To ensure autonomy, RBI union moots collegium for selection of governors

A day after the Reserve Bank (RBI) announced resignation of deputy governor Viral Acharya, the central bank's employees association has called for a collegium of experts to select new governor and deputy governors so as to ensure autonomy of the central bank.

Acharya, the youngest ever deputy governor, resigned from his position a few weeks back citing "unavoidable personal circumstances" and will be leaving the Mint Road office on July 23, the RBI said in a brief statement Monday.

As per the Section 8 of the Reserve Bank of India Act of 1934, the governor and deputy governors are appointed by the government.

"Such sensitive and very important positions at the central bank must be decided not by a few ministry officials, even not by the finance minister himself, but by a collegium of experts comprising former governors, other prominent central bankers and economists," the All-India Reserve Bank Employees Association said in a statement Tuesday.

Only such a body can properly assess and judge the competence, knowledge and experience of the individuals for such posts, it added.

"Only such appointments can ensure neutrality as well as the independence and autonomy of the central bank, and also prevent undesirable political and purposive interference in such nominations," the association said.

They expressed regret on the premature departure of Acharya and said the personal reason cited by the deputy governor does not tell the whole story.

"Deep and prolonged differences with the finance ministry on the autonomy and the independence of RBI is supposed to have quickened Acharya exit," it claimed.

Acharya resigned six months before the scheduled end of his term on January 20 next.

He joins the long list of many noted economists/ technocrats, especially his immediate past bosses Raghuram Rajan (who was keen for a second term but chose not to seek one due to the growing differences with the government) and Urjit Patel, who quit much before the end of his three-year term.