Centre names NYU academic Acharya as RBI Dy. Governor

The Centre on Wednesday appointed Viral V. Acharya, Professor of Economics at the New York University (NYU) – Stern School of Business, as a Deputy Governor of the Reserve Bank of India (RBI) for a three-year term.

Dr. Acharya’s appointment, approved by the Appointments Committee of the Cabinet, fills the vacancy that was created following Urjit Patel’s elevation to the post of Governor in early September.

Dr. Acharya, 42, will oversee Monetary Policy and Research at the central bank and will assume office on January 20, 2017, the RBI said in a statement on its website.

The C.V. Starr Professor of Economics in the Department of Finance at the New York University Stern School of Business, Dr. Acharya is an alumnus of the Indian Institute of Technology, Mumbai, where he obtained a Bachelor of Technology degree in Computer Science and Engineering.

With his research interests including the regulation of banks and financial institutions, corporate finance, credit risk and valuation of corporate debt and asset pricing with a focus on the effects of liquidity risk, Dr. Acharya has co-authored a few research papers with former RBI Governor Raghuram Rajan.

Dr. Acharya was chosen from more than 100 candidates as the government, for the first time, advertised for the post of a Deputy Governor of the central bank.

The RBI has four deputy governors, of which two are traditionally promoted from within the ranks of the central bank. Of the other two, one is a commercial banker while the other is an economist.

A former member of the Advisory Committee of Financial Sector Legislative Reforms Commission (FSLRC) of India, Dr. Acharya is also on the International Advisory Board of the SEBI.

A strong votary of central bank independence, Dr. Acharya’s appointment comes at a time when the RBI’s autonomy has been in the spotlight over the Centre’s decision to withdraw legal tender status for high denomination banknotes and the subsequent implementation of the demonetisation.

Commenting on a government proposal to dip into the central bank’s emergency funds to recapitalise commercial lenders burdened with bad loans, Dr. Acharya had, in a June interview to Bloomberg, panned the idea as ‘opaque’.

Dr. Acharya was quoted by Bloomberg as having said at the time: “Setting a precedent to compromise central bank risk management for public-sector bank recapitalization could lead to repeat and more devious interventions that over time could be perceived as an attack on central bank independence.”