Outgoing RBI Deputy Governor K C Chakrabarty, who earned a reputation for being too candid during his 5-year stint at the central bank, today said many of his views have been vindicated from time to time. He defended his being outspoken on important regulatory issues, saying that his views on inflation and monetary policy among others have been vindicated repeatedly. Chakrabarty told PTI in an interview. The commercial banker-turned central banker had last month called its quits almost 45 days ahead of the end of his second term. His last working day is tomorrow.
"Being open and transparent is the hallmark of democracy. As a supervisor, my job is to communicate and shout, create the awareness. (Sooner) you do that, you will get a better result and more you delay, to that extent will be the damage. That is why I am happy about my stint in RBI,"
He asserted that he never spoke against his higher-ups, but only gave his views on certain topics when they were sought. Chakrabarty also spoke candidly about an episode in 2011 when the then Governor D Subbarao was forced to strip all the key departments from him after critical comments surfaced in the media on the ineffectiveness of the monetary tightening, attributed to an unnamed RBI official. "So far as that episode is concerned, nowhere can anybody prove that I said that. Anyhow that was my view, and the entire world today knows that my view was correct," he said. This incident also led him being asked not to speak extempore, something he was very fond of, and his speeches were uploaded on the Reserve Bank of India website. 
"Our job is to give the advice. You may not agree with my views... I will give you logic and ultimately time will say who is right and who is wrong," 
Chakrabarty, understood to be considering an offer from a global consultancy firm post-retirement in London, refused to confirm or deny this saying that nothing is on his hands as of now. Meanwhile, he pointed to his flagging concerns over the public's obsession over gold buying which needed to be addressed. "I had said gold buying was bad, and lots of people abused me. Ultimately it has been proved that what I had said was correct," Chakrabarty said.
 "Difference of opinion and dissent should be the hallmark of a democratic society and absolutely this is what is the greatness of this institution, that you can express your views. I have so many times said so many things against the ministry and nobody has said anything against me... The hallmark of the democratic system is that,"
Chakrabarty expressed satisfaction over the results of his zealous approach in pointing out the flaws on the corporate governance and asset quality at banks. "I think I have sensitised the system. Everybody is talking of corporate governance and asset quality now. The media is concerned about asset quality, bank chairmen are concerned about asset quality, the finance ministry is concerned about asset quality, and so is Parliament. I think I've been successful in my job," he said. Seated in his 19th floor office on the Mint Road, Chakrabarty also spoke about the duel between him and the then SBI chairman Pratip Chaudhuri over the former's call for abolishing the cash reserve ratio (CRR), even though the comments were largely a reiteration of his earlier stance. "In a regulated environment, you have to learn to do business as per what the regulator says. If you don't agree with the regulator, you have to stop doing business... The regulated entities cannot dictate the terms to the regulator, if they do that there will be regulatory capture," he said. The CRR and the statutory liquidity ratio (SLR) have been brought down to the current levels as part of the RBI's reform agenda to gradually bring down those ratios he said, pointing out that while CRR was 16 per cent in the 1990s, SLR was at an atrocious 40 per cent. On the foreign banks' opposition to the priority sector lending requirement, Chakrabarty said it is time they learnt to do business the way the regulator wants them to and that the RBI will give them a say in the matters but cautioned against "regulatory capture". "All these foreign banks, which we are giving agricultural target, they have been working in this country for the last 125 years or more than 100 years... Now I am giving them the target and asking them to learn it, and then also they are unhappy, what can I do? "I am sorry, (but) what the regulator will do, the regulator will decide. You cannot say market players will dictate what regulator should do. Then it is regulatory capture," he added. 

Much remains to be done

There are certain things which still remain unaccomplished, especially on the financial inclusion front, the commercial banker-turn-central banker, said.
He has been credited with doing a lot in the field of financial inclusion by pushing banks to lend to the economically weaker sections and opening more branches in unbanked areas. Some of his initiatives include stopping banks from charging prepayment penalties on mortgage loans, forcing lenders to end discriminatory pricing, interest rate deregulation on the savings accounts, and ending penalties for not maintaining minimum balance, among others. " A lot of ground has to be covered. We have a long way to go. Financial exclusion is very high in our society," Chakrabarty told. He said though a lot has been accomplished by the apex bank, there are still many areas where work remains to be done. "Yes, so far as the area of financial inclusion is concerned, the number of transactions has not gone up and credit products have also not picked up which could have made these accounts commercially viable," the statistician-turned- academic-turned banker said. Chakrabarty, who joined RBI in 2009, was in charge of banking supervision, currency management, financial stability, customer service, rural credit, HR management, Deposit Insurance and Credit Guarantee Corp, Rajbhasha department and Right to Information, among others. He is also the RBI nominee on the Financial Stability Board, an international body. He said the apex bank has been successful in creating more touch points, thereby giving a number of people access to credit and bringing them into formal financial system. "We have created access by creating over 3.5 lakh touch points. So far as opening the basic savings accounts is concerned, over 200 million savings bank accounts have been opened, which is an achievement," he added.
"So, while I have not been able to achieve many things, let me say that it is not because we have made any less efforts. Efforts were not lacking, but we did not get the results to the desired extent," Chakrabarty said. Declining to take credit for the initiatives and changes that happened during his tenure, he said it was because of the support from former Governor D Subbarao and the present chief Raghuram Rajan that he was able to do his job. "Ours is a very feudal system. I have no agenda. We (Deputy Governors) propose certain things and they become the Governor's agenda." However, he was quick to add that both the Governors he worked with accepted his ideas and allowed him to do his job smoothly. Asked about the problems at United Bank of India, which is having high level of bad loans, Chakrabarty said there will be some exceptions and the Kolkata-based lender is one of them. "Not a single bank has collapsed in the past five years, which was one of the most critical periods (for the Indian banking system). Yes, something has happened at United Bank, and corrective measures have been initiated. "This bank is even today adequately capitalised and if there is any shortfall, the Government has said it will provide that. Absolutely there is no problem in the bank," Chakrabarty added.


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