The RBI governor is appointed by an Appointment Commission in consultation with Prime Minister, Finance ministry and outgoing RBI governor under ‘The RBI Act 1935’. The tenure of RBI governor is not more than 5 years. However the tenure can be extended in certain circumstances.
Power of RBI Governor:
1) Since he/she is the head of RBI, he plays an important role in formulating the RBI Policies.
2) Governor controls the interest rates on the deposits and advancement of the country.
3) The foreign exchange management Act, 1999 is managed by the governor of RBI.
4) Since he/she is banker of bankers, his/her decisions have the power to influence both macro and microeconomics enormously.
5) The stock market, the economy and the lives of people are influenced by the governor’s actions.
6) The RBI governor controls the financial institution like SEBI, NABARD etc.
7) The governor’s autograph appears on the currency notes.
Responsibility of RBI Governor:
1) Issuing license of opening New Private and Foreign Banks.
2) He/She regulates the financial system of the Country.
3) the RBI governor is responsible to monitor the issue and destruction of currency and coins which are not fit for circulation in public.
5) The governor controls the country’s monetary, currency and credit system.