Banking visionary M Narasimham passes away at 94
Former Reserve Bank of India (RBI) Governor Maidavolu Narasimham died in a Hyderabad hospital on 20th April, Tuesday at the age of 94 from a covid-related illness.
Before his seminal role as the chairman of the Narasimham Committee in 1991 and 1998, he held the distinction of being the only governor appointed from the Reserve Bank cadre. Although his tenure as the RBI governor in 1977 was short-lived and lasted only 7 months during the historic emergency period, his name and contributions to the Indian Banking sector remain significant to date. It would not be an exaggeration to say that most developments in the Banking sector have some foundation on the Narasimham reports.
Narasimham’s journey with RBI began when he joined as a research officer in the economics department. Following this, he joined the government, served as an additional secretary to the Department of Economic Affairs before becoming the 13th RBI governor between May and November 1977. He then went on to serve as the executive director for India at the World Bank and the IMF, after which he became a secretary in the finance ministry.
His role in the Committee of Financial System (CFS) set up by Dr Manmohan Singh as part of the overall economic reforms in 1991 and the Committee on Banking Reforms 1998 shaped much of India’s financial landscape. Some of the recommendations he made back then include the creation of bank mergers and a four-tier banking structure with three large banks on top, he advocated for regional rural-focused banks to operate with the efficiency of commercial banks, proposed a phased reduction in banks’ mandatory bond investment and cash reserve limits and introduced the capital adequacy ratio and voted to abolish the branch licensing policy.
A true financial visionary, he also recommended the full disclosure of accounts and the classification of non-performing assets and suggested an asset reconstruction fund to take over bad debts. The idea for six special recovery tribunals for the same is the grounds for the modern Insolvency and Bankruptcy Code.
