Reserve Bank of India Deputy Governor Rakesh Mohan appears set to move to Washington as executive director of the World Bank next month.
Sources close to the development said the government and RBI would soon start the process of appointing Mohan's successor, for which a search committee may be put in place. The committee is expected to be headed by RBI Governor Duvvuri Subbarao, with Finance Secretary Arun Ramanathan as a member.
The mechanism that is being tried for the first time will also be used to select a replacement for Deputy Governor V Leeladhar, whose term is scheduled to end later this year.
The Centre is, however, keen that RBI deputy governors have experience in dealing either with the government or the central bank. The move may mean that "outsiders" like Raghuram Rajan, a professor at the Graduate School of Business of the Chicago University, are kept out of the RBI deputy governor race. Traditionally, of the four deputies at the central bank, one is a monetary economist, another a professional banker and two are from within.
Rajan and chief economic advisor Arvind Virmani were seen as the top contenders for the post. Mohan, 60, has a five-year term that ends in July 2010. This is Mohan's second stint as deputy governor of RBI, having earlier worked in this role between September 2002 and October 2004. He cut short his three-year term to serve as secretary, department of economic affairs, before returning to Mint Road in July 2005.
Mohan was seen as a successor to YV Reddy, whose five-year term as RBI governor ended last month. He will move to Washington once the term of Dhanendra Kumar, a former IAS officer, ends at the end of October. The executive director nominated by India to the World Bank is also responsible for Bangladesh, Bhutan and Sri Lanka.
At present, among other things, Mohan handles the monetary policy department and the department of economic analysis.
