Birla should quit RBI board for sake of legacy

As a board member, even if he recuses, he will have advance access to what a high-level committee recommends

rohit

Rohit Bansal | July 5, 2013


Kumar Mangalam Birla
Kumar Mangalam Birla

As in most matters, the world is split over whether or not star industrialist Kumar Mangalam Birla can continue serving on the board of India’s central banker, the Reserve Bank of India (RBI), and remain in contention for a banking licence, applications for which closed July 1.

Supporters of Birla have trolled me on my social media stating that I’ve been too harsh in being among the first to go on record (read, for example, here) that he should quit.

Birla’s supporters think he will run a fine bank and there’s no reason to suspect either his group’s credentials or his interest in swinging the decision to his favour vide his seat on the board.

Within this group of supporters, some suggest a mere recusal from the relevant board meeting will be enough; others see no role for the board in the selection process, pointing out that a high-level committee (HLC) will do the selection process, and Birla won’t be the judge of his own case!

It’s therefore important to read in entirety the selection process (read it here).

I reproduce with emphasis the operative para: “The High Level Advisory Committee will set up its own procedures for screening the applications. The Committee will reserve the right to call for more information as well as have discussions with any applicant/s and seek clarification on any issue as may be required by it. THE COMMITTEE WILL SUBMIT ITS RECOMMENDATIONS TO RBI FOR CONSIDERATION. THE DECISION TO ISSUE AN IN-PRINCIPLE APPROVAL FOR SETTING UP OF A BANK WILL BE TAKEN BY RBI. RBI’S DECISION IN THIS REGARD WILL BE FINAL.”

Needless to say, “RBI” means “RBI Board” because as per the central bank’s website: “...the affairs of the apex banking institution and regulatory authority are governed by its board. The board's functions include general superintendence and direction of the bank's affairs.”

Even if Birla recuses from the operative meeting, he will certainly receive the agenda papers and the recommendations of the HLC, right?

So, Birla and his advisors must draw the fine line between his entitlement to a licence, and his continuation on the RBI board, a position he’s been holding for six years.

At stake is Birla’s own reputation and brand value, something he covets dearly. There’s also an issue of legacy, which other RBI board members drawn from India Inc., not all of them angels, will cite in years to come, when they themselves think about becoming applicants in the coming years.

RBI governor D Subba Rao has rightly pointed the parcel towards the government, which is the appointing authority for board members. "We have to take a view on that," the governor told reporters after the central bank's board meeting in Chennai, in which Birla also took part.

"This (grant of new licences) is a very recent development. Birla has been on the central board for the last six years. We have to discuss that with the government."

A firm nudge to Birla must therefore come from North Block. 

Comments

 

Other News

Shri Abhijit Phukon (IES, 2004) appointed as Joint Secretary, Department of Agriculture & Farmers Welfare.

 Shri Abhijit Phukon (IES: 2004) has been appointed as Joint Secretary, Department of Agriculture & Farmers Welfare, Government of India. His appointment, approved by the

Shri Avanish Kumar Mishra (ISS, 2000) appointed as Joint Secretary, Department of Administrative Reforms & Public Grievances.

 Shri Avanish Kumar Mishra (ISS: 2000) has been appointed as Joint Secretary, Department of Administrative Reforms & Public Grievances (DARPG), Government of India. The appointment, approved by the Appointments

Millets are thriving. Are millet farmers?

The story of millets is nothing short of extraordinary. Once seen as the food of the poor and downtrodden, they are now seen as the food of the health conscious and the elite. Today, these nutri-cereals occupy prominent shelves in premium supermarkets, feature on the menus of gourmet restaurants, and are e

More judges will not fix courts without better court work practices

A vacant courtroom cannot decide a case. Neither can a poorly managed courtroom simply decide twice as many cases after receiving an additional judge. Judicial capacity and court productivity are related, but they are not the same. The distinction matters because India’s district and subord

Dharmendra Pradhan tenders resignation

Dharmendra Pradhan, education minister at the centre of the storm of the NEET paper leak, offered his resignation to the prime minister on Saturday.   He posted a two-page letter on X, saying he was pained by the events of the last ten days. "This is not a matter of personal

Cabinet approves scheme of chemical parks

The union cabinet chaired by the PM has approved Bharat Audyogik Vikas Yojana Rasayan or BHAVYA - Rasayan Scheme for establishing three dedicated Chemical Parks in the country. The Scheme was announced in the Union Budget of FY 2026–27.   The Scheme will have a total financ

Upcoming Conferences



-->

Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter