M. Narasimham
Maidavolu Narasimham | |
|---|---|
| Born | 3 June 1927 Nellore, Andhra Pradesh, India |
| Died | 20 April 2021 (aged 93) Hyderabad, India |
| Occupation(s) | Banker, civil servant |
| Known for | 13th Governor of the Reserve Bank of India; banking reforms in India |
| Notable work | India and the Current Crisis in the International Economy (1985); World Economic Environment and Prospects for India (1988); The Financial System, Report (1992); Economic Reforms: Development and Finance (2002); From Reserve Bank to Finance Ministry and Beyond: Some Reminiscences (2002) |
Maidavolu Narasimham (3 June 1927–20 April 2021) was a distinguished Indian banker who held the position of the 13th Governor of the Reserve Bank of India (RBI) from 2 May to 30 November 1977. Recognized as a pioneering figure in India's banking reforms, his policy proposals played a pivotal role in transforming the nation's financial landscape. His major initiatives encompassed overhauling banking operations, facilitating the entry of private sector banks, setting up asset recovery mechanisms, advancing rural banking services, strengthening capital adequacy and provisioning norms, upgrading public sector banks through technological advancements, and integrating banking reforms with capital market development.
Narasimham also represented India as executive director at the World Bank, International Monetary Fund, and Asian Development Bank. Furthermore, he held key administrative roles including secretary of the Ministry of Finance and additional secretary in the Department of Economic Affairs. In acknowledgment of his substantial contributions to India's financial system, he was honored with the Padma Vibhushan, the nation’s second highest civilian award, in 2000.
Early life
Born on 3 June 1927 in Nellore to Padmavati and Maidavolu Seshachelapati, Narasimham hailed from a family rooted in Maidavolu village within Andhra Pradesh’s Guntur district. He pursued higher education at Presidency College, Madras, followed by St John's College, Cambridge. Despite his aptitude for cricket, his near-sightedness prevented him from joining the college cricket team.
Career
Beginning his professional journey in 1950 with the Reserve Bank of India as a research officer in its Economic Department, Narasimham eventually became additional secretary at the Department of Economic Affairs. Notably, he remains the only RBI cadre officer to have been appointed Governor of the central bank, a role he fulfilled from 2 May to 30 November 1977.
Following his tenure as Governor, he served as India's executive director at both the World Bank and International Monetary Fund and took on the role of Vice President at the Asian Development Bank. Between 1982 and 1983, he was appointed secretary of the Ministry of Finance. His exceptional service was recognized with the Padma Vibhushan award in 2000.
Banking reforms
Narasimham chaired two influential committees that shaped banking and financial sector reforms: the Committee on the Financial System (1991) and the Committee on Banking Sector Reforms (1998). The outcomes of these committees have been instrumental in modernizing India’s banking industry, earning him distinction as the "father of banking reforms" in India.
Bank structures and mergers
The 1991 Narasimham committee was among the first to advocate for consolidating public sector banks through mergers to form robust mega-banks. This vision laid the foundation for subsequent consolidations such as the merger of ten public sector banks that took place in India in 2020.
Asset reconstruction
The committee recommended establishing Asset Reconstruction Companies tasked with securitizing non-performing assets and introduced an asset reconstruction fund designed to assume control over distressed loans. These proposals served as precursors to India’s Insolvency and Bankruptcy Code enacted in 2016, which operates alongside six specialized debt recovery tribunals.
Rural banking
In 1976, Narasimham prepared the Regional Rural Bank report, which laid the foundation for establishing regional rural banks across India. These institutions were designed to blend local accessibility with the professionalism characteristic of major commercial banks.
Capital adequacy
The 1991 report introduced the concept of the capital adequacy ratio and recommended a gradual reduction in mandatory investments in bonds and cash reserve requirements to stimulate lending activities. It also set forth guidelines for classifying non-performing assets (NPAs) and required the Reserve Bank of India to make provisions against bad loans.
Private banks and modernization of public sector banks
Narasimham’s reforms paved the way for the emergence of new-generation private banks such as ICICI Bank, HDFC Bank, and Kotak Mahindra Bank. His proposals encouraged banks to access capital markets, deregulated interest rates to enhance competition, and urged public sector banks to separate ownership from management while adopting modern technologies.
Published works
- India and the Current Crisis in the International Economy (1985)
- World Economic Environment and Prospects for India (1988)
- The Financial System, Report (1992)
- Economic Reforms: Development and Finance (2002)
- From Reserve Bank to Finance Ministry and Beyond: Some Reminiscences (2002)
Death
Narasimham passed away on 20 April 2021 in Hyderabad due to complications related to COVID-19. He was aged 94.