Why RBI is uncomfortable with a more active board - letsdiskuss
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Why RBI is uncomfortable with a more active board


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RBI had renowned and strong personalities like Ratan Tata, Aziz Premji, Kumaramangalam Birla, N.R. Narayan Murthy in its board in the past. Its current members from industries are N.Chandrasekaran of Tata sons, Dilip Sanghvi of Sun Pharmaceuticals, Manish Sabharwal of TeamLease. So RBI always had a strong board. And it has chiefs of highly indebted groups like , K.P.Singh of DLF group G.M. Rao of GMR group.


But there was no dispute or disagreement between the board and the Governor as the minutiae of RBI's regulations or monetary policy was never discussed in the board meetings. Until now the RBI board only gave a broad directions or advice that the central bank should take.


But on 23rd October board meeting some of the board members were not happy with the indebted group's continuing as a board member in the RBI. According to a former RBI official, it would be fatal if these indebted group's chief knew the regulation of RBI before it is implemented.


 Some board members want the board to be more strong and should have a chance to participate actively in RBI's regulations and decisions. But if the board has members from industries or banks it will be like dig one's own grave. Because if the board members who will be affected by the regulations of the RBI, know the regulations beforehand will give time to take action and will benefit them only.


Think about a notice on recognition of non-performing assets came to the board or demonetization announcement known to the board, which has members from banks and indebted companies. You can imagine the consequences. So it is natural that RBI is uncomfortable with strong board.


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