The media including the otherwise respected Economic Times and CNBC TV all predicted dooms day for Indian economy if Rajan is not given a second term. It was funny to observe that even Mr Narayana Murthy of Infosys made a suggestion that Rajan deserves not one renewal but two at one go.
Now that Mr Rajan has decided to call it quits, all these people should accept that their attempt to manipulate the process of appointment of an RBI Governor which is the prerogative of the current Government has not been successful and keep quiet.
All said and done, Mr Rajan was a personal choice of the previous Finance Minister Mr Chidambaram who is a tainted with issues such as the Ishrat Jehan files involving National Security issues and that should be sufficient to cause distrust of Mr Rajan by neutral observers.
Mr Rajan did not do enough to present himself as a person who is not pro-Congress during his tenure. The support he received from Congress in the last month and receiving till today is sufficient to vindicate the belief that Congress had a vested interest in his continuation and it was therefore a political decision to continue him or not.
The media which thinks it can influence every Government decision has now started its game once again by projecting Ms Arundhati Bhattacharya, the current SBI Chair person to the post of the RBI Governor. Media would love to have the “First Female Governor of RBI” as if it is a special qualification for a person to be female. This criteria is insulting even to Ms Arundhati and should never be advanced.
I however, consider the attempt of the media to project Ms Arundhati as faulty for a different reason.
We must understand that she is now the head of the biggest Commercial Bank in India and if there is any problem with the Banking industry including NPAs and Frauds, the biggest share of the same is with SBI.
The role of RBI Governor is one of the “Regulator” of Banks and therefore it is completely illogical that the current Chair person of one of the commercial Banks is made the regulator.
It is highly objectionable in principle and should be avoided at all costs.
Even if she is otherwise eligible for the responsibility, it can be considered only after a cooling off period of upto 3 years after she demits the current office. Otherwise there would be a serious conflict of interest in her role.
Further, in Personnel Management, we all know the problem of “Role Fixation” that arises in a person when he is elevated to a higher position in the hierarchy. An SBI Chairperson will remain an SBI Chairperson mentally, for some time even if she is made the RBI Governor and immediate switch over is not advisable from managerial principles.
Further, it should be understood that the RBI Governor’s position is that of a “Regulator”. One of the problems with Raghuram Rajan was that he had a “Role Fix” as an “Economist” and was weak in discharging his other functions as a “Regulator”. It is for this reason that on issues of security, fraud management etc, his contribution appeared wanting.
Any person who has watched the E Banking and Credit Card scenario in India will recognize that SBI was one of the problem Banks. It was operating its credit card operations through an outsource partners and fraud attempts and phishing was most rampant in SBI cards. There have been many E-Banking frauds indicating a weak information security position in SBI though its past image has endured in giving a picture of a sound Bank.
The recent incident where SBI was caught transferring Rs 720 crores in Cash (as claimed by them in certain press reports) in Tamil Nadu during elections cast a doubt on the integrity of SBI just as the old Nagarwala Case had proved how SBI was acting as a private Banker of Indira Gandhi. Ms Arundhati owes an explanation to the country on this incident which she is yet to come up with.
I wish Mr Subramanya Swamy raises this question in the Parliament.
There is no doubt that ex-Bankers like us hold SBI with lot of respect for their systems and procedures as well as their manpower training systems. However, in the generation of E-Banking, the same efficiency does not seem to have been carried through. Now that SBI will be saddled with the “Subsidiary Merger Issues”, there will be chaos in the Bank in the next three years and it would be best if Ms Arundhati is left to handle the challenges of merger rather than be moved out.
If Ms Arundhati is made the RBI Governor, I see the possibility that many of the frauds in SBI will be suppressed and there will be a greater mess to deal with on a later date. Even issues such as the Vijay Mallya issue will become complicated if the SBI Chair person becomes the referee.
I therefore request media to stop speculations and supporting any one person for the job of the RBI Governor. Let this be handled professionally. More the media tries to support a person, it will be seen as a PR exercise and there will be many who will oppose. This is not good even for the incumbent candidate.
If Ms Arundhati is intelligent, she should immediately issue a statement that she would not like to be considered for the post at this point of time. This will prevent further embarrassment to her.
My personal view is that the RBI Governor’s position is best managed by one of the current Deputy Governors, the best of whom can be elevated. We donot need a Noble Laureate and an economist but a hard nosed regulator to manage RBI. Then the Governor will focus on Bank regulation rather than poking his nose into the Financial Minister’s work.
Certainly it is wrong to think of current Chair persons of SBI or ICICI Bank or Axis Bank for the post even if they have been efficient in their past assignments and they all would create history of being the First Female RBI Governor of India, if it is a desirable thing. If such a decision is taken, remember “Peter’s Principle” and pray for the welfare of the Indian Banking Customer.
Naavi
Some of my old articles on NBFCs written in 1998 are available here: http://naavi.org/uploads_wp/old_articles_nbfc.htm
Kindly read them with reference to the context. I am giving the link here since the decisions were politically motivated and there was a scam in the CRB Capital issues which was never properly investigated. Some of the active politicians in Tamil Nadu and the then Central Government who are still active today were allegedly responsible for the decisions.
The industry has however grown around these developments and it is not easy to evaluate dispassionately whether these decisions were correct and beneficial. However they are facts of life.
Similarly the decisions in the case of Mr Rajan will also be evaluated by history and there is no need to lose sleep over it.
Naavi
The article is a brilliant expose of rotten media trying to grab more than it could chew and damning democracy and federalism, crating badwill for once held as pridesome profession. The exit of Rajan as RBI Governor has been made an important issue forcing govt to surrender its stake in favor of much tainted keeper of national conscience. The character and wrong doings of P Chidambram are forcing and his ilk forcing the congress to play stooge in halting the exit of Rajan, a sad state portraying Congress cult ‘ an individual is bigger than the nation’..
I fully agree with you. No one is indispensable and immortal. This is all games played by vested interests. Rajan is intelligent enough to understood the embarrassment, he would have faced and decided to quit himself. Yes, we need a hard nosed regulator and not a economist or banker with vested or conflict of interest.