Reserve Bank of India Deputy Governor K C Chakrabarty seems to have paid the price after a senior RBI official reportedly talked out of turn to the media. This official criticised the RBI over its mild action in the July review of the monetary policy, especially at a time when inflation was in double digits. In a sudden revision of portfolio allocation of deputy governors, Chakrabarty’s responsibilities have been drastically snipped.
According to sources, Chakrabarty, who joined the RBI in June 2009, does not mince words. As Chairman and Managing Director of the state-owned Punjab National Bank before joining the RBI, he spoke his mind, at times even against the finance ministry. With the wholesale price index-based inflation continuously hovering around double digits, Chakrabarty is learnt to have said that the RBI should have been more aggressive in hiking policy rates. The central bank Governor D Subbarao had hiked the repo rate by 25 basis points and the reverse repo by 50 basis points, pretty much in line with market expectations. It is very rare that a central banker talks, even if it is off the record, against the institution’s own monetary policy stance. On the contrary, top officials at the Reserve Bank of India, are unusually quiet on all issues that have a bearing on the financial markets. A loose comment can bring the markets down or cause irreparable damage.
After the new allocation, Chakrabarty will oversee just four departments — IT, Rajbhasha, Inspection and Customer Services, none of which are significant in real terms. When he took charge as Deputy Governor, he was asked to oversee Administration and Personnel Management, Payment and Settlement Systems, Human Resources Development, Rural Planning & Credit and Urban Banks besides the four departments that he is left with now. He was also made the Alternate Appellate Authority under the Right to Information Act, 2005.
While Chakrabarty could not be reached for comment, an RBI spokesperson said portfolio reallocation was routine work.