Three-year term is short for RBI Governor: Raghuram Rajan

It should be four years as in the U.S. Federal Reserve,he was quoted by sources as telling the Parliament’s Standing Committee of Finance.

June 30, 2016 05:41 pm | Updated November 17, 2021 04:53 am IST - New Delhi

RBI Governor Raghuram Rajan. File photo

RBI Governor Raghuram Rajan. File photo

RBI Governor Raghuram Rajan, whose current three-year tenure ends on September 4, on Thursday pitched for a longer tenure for the central bank head, saying the global practice has to be emulated in India as well.

Mr. Rajan was briefing the Parliamentary Standing Committee on Finance.

When asked by members on what should be the tenure of the RBI Governor, he said a three-year term is “short,” sources said.

On whether it should be five years, Mr. Rajan is believed to have cited the case of U.S. Federal Reserve where, in addition to serving as members of the Board, the chairman and vice-chairman serve terms of four years and may be reappointed to those roles who, in turn, serve until their terms as Governors expire.

Mr. Rajan has already said 'no' to a second term.

The sources said that during the meeting that lasted for over three hours, the Governor briefed the panel, headed by senior Congress leader M. Veerappa Moily, on the state of the economy, NPA in banks, reforms and restructuring of the RBI, challenges in the banking sector and the way forward.

The committee was apprised by Mr. Rajan of the various steps taken to deal with the bad loan problem, said the sources.

The RBI has said the gross non-performing assets of the banks can rise to as high as 9.3 per cent in 2016-17 after hitting 7.6 per cent in March 2016.

Mr. Rajan, the sources said, briefed the MPs about the credit scenario of the banks, the active role played by private lenders on the lending front and PSU banks' reluctance even when there is no shortage of funds.

The Governor also explained to the MPs the impact of Brexit on India and the global economy.

Earlier in the day, Mr. Rajan called on Finance Minister Arun Jaitley, as the central bank and the government seek to quickly put in place a new interest rate-setting mechanism.

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