Ashima Goyal, a member of the Monetary Policy Committee (MPC), said on Sunday that the Reserve Bank of India is not “behind the curve” in raising interest rates to combat rising inflation, and that it is never wise to overreact to shocks when the economy is still recovering from the coronavirus pandemic. While recognizing that India is “particularly sensitive” to the mix of food and crude oil inflation brought on by the Russia-Ukraine conflict, Goyal, who is also an eminent economist, said rate hikes should be timed to coincide with the country’s economic recovery. Her remarks come just days after the MPC, the central bank’s rate-setting body, stunned markets by raising the repo rate by 40 basis points in an off-cycle policy meeting earlier this month. It was also the first rate increase since August 2018.
It is up to the government to retain the chairman and some members or have a completely new board, sources said, adding that fresh appointments in the financial services space would take place after the new BBB takes charge. The permanent member or ex-officio members of BBB are Department of Financial Services Secretary, Department of Public Enterprises Secretary and a Deputy Governor of RBI. The government, in 2016, had approved the constitution of the BBB as a body of eminent professionals and officials to make recommendations for appointment of whole-time directors as well as non-executive chairpersons of public sector banks (PSBs) and state-owned financial institutions.
According to reports, the government will shortly complete the reform of the Banks Board Bureau (BBB), whose extended two-year tenure ended last month. The BBB, the headhunter for senior management of state-run banks and financial institutions, completed its extended term on April 10. According to insiders, the Cabinet Appointments Committee will make a decision on BBB reform soon. BBB has been led by former Secretary of the Department of Personnel and Training B P Sharma since April 2018. Vedika Bhandarkar, former MD of Credit Suisse; P Pradeep Kumar, former MD of State Bank of India (SBI); and Pradip P Shah, founder MD of rating agency CRISIL, are the other part-time members.
It was also entrusted with the task of engaging with the board of directors of all PSBs to formulate appropriate strategies for their growth and development. Besides, it was asked to frame a strategy discussion on consolidation based on the requirement. The government wanted to encourage bank boards to restructure their business strategy and also suggest ways for their consolidation and merger with other banks. It is also mandated to do selection for top management of public sector insurance companies and financial institutions.
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