Y. Venugopal Reddy - Contributions

Contributions

Reddy has worked on piloting a calibrated approach to financial sector reforms. A 19 December 2008 article in the New York Times has credited the tough lending standards he imposed on the Indian banks as RBI Governor for saving the entire Indian banking system from the sub-prime and liquidity crisis of 2008. At the Reserve Bank, he was Member-Secretary of two high level committees: one on Balance of payments and the other on Public Sector disinvestments. Dr. C. Rangarajan, former Governor, Reserve Bank of India headed both the committees. Reddy was also a member of the Reserve Bank of India's Policy Group on External Debt Statistics. Reddy is credited to have played a crucial role in framing macro-economic policies that helped quarantine the country from the domino effect of the financial crisis encountered by the South-East Asian countries during the later part of the 1990s. He, along with Dr. C. Rangarajan, is also credited with the formulation of the course to be steered by the country to come out of the then Balance of Payments crisis.

As Governor, he saw his job as making sure Indian banks did not get too caught up in the bubble mentality. He banned the use of bank loans for the purchase of raw land, and sharply curtailed securitisations and derivatives, and essentially prohibited off-balance sheet financing. He increased risk weightings on commercial buildings and shopping mall construction and increased bank reserve requirements. Less well-discussed is his work on rural banking, particularly on reviving co-operative banks and his focus on the common person. His term was marked by an emphasis on financial inclusion with the aid of information technology. He recently authored a book titled "India And The Global Financial Crisis : Managing Money and Finance" published by Orient Blackswan. He is widely consulted on many financial issues by institutions both in India as well as the world over.