Image Source : PTI Reserve Bank of India (RBI) Governor Shaktikanta Das addresses a press conference at the headquarters in Mumbai.
Outgoing Reserve Bank of India Governor Shakti Kant Das has guided the country’s monetary policy through turbulent times during his six-year tenure. The 67-year-old Das, who is known for his vivid metaphors like “horse requiring a tight leash,” left a significant mark on the Indian budget as he prepares to step down on December 10.
COVID-19 financial crisis
In 2020, when the COVID-19 pandemic hit, the Indian economy suffered a severe recession, with GDP shrinking by 6.6 per cent in FY2. In response, the RBI introduced a six-month loan moratorium and helped more than sixty million borrowers. To stimulate the economy, the RBI cut the repo rate by 115 basis points to a historic low of 4 per cent. 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% in FY22.
Indian digital currency revolution
Under Das’s leadership, India made significant strides in digital finance with the launch of the Central Bank Digital Currency (CBDC) by 2022. With pilot projects for wholesale and retail, India became one of the leading countries in adopting CBDCs. By mid-2024, over 500,000 retail users and 50,000 merchants were actively using the Digital Rupee. The RBI’s proposal to expand access to CBDC wallets by non-bank operators like PhonePe and Google Pay in 2024 furthered the country’s digital transformation.
Withdrawal of Rs 2,000 note: A step towards cash management
In May 2023, the RBI announced the withdrawal of Rs 2,000 notes, aimed at improving liquidity and reducing the risk of counterfeiting. Unlike the sudden withdrawal in 2016, the move was planned with a clear timeline. As of May 19, 2023, almost 98 per cent of the Rs 2,000 notes that were in circulation were returned, indicating that this scheme has been successfully implemented.
Strengthening the banking system
Das introduced stringent capital adequacy standards and improved supervisory systems to improve the health of the Indian banking sector. By complying with the Insolvency and Bankruptcy Code (IBC), the RBI helped reduce non-performing assets (NPAs) from 11.2 per cent in 2018 to 4.8 per cent by 2023. It significantly increased the profitability of public sector banks, with their combined net profit surging nearly 4.5 times, reaching a record ₹1,41,203 crore in FY24.
Inflation control: A delicate balance
Inflation management remained a major focus during the Das era, especially in the face of external shocks such as supply chain disruptions and price fluctuations, leading to the inflation target policy introduced in 2016. RBI kept inflation high within its target range of 4 per cent ± 2 per cent. The central bank has partnered with the government to address inflationary pressures such as cutting fuel excise duty and freezing essential stockpiles.
Promoting financial inclusion and digital payments
Among the major achievements of Das was the massive improvement of the Unified Payments Interface (UPI). Daily transactions increased from 10 million in 2018 to over 500 million by 2024, with a record 16.58 billion transactions worth Rs 23.49 lakh crore by October 2024. The RBI also made digital payments more inclusive by ensuring accessibility features for people with disabilities and tracking progress through the Inclusive Digital Payments Index. These initiatives extended financial services to rural and underserved populations, advancing India’s financial inclusion goals.
Shaktikanta Das’s six-year tenure as RBI Governor was marked by decisive policy actions that not only helped India navigate global economic challenges but also positioned the country as a leader in digital finance and financial inclusion. As he hands over the reins to Sanjay Malhotra, the legacy of his leadership will undoubtedly leave a lasting impact on the Indian economy.
Also read | Rs 5,000 late fee: Your last chance to file belated ITR before December 31, check steps here
