Just reward – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/opinion/editorial/just-reward/article37288995.ece


A second term for the RBI Governor is a recognition of his work but may be more challenging than the first

The government has done well to grant Reserve Bank of India (RBI) Governor Shaktikanta Das a three-year extension of his term. Having moved into the hot seat when relations between the central bank and the Finance Ministry were at a flash point, Das has done much more than restore this relationship to an even keel — he has adroitly managed the tricky balance between growth, inflation and exchange rates during a very difficult period. RBI, under his stewardship, has led from the front doing the heavy lifting for the government as the economy took a pounding from the pandemic. Whether it was maintaining low rates and an accommodative stance for an extended period, reaching credit to needy sectors through unconventional tools, extending regulatory forbearance to small borrowers during the worst of the crisis or managing market yields through G-SAPs, RBI’s proactive interventions kept the economy’s growth impulses alive during Covid, allowing the Centre to make fewer fiscal interventions. Under Das, RBI has also been able to shed its image as an ivory-tower-regulator, with wide stakeholder consultations helping it usher in a tighter regulatory dispensation for housing finance companies, co-operative banks and NBFCs without much ado.

RBI also has its work cut out as a financial regulator. It needs to take the contentious call on issuing banking licences to industrial houses, per recommendations of its internal working group. Along with the government, it will soon need to bell the cat on checking the untrammelled growth in crypto-currencies. The same holds good for burgeoning fintech providers, which are now becoming an unregulated front-end for banks and NBFCs to dabble in unsecured loans and pitch risky products to unwary investors. Already criticised for ineffectual supervision of banks, RBI needs to build capacity to extend this oversight to NBFCs and co-operative banks. Clearly, Das’s second term will call for even more adept helmsmanship than his turbulent first one.

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