the government took time to prepare a database. Others in the race were Arvind Virmani, the government’s chief economic advisor, Ashoka Mody, assistant director at the International Monetary Fund’s European department, and Jahangir Aziz, JPMorgan India’s chief economist.
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