The Reserve Bank of India is set to have a new deputy governor in November, when the present term of Usha Thorat comes to an end. Thorat, 60, will complete her five-year tenure in November and may not be reappointed.
According to RBI sources, the government -- which appoints deputy governors -- is of the view that it will do away with the practice of reappointment to important posts like chairman of the Securities and Exchange Board of India, RBI, National Bank for Agriculture and Rural Development.
However, there is no rethinking on allowing extensions of term. According to RBI rules, a deputy governor is appointed for five years or until he or she attains the age of 62, whichever is earlier.
The retirement age of RBI governor is also 62.
Though there was no norm on how many deputy governors can be chosen from RBI internally, the practice usually followed is to have at least two from within the central bank.
The third deputy governor is usually a public sector bank chief, while the fourth is an economist. Apart from Thorat, Shyamala Gopinath is from RBI while Subir Gokarn is an economist and K C Chakrabarty is a commercial banker.
Technically, Thorat was also eligible for re-appointment as she will still have two years before the retirement age kicks in.
But for Thorat to continue, mere extension will not do and the government has to form a search committee and shortlist at least three candidates for the deputy governor's post.
In September last year, the government had allowed the reappointment of Shyamala Gopinath, who had completed her five-year term.
She was reappointed for two years up to June 2011. It was the first occasion when a deputy governor was reappointed.
Thorat oversees the department of banking operations and development, banking supervision, currency management, rural planning and credit department, among others.
Among the internal candidates that could replace Thorat are V K Sharma, the senior-most executive director, and Anand Sinha, another ED.
Gopinath's reappointment followed observations made by the Delhi high court in 2007 on the need for proper norms and criteria for the appointment of a deputy governor.The court made those observations in a case filed by P K Biswas -- an executive director of RBI -- who challenged the appointment of Thorat as deputy governor.
Biswas challenged the appointment on the grounds that despite being senior to Thorat, his case was ignored. The court had dismissed Biswas' plea.
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