Shaktikanta Das, the Chief of the Reserve Bank of India (RBI), was recognised as the ‘Governor of the Year’ for 2023 by Central Banking in London, on 14 June 2023. Central Banking is an international economic research journal. The prestigious award acknowledges Das’ commendable performance as the head of the RBI in effectively handling inflation and navigating India’s banking system through challenging situations such as the COVID-19 pandemic and global turmoil.
According to the organisers, Das, as the RBI governor, has played a pivotal role in implementing crucial reforms and ensuring the smooth operation of India’s leading payment innovations. He has demonstrated exceptional leadership during difficult times, as highlighted by his ability to steer India through crises with confidence and articulate solutions.
The publication recommended Das for this award in March 2023, recognising his outstanding leadership during times of global turmoil and adversity. Throughout the COVID-19 pandemic and other significant events like the Russia-Ukraine war, Das exhibited remarkable finesse in managing India’s central bank and the entire banking system.
Shaktikanta Das assumed his position in December 2018, a few months before a major Non-Banking Financial Company (NBFC) in India went bankrupt, leading to a liquidity crisis. This crisis revealed significant flaws in the business models of various mid-sized banks that heavily relied on NBFCs. Subsequently, other banks such as Punjab and Maharashtra Co-operative Bank also faced collapse. Despite these challenges, Das effectively managed the situation with his leadership skills.
It is worth noting that Das is the second RBI governor to receive this award, following Raghuram Rajan in 2015.
Speaking on the achievement, V Vaidyanathan, CEO of IDFC First Bank, highlighted a few key moments during Das’ tenure. “In 2018, India encountered a “Twin Balance-Sheet Problem” with many capital-deficient lenders and cash-flow-deficient borrowers. Now, capital adequacy surpasses 16%, and borrowers have robust cash flows, with a “Twin Balance sheet Advantage.””
He also spoke on the changes that the RBI introduced during Covid-19, “markets crashed, bond markets froze, and interbank lending choked; RBI moved in swiftly and introduced innovative and targeted measures to thaw the system and restore stability,” outlining some measures that RBI took during this time, including: extending resolution period for stressed assets, reducing repo rates, reducing MSF, Moratorium 1.0 and 2.0, Restructuring 1.0 and 2.0, the implementation of sector-specific liquidity support MFs, MSMEs, agriculture, NBFCs and housing.
The CEO listed innovative systems introduced by RBI, including UPI, ONDC, e-KYC, e-mandates, e-agreements and more. He also noted how RBI insisted that banks achieve both financial inclusion as well as strong asset quality.
Vaidyanathan concluded his post with a question he asked Das, “I once asked him how he manages to be independent and also never have an altercation with the government. He said “Look, when I have to say No, I just politely say “No”, and explain the reason for it. Why fight? We work for the common good of the country.” The approach is so simple, I learned from it.”
