Chakrabarty tells Shyamal Majumdar & Manojit Saha that banking came to him not by design but by accident, and that banks in India ignore the poor
Our first question was inevitable. Why, really, we ask Kamalesh Chandra Chakrabarty, did he decide to resign as Reserve Bank of India (RBI) deputy governor nearly three months before his term was slated to end on June 15 this year. To our disappointment, the answer does no justice to his public persona of a fiercely outspoken banker and regulator. “That’s not for public consumption,” Chakrabarty, dressed in an immaculate two-piece black suit, demurs before proceeding to provide us with details of his excellent equation with all his bosses at RBI.
We take the cue and try, quite reluctantly, to change the topic, but the vintage Chakrabarty is back in a jiffy. As we settle down at Fenix, the restaurant at the sprawling lobby of the Trident hotel at Nariman Point, he volunteers to talk “in general” about a couple of issues. First, one should leave when people miss you and not when they “start kicking you”. Second, he has still not been able to figure out the exact retirement age of RBI deputy governors. Sixty-two, we say. But Chakrabarty counters that by saying four of the previous deputy governors retired on either side of 62; in fact, most got extensions beyond 62 years. He doesn’t understand why there should be different retirement age for different people and why such decisions should be ad hoc or discretion-based. In fact, regarding one deputy governor, both the finance ministry and RBI wrote in the files that there is no retirement age for RBI deputy governors.
The question before him, thus, was simple. If there is no official retirement age, then he should choose when to retire since he didn’t “want a bureaucrat to take that decision.”
“I can’t decide on the day of my death; that’s God’s prerogative. But in a democratic country, one has the power to decide on his retirement date,” he says.
He isn’t finished yet and gives us a third “issue”. Never in his life has he worked for more than five years in one position since he is a firm believer of the fact that after a point, one has nothing new to offer in the same position: “I have worked for five years as deputy governor, with more or less the same portfolio… and sometimes without a portfolio.” The last bit is a reference to August 2010, when he was stripped of most of his key portfolios a few days after his reported public comments on why RBI should be more aggressive in combating inflation. Chakrabarty clearly has that rare ability to laugh at his own expense. When reporters asked him to comment on an RBI policy initiative, he had famously said “Do you want me to be stripped of the Rajbhasha portfolio as well?”
Chakrabarty orders chicken clear soup and assorted baked vegetables, saying he stopped having a full meal for lunch many years ago. We make up for his frugal order by ordering rice and “railway mutton curry”, prompting Chakrabarty to say wistfully that he used to have rice for breakfast as well as lunch during his childhood in a tribal area in Odisha, where his father was posted as a doctor in a missionary hospital. The only male among six siblings of immigrant parents who moved to India from then east Pakistan, he was later sent to his grandparents in Varanasi, so that he could get a decent schooling.
Even close to four years after the “punishment” by then RBI Governor D Subbarao (he subsequently regained most of his key departments), Chakrabarty remains unapologetic and says but for his outspokenness, the world would have not known that he has a different view on inflation. “In hindsight, one can say I wasn’t liked for speaking the truth. But I certainly wasn’t punished because less work can’t be considered a punishment. If I were to be punished, I should have been given more work,” he says with a big smile. In any case, he has differed with his bosses at every stage of his 42-year career. In fact, on a number of occasions, he differed with various finance ministers openly. “No one can be punished for having a difference of opinion but when a decision is taken by my superiors, it’s my duty to implement it,” he says.
Chakrabarty says he is extremely lucky to have had the opportunity to work in the public sector since outspoken people like him would have surely been thrown out in the private sector. In the public sector, the punishment for outspoken and no-nonsense people who refuse to indulge in lobbying is limited to either not getting a choice posting or transfers. For example, when he was in Bank of Baroda, he was posted for a long time in Baroda (now Vadodara), which was 1,800 km away from his adopted hometown of Varanasi, with the result that he couldn’t attend the last rites of both his parents since convention dictates that the cremation must take place before sunset on the same day as the death. Then, he was shipped to Chennai from Delhi, when he became chairman of Indian Bank, and then brought back to Delhi, when he took over as chairman of Punjab National Bank (PNB), unlike many of his peers who became chairmen of banks that had their headquarters in the same city in which they were posted.
The lesson he learnt is that if you want to do some plain-speaking and be nobody’s man, then your conduct has to be like Caesar’s wife – that is beyond suspicion – and you should not seek any personal favours from anybody. “For instance, many of my illustrious colleagues used to call for their bank board meetings in the same city where they had to attend a family wedding. I was singularly talent-less in these things,” Chakrabarty says, adding whenever a minister or an important politician wanted him to do something against his wishes, he used to always insist on written instructions. “Half of my problems were sorted out because of that,” he adds.
He orders green tea and says banking came to him not by design but by accident. A brilliant student with a knack for numbers, Chakrabarty scored a gold medal in MSc (statistics) followed by a PhD and the inevitable teaching route at Banaras Hindu University, which lasted five years. But he didn’t want to spend the rest of his life regurgitating the same lessons over and over and applied for the post of planning officer in Bank of Baroda. Despite his growing reputation as someone who is unwilling to cut corners, the promotions came fast throughout his 26-year stint at Bank of Baroda – later, he became executive director of PNB, before becoming chairman of Indian Bank and then PNB.
The valuable lesson he has learnt is that banks in India continue to ignore the poor, despite the fact that they are more bankable and more credit worthy. While his opinion about the quality of management in public sector banks is well-known (“non-performing administration” and so on), Chakrabarty says most banks are underperforming because there is no pressure of competition. That is why, he says, India needed more banks. Instead, from 1947 onwards, the number of government banks in the country has been reduced.
So what explains the four-year delay in issuing new bank licences, we ask. “Reluctance and incompetence,” is the short answer.
As we wait at the lobby for his car, Chakrabarty says he hasn’t decided on his future, though he is firm on not taking up a full-time role; 42 years of non-stop work have been long enough. Offers have been flowing in but he would take his own sweet time before taking up something – possibly in part-time consultancy or research. “Though I would love to spend time reading books, my wife has already started asking me to go out and keep myself occupied. After all, she is not used to seeing me at home,” he jokes.
At this point, however, he is caught up in a more mundane issue: transition from an exalted existence of so many years to that of a common man’s daily issues. For example, he had to go through a maze of formalities before getting a new phone connection at a temporary residence in Mumbai. “I have forgotten how to stand in queues – even at the airport, there was always someone else to take care of the formalities. But I will learn fast,” he says. To make the transition easier, Chakrabarty is planning to live abroad (his son is based in the UK) for a few months where he has to do everything for himself anyway.