4 min readMumbaiUpdated: Dec 10, 2024 08:57 AM IST
For outgoing Governor of the Reserve Bank of India (RBI), Shaktikanta Das, who led the central bank in the last six years with several key decisions and overhaul of the regulatory framework, inflation remains an unfinished agenda. Despite a 250 basis points hike in the repo rate — the key policy rate, between May 2022 and February 8, 2023, consumer price index-based (CPI) inflation continued to remain elevated and above the RBI’s comfort zone of 2-6 per cent, as mandated by the government.
In the last policy review on December 6, the RBI kept the Repo rate, the main policy rate, unchanged at a high of 6.50 per cent amid the fall in GDP growth, squashing chances of a rate cut.
The latest data showed that CPI, or retail inflation, surged to a 14-month high of 6.21 per cent in October 2024, compared to 5.5 per cent in September. Das, in his multiple speeches has admitted that the last mile of disinflation has been prolonged and arduous.
“The disinflation process is getting a lot of resistance from food inflation remaining stubborn and very high, primarily because of supply-side factors which are affected by the weather conditions,” he had said at an event earlier this year.
However, apart from inflation, Das’ track record has been uncontentious.
The RBI, during his tenure, weathered various domestic as well as exogenous shocks including the collapse of Infrastructure Leasing & Financial Services (IL&FS) and its impact on other non-banking financial companies (NBFCs), once in a lifetime Covid-19 pandemic and the effect of Russia-Ukraine war on inflation.
In his tenure as the RBI Governor for the last 6 years, Das used conventional and unconventional policy measures to maintain macroeconomic and financial stability in the country.
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During Covid 19 pandemic, Das reduced the repo rate by 115 basis points to revive the economy. He offered a loan moratorium to mitigate the adverse impact of the pandemic.
The RBI, under Das, continued reforms in the banking sector at a time when lenders were reeling under the worst asset quality situation. The efforts resulted in an improvement in the gross non-performing assets (GNPAs) of banks from 10.8 per cent in September 2018 to 2.8 per cent at end-March 2024.
He also jacked up risk weight on the exposure of banks towards consumer credit, credit card receivables and non-banking finance companies (NBFCs) by 25 per cent up to 150 per cent, to address the build-up of risks.
The RBI also tightened norms for NBFCs that were aggressively pursuing growth without building up sustainable business practices and risk management frameworks.
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Das also refrained from granting banking licence to big corporate houses amid fears over connected lending and self-dealing if they are allowed in the banking space. “Experience world over has shown that when real sector companies enter into the banking space, there are potential conflicts of interest. The problem around related-party transactions is also a major issue,” Das had said in July this year.
Under Das’ stewardship, the RBI surplus transfer reached an all-time high of Rs 2.11 lakh crore for the year 2023-24. Between FY19 and FY24, the RBI paid a total dividend of Rs 6.61 lakh crore to the government.
He oversaw the withdrawal of Rs 2,000 notes without causing any disruption to common people and businesses. Das also focused on making Unified Payments Interface (UPI) and RuPay, the card payments network of the country, global. Das was instrumental in launching the central bank digital currency (CBDC), or digital rupee, for both wholesale and retail uses.
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