The Reserve Bank of India (RBI) has asked its senior officials, especially deputy governors, to take permission before taking up assignments in the private sector after retirement or quitting from the central bank.
The RBI move came after a deputy governor joined a private sector group soon after leaving the RBI, without waiting for the cooling period. This did not go down well with the RBI which asked explanation from the official. While a high level committee decides about the post-retirement movements of senior officials, officers should take permission during a period of two years from the date of cessation of their service.
“The RBI has a well laid down policy for all its officials (including senior officials) for joining other institutions post their retirement/resignation…,” the RBI said.
“The policy provides that the officers should seek prior permission of the RBI during a period of two years from the date of cessation of their service before taking up such employment. Before granting permission, it is ensured that the position being sought by the retired officer does not bring in any conflict of interest on account of the portfolio held by the officer in the immediate past. In respect of retired senior officials, the decision vests with a high level committee,” the RBI said in response to a query from The Indian Express.
The central bank’s move is to avoid any conflict of interest if a retired RBI official, who was privy to sensitive information, joins a private sector firm. Several RBI officials have joined finance companies and banks after retirement. Another RBI deputy governor who retired in 2011 became the non-executive chairman of a leading private bank in 2015.
Meanwhile, a panel headed by RBI governor Raghuram Rajan interviewed candidates for the position of Deputy Governor. The interview was held as Urjit Patel’s term as Deputy Governor in charge of the monetary policy department will end in January.
Apart from Patel, RBI executive directors Michael D Patra and Deepak Mohanty were also called for the interview. Patel’s predecessor Subir Gokarn did not get an extension after a three-year tenure.
There will be another vacancy of deputy governor post soon when Khan will retire in June 2016. Out of four deputy governors, two are selected from within the RBI while a career banker is selected as the third deputy governor. The fourth DG is normally an economist selected from outside who will head the monetary policy department.
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