Former RBI Governor Dr. Duvvuri Subbarao addresses EPGP students at IIM Bangalore on Dilemmas in Central Banking, on 10th Aug 2022
12 August, 2022, Bengaluru: Dr. Duvvuri Subbarao, Former Governor, Reserve Bank of India, addressed students of IIM Bangalore’s one-year full-time MBA, the Executive Post Graduate Programme in Management (EPGP), on: ‘Dilemmas in Central Banking: Implications for Corporate Managers’, as part of the EPGP Seminar Series, on 10th Aug 2022.
During the interactive session with students, Dr. Subbarao shared the challenges faced by an RBI Governor and the necessary skillset a manager must possess when managing large stakeholders.
Dr. Subbarao said that he joined RBI in 2008, the same year when the world was hit by the infamous financial crisis. Just before he joined, RBI had hiked interest rates. Recollecting the challenges posed by the tough times in 2008, he pointed out that strong credibility and clear communication are of utmost importance for convincing a large audience.
Talking about the challenges of RBI, he mentioned that RBI always needs to find the right balance between growth and inflation as well as between the interest of savers and borrowers. He added that the Monetary Policy Committee was set in 2016 with the responsibility to maintain price stability, manage inflation expectations and ensure monetary policy congruency with the fiscal policies.
Dr. Subbarao emphasized on the role of communication in managing expectations. “The significance of communication is paramount for a Public Policy manager. Earlier, RBI used to refrain from making regular public statements. However, for the last few years RBI has been effectively communicating, which has helped in gaining public confidence.”
Discussing the changing dynamics in RBI’s role, he said that there used to be a time when Forex rates were determined by exports and imports; however, now, capital movements such as FPI investments and bilateral transactions have become a key contributor to Forex rates volatility. “It’s very difficult to keep Forex rates away from fundamentals. RBI can only manage the volatility”, he added.
Further, he talked about the role of regulation in the financial market. “Financial sector regulation has two core objectives: financial stability and consumer protection”. He mentioned that RBI has been regulating multiple facets of financial markets, but one needs to understand the frameworks regulating the regulator. Dr. Subbarao added that, “RBI as an institution learns from its own experience. However, as a Governor, not only should one learn, but one must convince the world that he or she has learned!”
About Dr. Duvvuri Subbarao
Dr. Subbarao was the 22nd Governor of the Reserve Bank of India (2008 - 2013). He served as the Finance Secretary, Government of India from 2005 to 2007. He was a Distinguished Visiting Fellow at the University of Pennsylvania and National University of Singapore (NUS). In addition to numerous papers and publications, he has authored the book, ‘Who Moved My Interest Rate? Leading the Reserve Bank of India Through Five Turbulent Years’, which chronicles his experiences as RBI Governor.
Former RBI Governor Dr. Duvvuri Subbarao addresses EPGP students at IIM Bangalore on Dilemmas in Central Banking, on 10th Aug 2022
12 August, 2022, Bengaluru: Dr. Duvvuri Subbarao, Former Governor, Reserve Bank of India, addressed students of IIM Bangalore’s one-year full-time MBA, the Executive Post Graduate Programme in Management (EPGP), on: ‘Dilemmas in Central Banking: Implications for Corporate Managers’, as part of the EPGP Seminar Series, on 10th Aug 2022.
During the interactive session with students, Dr. Subbarao shared the challenges faced by an RBI Governor and the necessary skillset a manager must possess when managing large stakeholders.
Dr. Subbarao said that he joined RBI in 2008, the same year when the world was hit by the infamous financial crisis. Just before he joined, RBI had hiked interest rates. Recollecting the challenges posed by the tough times in 2008, he pointed out that strong credibility and clear communication are of utmost importance for convincing a large audience.
Talking about the challenges of RBI, he mentioned that RBI always needs to find the right balance between growth and inflation as well as between the interest of savers and borrowers. He added that the Monetary Policy Committee was set in 2016 with the responsibility to maintain price stability, manage inflation expectations and ensure monetary policy congruency with the fiscal policies.
Dr. Subbarao emphasized on the role of communication in managing expectations. “The significance of communication is paramount for a Public Policy manager. Earlier, RBI used to refrain from making regular public statements. However, for the last few years RBI has been effectively communicating, which has helped in gaining public confidence.”
Discussing the changing dynamics in RBI’s role, he said that there used to be a time when Forex rates were determined by exports and imports; however, now, capital movements such as FPI investments and bilateral transactions have become a key contributor to Forex rates volatility. “It’s very difficult to keep Forex rates away from fundamentals. RBI can only manage the volatility”, he added.
Further, he talked about the role of regulation in the financial market. “Financial sector regulation has two core objectives: financial stability and consumer protection”. He mentioned that RBI has been regulating multiple facets of financial markets, but one needs to understand the frameworks regulating the regulator. Dr. Subbarao added that, “RBI as an institution learns from its own experience. However, as a Governor, not only should one learn, but one must convince the world that he or she has learned!”
About Dr. Duvvuri Subbarao
Dr. Subbarao was the 22nd Governor of the Reserve Bank of India (2008 - 2013). He served as the Finance Secretary, Government of India from 2005 to 2007. He was a Distinguished Visiting Fellow at the University of Pennsylvania and National University of Singapore (NUS). In addition to numerous papers and publications, he has authored the book, ‘Who Moved My Interest Rate? Leading the Reserve Bank of India Through Five Turbulent Years’, which chronicles his experiences as RBI Governor.