For close to seven months, the RBI does not have a full-time deputy governor (DG) handling the supervision of banks, both state-run and private, with the government failing to find a replacement for S S Mundra who retired in July.
RBI has four deputy governors, including one from the banking sector. While it has an economist in Viral Acharya, and B P Kanungo and N S Vishwanathan have risen through the ranks, the regulator does not have a full-time head of the crucial department that oversees functioning of banks.
The role of the department of banking supervision, which also undertakes inspection, is under the scanner as RBI is seen to have failed in spotting the alleged over Rs 11,300-crore fraud that had been going on for over six years until it was busted in January after being spotted by PNB.
The government had initiatied the process to appoint the fourth DG before Mundra retired on July 30 but scrapped the panel of short-listed candidates who had been interviewed. In December, over four months after interviews were conducted, the process was restarted with the government yet to shortlist a new set of candidates.
While several bankers are expected to compete for the job, many see SBI MD B Sriram, who was in the race to head the country’s largest bank, as a top contender. In the past, public sector bankers, usually CMDs, were appointed DGs but last time, private sector and foreign bank executives were also considered.
The department of banking supervision was set up in 1993, after the Harshad Mehta scam where the RBI’s role had come under scrutiny.