Sea change in regulatory top deck this year

Mumbai: India's regulatory landscape could be set for further changes in key personnel, with the crucial role of central bank governor having just been filled. The tenures of the heads of the capital market and insurance watchdogs are scheduled to end soon. It's not clear whether extensions or replacements are around the corner, amid a likely churn in the global economic landscape as Donald Trump assumes the US presidency with a pledge to upend business as usual.

Sanjay Malhotra took over as Reserve Bank of India (RBI) governor last month. In addition, three of four RBI deputy governors (DGs) are retiring this year.

They include Michael Patra, who will leave later this month after his second one-year extension ends, completing a five-year term in charge of the crucial monetary policy department. Patra has been part of the six-member Monetary Policy Committee (MPC) since it was established in 2016, first as executive director and later as DG.


In October, three new external committee members were also appointed to the MPC. This means five of the six members of the rate-setting committee will be new, including Patra's replacement, as the RBI seeks to balance growth and inflation.

At the Securities and Exchange Board of India (Sebi), Madhabi Puri Buch completes her three-year term as chairperson at the end of February.

'Personality changes at the top'
The government hasn't yet started the process of finding her successor and it's not yet known if her term will be renewed.

Insurance Regulatory and Development Authority (Irda) chairman Debasish Panda's three-year term also ends on March 10. However, people with knowledge of the matter said the former bureaucrat may be given more time to complete the government's agenda of increasing insurance penetration.

Further, the Pension Fund Regulatory and Development Authority may get a new chairman as Deepak Mohanty's term ends in May, after he turns 65.

Bankers and economists note that changes will be watched closely at a time when markets are volatile and the world is undergoing geopolitical changes. "Three of four DGs (changed) is an extraordinary situation," said a risk and compliance consultant at a US-based advisory. "No doubt, RBI has an experienced line of regulators who have come up the ranks and can take over the mantle, but quick personality changes at the top need to be planned better."

T Rabi Sankar's term as DG, including a one-year extension, ends on May 3. Sankar, who is in charge of the foreign exchange, currency management and government accounts departments at RBI, has spent close to 35 years at the central bank.

Rajeshwar Rao will finish his second one-year extension as DG on October 8. Rao, who has steered the crucial departments of regulation, risk monitoring and enforcement since 2020, is also a career central banker.

It won't be surprising if Sankar gets another year's extension, but Patra and Rao are unlikely to be given more time. Another year's extension beyond five will be unprecedented, said the people cited above.

"Even in a commercial bank, so many changes at the top would invoke caution, and this is the regulator we are talking about," said the former head of risk and compliance at a private sector bank. "Both globally as well as domestically, we are seeing some cases for risk aversion."

"Sebi and Irda are important but the most crucial is, no doubt, RBI," said the consultant.