Tenure of Shaktikanta Das as RBI governor will always be remembered for his proactive measures to neutralize the impact of Covid-19 pandemic on the country’s financial sector. His contribution makes him a distinguished governor in the history of the apex bank
Sajjad Bazaz
Even as the Reserve Bank of India (RBI) welcomed Sanjay Malhotra as its new (26th) Governor, it is Shaktikanta Das who is still dominating media headlines. A breed of experts have engaged themselves in doing postmortem of his six years’ tenure as the 25th Governor of the Apex Bank after he demitted the office on December 10. His hits and misses are currently being discussed and mostly his ability to navigate the RBI through turbulent phases is winning praises for him despite being a non-banker in the context of his qualification.
Remarkably, a few days back Congress MP Shashi Tharoor lauded him for leaving behind an “outstanding record of service to the nation.” Tharoor admitted he too had initially doubted whether someone with an MA in History could successfully lead the RBI.
“A word of tribute to @DasShaktikanta as he demits office as Governor of @RBI,” Tharoor said. “Shakti was my junior in College, but I too had wondered whether an MA in History could take on such onerous financial and economic responsibilities.”
Of course, Shaktikanta Das surprised one and all, firstly, by being thrust into the hot seat after his predecessor Urjit Patel’s sudden resignation owing to his rift with the central government and secondly, through his sheer performance during his six-year tenure as head of the Apex Bank.
His efficient dealing with the matters related to banking, financial and economic sectors is what he was supposed to do as governor of the RBI. But, maintaining calm while dealing with systemic shocks and keeping his staff at the RBI woven into a well coordinated network and dealing as a tough regulator were some of the parameters adding grace to his tenure.
However, his distinguished services during the unprecedented Covid-19 crisis makes him different from a routine RBI governor. He took a walk on the razor’s edge and fine-tuned the operations of the RBI during the pandemic, to keep the engine of the country’s banking and financial system running.
When the financial system in various countries was derailed owing to the pandemic, the RBI through a series of stimulus and other packages kept the bruised economy afloat. In other words, the measures taken by the Apex Bank during the peak of Covid-19 crisis kept the common household budgets afloat and helped different segments of populations to negotiate the pandemic-induced economic crisis.
Let us revisit Shaktikanta Das’s acts of wisdom and power of Shaktimaan to take Covid-19 head-on to neutralise its onslaught on the banking and financial sector. He was proactive in his approach while declaring a war on COVID-19. Within six days of the World Health Organization’s (WHO’s) declaration of COVID-19 as a pandemic, the RBI under his leadership immediately created a business continuity bio-bubble.
Bio-bubble is a safe and secure environment that can only be accessed by a certain set of people who tested negative for COVID-19 to minimize the risk of transmission of the coronavirus from one person to another during the course of the event.
Almost 150 selected officers, staff and service providers were kept in isolation in the bubble to work 24X7 in order to keep essential RBI services such as currency issue, retail and wholesale payment and settlement systems, financial markets regulation,supervision and liquidity management, andothernoticeableservices that impact the lives of people, businesses and financial institutions on a regular basis. This turned out to be visionary. Within days of the pandemic-induced lockdown being announced, financial markets in thecountryseizedtooperate, bankingand financial institutions were gripped by liquidity evaporation, and financesthatlubricate the wheels of the economy, dried up.
Itwasfrom March 27, 2020 that the RBI rolledout an array of measures, conventional as well as out-of-the-box, to address pandemic-induced dislocations and constraints, system level aswellas also specific to sectors, institutions and financial instruments.
Notably, the pandemic brought to the fore solvency concerns among individuals and businesses following dislocations in everyday activity and access to finance.Wealsoobserved raised fears of imminent asset quality stress among banks and financial institutions. Accordingly, toaddresstheseconcerns, the RBI launched a series of regulatory measures suchas loan moratorium; asset classification standstill; easing of working capital financing and deferment of interest; increasing of group exposure norms; restructuring of advances to micro, small and medium enterprises (MSMEs); and reduction of the liquidity coverage ratio (LCR) requirements, etc. These concessionsnotonly provided a reprieve to borrowers affected by the pandemic-inducedlockdowns,butalso shored up the health of lending institutions.Attheend,theseinitiativesprovedafoundationstoneto preserve the resilience of the financial system.
Rationalization of risk weights for individual housing loans; revised risk weights for banks’ regulatory retail portfolio; and restrictions on banks from paying out dividends weresomemoreactsofwisdomexhibitedbythe RBI,technicallytermedas countercyclical regulatory measures.Theseinitiatives eased stress on both borrowers and the banking system.
In the contextof technologysolutions, the RBI adopted a proactive approach by leveraging onthepowerof technology to facilitate digital penetration, innovative payment options and consumer awareness on the path to a “less cash”reliant society. A few initiatives were customised inlinewiththe pandemic protocols.Forexample, itwas ensured digital banking channels, ATMs, internet/mobile banking facilities remainavailable; cyber security strengthened; mechanisms for faster redressal of customer grievances putinplace; and financial literacy campaignsmeticulouslytailoredandrunina sustained and focused manner through RBI Kehta Hai.
To beprecise, the RBI’s measures under the leadership of Shaktikanta Das have contributed significantly in engineering the turnaround in the Indian economy, supported by rising financial inclusion and digitalisation. That is why Indiaistoday on the cusp of becoming one among the fastest growing economies of the world. duringhistenure,hecultivatedahealthycultureofcontinuously evaluating highly volatile and uncertain conditions and remaining alwaysready to protect the country’s economy from shocks.He committed all instruments, using conventional measures and tailoring new ones,notonlytolessentheimpactofthe pandemic onthefinancialsector,butalsousethesituationto emerge stronger and more resilient than before, keeping in mind the objective of growth.
Now,over to hissuccessor Sanjay Malhotra.itisferventlyhopedthathe willcapitalizeonthestrengthsachievedduring Das’s tenure to makehisownmarkasgovernorofthe RBI.
(The author is a veteran journalist/columnist)
