M. Narasimham

Maidavolu Narasimham (3 June 192720 April 2021) was an Indian banker who served as the thirteenth Governor of the Reserve Bank of India (RBI) from 2 May 1977 to 30 November 1977. For his contributions to the banking and financial sector in India, he is often referred to as the father of banking reforms in India. Some of the reforms attributed to his recommendations include changes to banking structures, introduction of private sector banks, creation of asset recovery funds, rural banking, changes to capital adequacy and provisioning standards, technology upgradation and modernization of public sector banks, and capital market linked banking reforms.

Narasimham also served as India's executive director at the World Bank and later at the International Monetary Fund and the Asian Development Bank. The family hailed from Maidavolu village in Guntur district of present-day Andhra Pradesh. His father was a judge in the High Court of Andhra Pradesh, and his mother was the eldest daughter of Sarvepalli Radhakrishnan.

He completed his education from Presidency College, in Madras and went on to study at the St John's College, Cambridge. He was the first and only Reserve Bank cadre officer to be appointed as governor of the central bank. He was awarded India's second highest civilian honor Padma Vibhushan in 2000.

Banking reforms Narasimham was the chair of two high-powered committees on banking and financial sector reforms viz Committee on the Financial System (1991) and the Committee of Banking Sector Reforms (1998).

Asset reconstruction Some of the recommendations around creation of Asset Reconstruction Companies as means to securitize bad debt are built on the recommendations from his committee. His committee also introduced the notion of an asset reconstruction fund to take over bad loans. As a follow-up, six special debt recovery tribunals were set up. This served as the foundation for India's current Insolvency and Bankruptcy Code which was codified in 2016.

Rural banking Earlier in 1976, he had also been the author of the Regional Rural Bank report which was the basis for the setup of regional rural banks in India, building on his blueprint and recommendations of having these banks maintain a local appeal while bringing the professionalism from large commercial banks.

Capital adequacy The first committee report of 1991 introduced the notion of a capital adequacy ratio while proposing a phased reduction in mandatory bond investment and cash reserve ratios in an attempt to encourage lending. The committee also introduced rules around non-performing assets (NPA) classification and also had the Reserve Bank of India (RBI) requiring banks make provisions for bad loans.

Private banks and modernization of public sector banks Some of the other recommendations from Narasimham included creation of new generation private sector banks including ICICI Bank, HDFC Bank, and Kotak Mahindra Bank. His recommendations also had banks raising money from the capital markets. Interest rates were also de-regulated fostering competition between banks. Amongst the other Public sector banks (PSB), the committee recommended that the government separate ownership from management and also led to technology upgradation and modernization.

Published works

Death Narasimham died on 20 April 2021 in Hyderabad from COVID-19 complications. He was aged 94.