Shaktikanta Das on Tuesday (December 10) addressed his press conference as the Reserve Bank of India (RBI) governor on his last day in office. Das, twice ranked as the world’s top central banker by the US-based Global Finance magazine, outlined the most crucial tasks that lie ahead of his successor Sanjay Malhotra, who assumes office on Wednesday — restoring inflation-growth balance.
“First, so far as the Reserve Bank is concerned, I think restoring the inflation-growth balance is the most important task ahead of the Reserve Bank, and I am sure the Team RBI, under the leadership of the new Governor, will take it forward”, Das said.
The other concern flagged by Das for Malhotra was to navigate the changing world order, effectively deal with cyber threats, and focus on harnessing new technologies.
Das also hoped that Malhotra would carry forward RBI initiatives such as the Central Bank Digital Currency (CBDC) and unified lending interface (ULI) and promote financial inclusion.
“The new RBI Governor Sanjay Malhotra has vast experience, I am sure he will do his best,” Das further said.
Das said that during his tenure as the RBI governor, there was a productive and cooperative relationship between India’s central bank and the finance ministry.
He even noted that while at times there were divergent viewpoints during his leadership, they were resolved through internal discussions.
“Perspectives of the finance ministry and RBI can differ at times, it happens world over, but in my tenure, we have been able to resolve all such issues through internal discussion”, he said.
Das also said that when making decisions, RBI governors consider the requirements of the wider economy. “Eventually, it is a judgement call that every governor takes,” he said.
He pointed out that the effort of the RBI has been to make monetary policy as appropriate as possible, given prevailing economic conditions and outlook.
Das, a 1980-batch IAS officer, took charge as the RBI governor in December 2018 and served in the position for six years. The government extended his tenure for another three years in 2021.
During his press meet, Das said, “In the December 12, 2018 press conference, I said RBI is a great institution with a rich legacy. I also said I will do everything to uphold professionalism and autonomy of the bank.”
“I had mentioned about the challenges in the banking sector. I also mentioned the challenges at that time [when I joined in 2018]… I also talked about the liquidity issue which needs to be addressed and finally, I said that flexible inflation targeting the framework of flexible inflation targeting is very important and there is always a need to maintain inflation while being mindful of the growth trajectory. These were the exact words. So in the last six years, I have endeavoured to adhere to these principles which I had mentioned when I took over as the RBI governor…” Das said.
“Teamwork in the Reserve Bank was perhaps, in my experience, at a very high level. I got excellent cooperation from each and every member of my RBI team. Each of my colleagues did their best during the trying times of Covid. My journey as the Governor of the RBI… I was fortunate to get this opportunity, and I tried to give my best to the institution, to its policies in the best interest of the economy,” he said.
In May 2023, the RBI, under the governorship of Das, made a surprise decision to withdraw Rs 2,000 denomination notes. It was executed smoothly, unlike the chaos during demonetisation.
As per the RBI, as of December 2024, 98.08 per cent of the Rs 2,000 currency notes, which were withdrawn starting in May 2023, have been returned to the banking system. Originally, about Rs 3.56 lakh crore in Rs 2,000 notes were in circulation.The RBI has continued to facilitate the deposit and exchange of these notes at its branches and through India Post.
Das’s tenure saw a massive boost in Unified Payments Interfaces (UPI) and financial digitisation.
Under the governorship of Das, UPI’s footprint was expanded beyond India via the National Payments Corporation of India (NPCI). The RBI engaged in discussions and piloted efforts to enable cross-border transactions via UPI, starting with countries like Singapore and Bhutan.
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By 2019, UPI surpassed 1 billion transactions and it started to become central to India’s digital payment ecosystem. By mid-2024, UPI recorded over 14 billion transactions each month, with transaction values often surpassing Rs 20 trillion.
During the Covid-19 pandemic, the RBI reduced the benchmark interest rate or repo rate to a historic low of 4 per cent from 6.5 per cent when Das assumed office. It was seen as a bold step towards the accommodative monetary policies to support growth amid economic challenges.
To provide relief to borrowers battling debt servicing due to pandemic disruptions, the RBI in March 2020 allowed a moratorium on term loans and working capital facilities.
The central bank also announced a monetary policy including a Targeted Long-Term Repo Operations (TLTRO) of Rs 1 lakh crore aimed at supporting critical sectors like MSMEs and NBFCs. The loan restructuring provided much-needed stability for struggling businesses, helping the economy recover 8.7 per cent in FY22.
The RBI had also launched pilots for the Digital Rupee under the leadership of Das. It was a part of India’s broader effort to explore the potential of blockchain technology in the realm of digital payments and to enhance the efficiency, security, and inclusivity of its financial systems.
The pilot project for the Central Bank Digital Rupee (CBDC) in the wholesale segment was started in November 2022 and was followed by a retail pilot in December 2022. These pilots were designed to test the digital currency’s technological infrastructure, its operational framework, and how effectively it integrates with existing payment systems like UPI and IMPS.
Over 500,000 retail users and 50,000 merchants were actively using the Digital Rupee by mid-2024.
Das emphasised that the CBDC could play a crucial role in optimising the monetary policy framework, offering a new tool for the central bank to manage liquidity and inflation.
In 2021, the RBI, under Das’s governorship, introduced new guidelines for reshaping the ownership structure of private banks in the country which were designed to encourage more diversified ownership and curb excessive concentration of control within a few entities.
As per the new norms, the promoters of private banks are required to reduce their stake to below 26 per cent within a period of 15 years. Also, restrictions were introduced on corporate entities from holding large stakes in private banks to reduce risks associated with cross-holding arrangements and related-party transactions, promoting transparency and accountability, among others.
Under Das’s leadership, India’s central bank took a host of key measures to stabilise the non-banking financial companies (NBFC) sector, restore liquidity and build investor confidence.
When Das took the charge of the RBI governor in 2018, the NBFC sector was grappling with the aftermath of the IL&FS crisis, which had exposed deep liquidity and governance issues in the sector. The crisis triggered a widespread loss of investor confidence and panic in the financial markets.
The RBI also tightened regulations to improve the governance and risk management frameworks of NBFCs. It introduced measures that focused at increasing the transparency and accountability of these institutions, including stricter norms for asset classification, provision coverage, and capital adequacy.
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Why Shaktikanta Das was rated among world’s top central bankers, 6 big feats in 6 years
