RBI Deputy Governor N S Vishwanathan has decided to step down by March 31 due to ill health, three months before the end of his extended one-year tenure. While the Reserve Bank has accepted his request to be relieved by March 31, the same has to be accepted by the Cabinet as well, which is likely to happen any day given his health condition, a person in the know of the development said. His one-year extension was to end on July 3.
RBI spokesperson Yogesh Dayal refused to confirm or deny the development. Sources said, despite ill health, the senior most deputy governor at the RBI was planning to leave by end-April, but the deteriorating health did not allow him. So he has asked for an early retirement. The 62-year-old has been in-charge of the key supervisory and regulatory functions at the Mint Road and it was this powerful position that led the government to offer him an extension given the mess in the banking system.
The RBI's supervisory and regulatory powers came under criticism after IL&FS, one of the largest NBFCs went belly up in September 2018. And then came the scam at the city-based Punjab & Maharashtra Cooperative Bank in September 2019. Both incidents dented the image of RBI's regulatory prowess. After being appointed as the deputy governor on June 28, 2016 for a three-year-term, Vishwanathan has served under three governors -- Raghuram Rajan, Urjit Patel and Shantikanta Das.
Before the elevation, he was an executive director of the central bank. Born in June 1958, he did his Master's in economics from the Bangalore University and joined the central bank in 1981. In July 2019, the Appointments Committee of the Cabinet re-appointed Vishwanathan for one year till July 3, 2020. If the resignation is accepted by the Cabinet, Vishwanathan will be second deputy governor to leave after Das took over as the governor in December 2018. Deputy Governor Viral Acharya left in June 2019.
As deputy governor, Vishwanathan is heading the departments of banking regulation, co-operative banking regulation, non-banking regulation, Deposit Insurance & Credit Guarantee Corporation, the financial stability unit, and departments of inspection, risk monitoring and also the secretary's department. Before he became the deputy governor, he was on a three-year deputation to the Bank of Mauritius, the central bank of Mauritius, as director of supervision.
An RBI observer said his departure will pose a challenge for the central bank to navigate the key supervisory and regulatory functions in one of its most difficult times. He was one of the key supporters for governor Patel in getting the crippled state-run banks under prompt corrective action framework as also sending the largest defaulters for bankruptcy through the February 2018 circular (which was struck down by the Supreme Court last April).