The Centre announced the appointment of Revenue Secretary Sanjay Malhotra as the 26th Governor of the Reserve Bank of India as the six-year term of incumbent Governor Shaktikanta Das came to an end.

RBI Governors

• RBI Governors are appointed by the Government of India and serve as the top leaders of the Reserve Bank of India (RBI).
• The Governor acts as the CEO of the RBI and the head of its Central Board of Directors.
• Indian Rupee currency notes issued by the RBI bear the Governor’s signature.
• Sir Osborn Smith was the first RBI Governor appointed after the inception of RBI in 1935.

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Appointment of RBI Governor

• The RBI Governor is appointed under the authority of the RBI Act, 1934. 
• The Central Government is responsible for the appointment.
• The Financial Sector Regulatory Appointment Search Committee includes the Cabinet Secretary, the current RBI Governor, the Financial Services Secretary, and two independent members.
  • This committee prepares a list of eligible candidates.
  • Shortlisted candidates are interviewed, and the list is sent to the Cabinet Committee on Appointments, headed by the Prime Minister, for final confirmation.
• Tenure: The Governor holds office for a term not exceeding five years, with the term determined by the government at the time of appointment.
  • The RBI Governor’s term is initially set at three years but can be extended by two more years if required.
• The term may end in two ways:
• • If the President of India decides to remove the Governor.
  • If the Governor chooses to resign and submits their resignation to the President.
• The Governor is eligible for reappointment or extension of their tenure.
• The RBI Act, 1934, does not specify any particular qualifications for the Governor.
• The Central Government can issue directions to the RBI in the public interest after consulting the Governor.

Roles and Responsibilities of RBI Governors

• Monetary Policy Committee (MPC): The Governor chairs the MPC, which is responsible for setting benchmark interest rates and maintaining inflation within target levels.
  • The MPC consists of six members; three from the RBI (including the Governor) and three external members. Decisions are made by majority vote.
  • If there is a tie (3-3), the Governor, as the chairperson, has the power to cast the deciding vote, effectively breaking the deadlock.
• Appointments and Leadership: Oversees appointments of senior officials within the RBI and plays a crucial role in forming committees on critical financial matters.
• Regulation of Financial Institutions: Regulates banks, non-banking financial companies (NBFCs), and other financial institutions to ensure financial stability and compliance with RBI guidelines.
• Implementation of FRBM Act: Monitors and advises on the implementation of the Fiscal Responsibility and Budget Management (FRBM) Act, ensuring fiscal discipline in the economy.
• Currency Management: Manages the issuance of currency, ensuring the supply of clean and secure notes while withdrawing unfit ones.
  • The Governor ensures and monitors credit flow to small-scale industries, rural areas, and the agriculture sector.
• Advisory Role: Provides expert advice to the Central and State Governments on financial and economic policies, fostering coordinated economic planning.
• Crisis Management: Acts as the key decision-maker during financial crises, implementing measures to stabilize the economy.
• Policy Implementation: Ensures the execution of policies related to foreign exchange, financial inclusion, and developmental initiatives for various sectors, including rural and agricultural areas.

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RBI Governors Eligibility Criteria

• The RBI Act, 1934 does not mention any specific qualification for the governor.
  • People with different educational backgrounds were selected to head the institution.
  • However, the governor traditionally is either a civil services personnel or an economist.
• Candidates should have prior experience in areas such as:
  • Working with the International Monetary Fund (IMF) or World Bank.
  • Serving as Chairman or General Manager of a bank.
  • Holding significant positions in reputable financial or banking organizations.
  • Working in the Ministry of Finance of the Government of India.
• The candidate must be an Indian citizen aged 35 years or older.
• The candidate cannot be a member of Parliament, State Legislature, or hold any other office for profit

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