In 1977, shortly after the end of the state of emergency, Finance Minister HM Patel summoned the then Banking Secretary Narasimham to the then Finance Ministry and asked the then RBI Governor KR Puri to step down. Puri was shocked to hear this, but according to Narasimham’s autobiography, on the advice of his teacher, he reprimanded Patel and Narasimham by asking them to stay till the end of April. Puri left the Central Bank on May 2, 1977.
IG Patel, who has been replaced as the new RBI governor, will not be available for another few months. The previous government of the Janata Party government is considered to be close to the most senior deputy governor of the then government wanted to appoint arkehajarini. So, following another example, they say that former President S. Radhakrishnan’s grandson M. Narasimham has been appointed as the 13th Governor of the Reserve Bank.
Early in his life, Narasimham studied at Cambridge, and was placed on the course on the advice of the former manager of the London branch of the RBI. Joined RBI in 1950 as an officer in the Research and Statistics Division. To get the role, he was interviewed by then banking, central bankers like BK Madan, JJ Anjaria, PS Narayana Prasad, then governor Benegal Rama Rao and the RBI board. Initially, Narasimham developed an interest in the banking sector and was one of the first research officers in the Banking Research Division established at RBI in 1952.
At the RBI, Narasimham joined a formidable line of young economists, including Anand Chandravarkar, Deena Khatkhate, VV Bhatt and Narasimham, who collectively gave Khatkhate the moniker of the “Gang of Four”.
In 1971, shortly after Bangladesh’s independence, Narasimham was sent to Kaka to assist the new Bangladeshi government in establishing central banking operations, and from there, Narasimham was summoned to Delhi and worked with the Ministry of Finance. On the proposal to return to the RBI as Deputy Governor, Narasimham read the tea leaves properly and remained in the Finance Ministry, which should be sent to the RBI as Governor a few years later. During this time, he worked with Manmohan Singh, Eng Kaul and PN Haqsar, with a special focus on raising rural debt.
An expert on banking issues, Narasimham worked on banking issues in the 1970s and is widely regarded as the father of regional rural banks. During his tenure as Banking Secretary, the National Agriculture Commission released its lengthy report, which eventually led to the establishment of the National Bank for Agricultural and Rural Development.
Narasimham was instrumental in securing India’s external position after the devastating 1979 famine. He spent many years in Washington, D.C. as Executive Director of India, first for the World Bank and later for the International Monetary Fund (IMF). His role in the formation of the SDR5bn loan (the largest advance made by the IMF) in 1981 was significant because he navigated the relatively hostile US Treasury and pushed back from Indian politicians to meet India’s financing needs. Narasimham later worked with FM Pranab Mukherjee to return to India from the Fund as Finance Secretary and quickly rose to become Finance Secretary.
Despite his layered profession, M. Narasimham is widely recognized for his prominent role in simplifying the Indian banking and economy. True, his two committee reports in 1991 and 1998 still affect Indian economic liberalization, and many of the suggestions made in his reports point to the right path.
In the first committee report, Narasimham strongly advocated ending dual control over the banking system and strongly suggested that the RBI should be ordered. His recommendations also included a dramatic reduction in the Statutory Liquidity Ratio (SLR), which would be phased out from 38.5% to 25%, abolishing branch licensing and opening up the banking system to private and foreign players.
In 1998, Narasimham was asked to lead another committee on banking reforms, where he supported the consolidation of public sector banks to form mega corporations and reduced public ownership to 33%. Among aspiring members. This ability to find the middle way helped him to bring forward bigger versions without cluttering up too many feathers.
M. Narasimham’s reports and recommendations have been paving the way for Indian banking reforms for the past three decades and are likely to remain a cornerstone of the modern system of Indian banking in the years to come.
Rahul Bajoria is the Chief India Economist for Barclays and author of ‘The Story of the Reserve Bank of India’. These are the personal views of the author.