Former RBI Governor Raghuram Rajan on Friday said government layers must be removed from the appointment of chief executive and board members of public sector banks.
He said this in the context of the Banks Board Bureau, which was set up last year with the objective of appointing top executives. Now, however, the BBB conducts interviews and only suggests a set of names to the government, which takes the final decision on appointments. “We need to have... professional boards in banks, independent of government and having the ability to hire or fire a CEO,” he said at his book launch.
‘Create distance’
“When we get there (independent bank boards), we will have truly created the distance between the government and the public sector banks. One indication that we have achieved that will be the day we can close down the department of financial services,” he said. The department of financial services of the finance ministry looks after the banking and financial sector and is headed by a secretary level officer.
Separately, the former IMF chief economist, who ended his term at the RBI in September 2016, said the Indian economy had tremendous potential to grow but ‘what we lack is implementation.’
“We talk, talk and talk. We don’t do,” he said. He said there is no reason why the economy cannot grow at 9-10%. “If we don’t, we need to ask why,” he said.