Shaktikanta Das Reappointed As RBI Governor For Another Three Years

Shaktikanta Das, the 25th governor of the Reserve Bank of India, has been reappointed for another three years, the government said in a letter dated Oct. 28, 2021. He will now serve till 2024.

Das was appointed in 2018 after former RBI Governor Urjit Patel stepped down abruptly before the end of his tenure.

Das, who will soon complete three years in office, will have the longest tenure in many years. Bimal Jalan exited a few months short of completing six years, while YV Reddy and D Subbarao were RBI governors for five years. Raghuram Rajan completed three years but Patel stepped down before he could finish his first tenure.

Going back in history, if Das completes his full six-year tenure, his stint will be the longest since Sir Benegal Rama Rau who was the governor from July 1, 1949 till Jan.14, 1957.

The three-year reappointment is slightly longer than the usual two-year extension that has been the norm recently, Rahul Bajoria, chief economist at Barclays, said. "The reappointment signals continuity of monetary policy and gives greater stability to government-RBI relations."

A 1980 batch IAS officer from the Tamil Nadu cadre, Das was the economic affairs secretary to the Indian government till May 2017. He took over as governor of the RBI on Dec. 12, 2018.

During his tenure at the RBI, Das has been instrumental in ensuring stable relations with the government after a period of turmoil when the central bank was at odds with New Delhi on a number of issues. Das has also spearheaded change in banking regulation after weaknesses emerged in a number of financial sector entities. In response, supervision functions of the RBI have been strengthened and regulation, particularly for cooperative banks, has been tightened.

Among the largest projects underway at the RBI now is the move toward a central bank digital currency, where the central bank is keen on initiating a pilot project soon.

On monetary policy, Das has come to be known as a 'dove' even though rates are no longer controlled only by the RBI but by a monetary policy committee.

Interest rates during his tenure have been on a downward trajectory even before the Covid crisis hit. Since then, the RBI under Das acted quickly to cut rates and flood the system with liquidity. As Das has himself articulated, the central bank mixed unconventional and conventional policy to keep the financial markets calm even as the economy underwent a historic contraction.

Coincidentally, the run of the low or stable interest rates under Das, so far, has rivalled that of Bimal Jalan.

Under Das, Bajoria said, the central bank has done the heavy-lifting to support the economy through the Covid crisis, with fiscal policy playing a supportive role. "We also view the governor’s reappointment as a vote of confidence in the RBI’s policy stance."

In his statement at the time of the last monetary policy review on Oct. 8, Das said the central bank has not been a prisoner of any rule book in dealing with the Covid crisis.

The central bank, Das said, has not hesitated to take new and unconventional measures to keep the financial markets functioning and the market sentiments positive.

The RBI now faces the crucial test of winding back this monetary policy accommodation so as to not fuel imbalances. The central bank has started to take steps towards normalisation even though it has suggested that monetary policy will remain accommodative for some time.