Pay Hike For Some Private Bankers Not In Sync With Business Growth: RBI Governor

The increase in packages of some private sector bank executives, in some cases, is not commensurate with the business growth, according to Reserve Bank of India Governor Shaktikanta Das.

“It is in such cases, we send it back to bank boards and ask them to re-look it and then come to us,” he explained while referring to the central bank’s circular on private sector bank executives’ compensation.

Das was addressing questions at the Business Standard BFSI Summit.

The central bank’s circular is only a principle-based regulation, the governor said. It doesn’t define how much fixed and variable pay should be there for these private sector bank executives, but just the ratio.

“It is the NRC of the banks, which is expected to decide the compensation… We don’t put any restrictions,” he said.

In terms of attrition at some private sector banks, the governor said that the RBI is looking at it as a part of its supervisory role.

“RBI has always looked at it, but now we are looking at it more closely as times have changed… Banks need to focus on it.”

On corporate governance, he said that the Indian banking sector and non-bank financial companies are healthy and robust.

Even the banks’ exposure to non-bank financial companies is also monitored regularly by the RBI, Das said.

As for the internationalization of the Indian rupee, it is not a target but a process, and there is a phased road for it, according to the RBI Governor.

“There is no particular time that we are trying to reach as the size, presence, and impact of the Indian economy in the global scenario is also expanding,” he said.

At this point, the Indian economy is contributing around 15% to world growth. The dependence on one currency for international trade in any economy has its risks, Das said.

However, this is not a case of pitting the Indian rupee against the U.S. dollar, but merely looking at ways to increase the footprint of the rupee in international trade, he said.

For this, India has also actively taken steps, especially with countries where there are active trade relations.

The growth momentum in India continues to be strong, and the Q2 GDP numbers are expected to surprise everyone, according to Das.

While there was no estimate, he said that when the numbers are released at the end of November, they will surprise everyone on the upside.

Domestic factors like inflation and growth are the principal determinants of India’s monetary policy, he said.

Addressing questions on cryptocurrency, Das maintained that it is a serious issue and a threat to the financial stability of countries, especially for emerging market economies.

“We are not against innovation, but it must serve a public purpose,” he said.