Cabinet Secretary replaces Raghuram Rajan in key RBI panel

In a departure from past practice, the government has asked the Cabinet Secretary to head the committee for the interview of a new deputy governor of the Reserve Bank on Monday to find a replacement for H R Khan.

The interview, at the RBI headquarters is to be conducted by a panel headed by Cabinet Secretary Pradeep Kumar Sinha. The vacancy is being created by the superannuation of Khan who is due to retire on July 7 as he turns 62.

As per the established practice, the interview panel for the appointment of deputy governors had always been headed by the RBI Governor. Rajan had headed the panel as early as this January that gave a three-year extension to Urjit Patel.

The committee will include Governor Raghuram Rajan, an additional secretary from PMO and three-four academics and will be headed by the Cabinet Secretary, sources told PTI.

The central bank has four deputy governors two of whom are from within the ranks.

The third rung of RBI management includes 11 executive directors and all have been called for the interview.

The move comes at a time when there is a clamour from certain quarters of the ruling BJP against any extension to Rajan, whose three-year tenure ends this September.

The government is yet to spell out its official stance. Amid this continuing debate in the corridors of power and among business leaders -many of whom want Rajan to be more forthcoming with interest rate cuts and less strict on bad loans, but still in public utterances favour a second term for him - the buzz is growing in the online space too.

Close to 60,000 people had signed petitions on online petition platform Change.org at the last count, asking Prime Minister Narendra Modi to allow a second term to Rajan at RBI.