Rajeshwar Rao appointed the new Deputy Governor of RBI
On October 7, 2020, the Government of India appointed M Rajeshwar Rao as the new Deputy Governor of Reserve Bank of India. The post fell vacant in March 2020 when the previous Deputy Governor N R Vishwanathan resigned citing health issues before his term completed. His term completes in September 2020.
The Deputy Governor is recommended by the Financial Sector Regulatory Appointment Search Committee. The committee comprises of RBI Governor, cabinet secretary and financial service secretary. The Appointments Committee of the Union Cabinet approved the appointment.
Recently, the Government of India appointed economists Jayant R Varma, Shashank Bhide and Ashima Goyal as members of Monetary Policy Committee (MPC). The MPC fixes interest rates, repo rate, reverse repo rate.
Deputy Governor of RBI
He manages internal debts, financial market operations, and international and secretarial departments at the central bank. The Deputy Governor plays a major part in the RBI Board
The RBI Board is appointed by the Government of India in accordance with the RBI Act, 1934. The board shall have maximum of four deputy governors. The maximum strength of the board can be 21 including the governor of RBI and deputy governors. It acts as an advisory body and is not same as that of Monetary Policy Committee. The MPC makes major decisions of monetary policies. The governor of RBI may or may not take the advises provided by the board.
The Deputy Governors are the ex-officio members of the board. The board is responsible to supervise banks, Non-Banking Financial Companies, financial institutions.
However, the RBI Act says that the RBI board can make regulations with prior approval from GoI. The notification has to be placed in front of the parliament within a month and both the houses should approve it. This says that the board cannot direct the Governor.
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