Request to appoint ‘outsider’ as CB Deputy Governor
The Central Bank’s Monetary Board recently fielded a request from Finance Minister Ravi Karunanayake to appoint an ‘outsider’ as Deputy Governor, which is contrary to the usual practice of such appointments being made from amongst senior bank officers based on seniority and experience.
The request was made by Treasury Secretary Dr. R.H.S. Samaratunga at a meeting of the board saying the proposal came from the Finance Minister, informed sources said. Vacancies exist as two deputy governors are due to retire – S. Lankatilaka in April and P. Samarasiri in August. The Treasury Secretary is also due to retire shortly.
The proposal surprised board members who then discussed it at length and decided however to call for ‘expressions of interest’ internally, initially for the position falling vacant in April. “As per the second vacancy in August, the board is believed to have not taken any decision,” one source told the Business Times, adding that he didn’t rule out an extension being given to Mr. Samarasiri.
Currently the bank has three deputy governors inclusive of Dr. P. Nandalal Weerasinghe and nine assistant governors, the category from which deputy governors are normally picked.
Board sources including Governor Indrajit Coomaraswamy and the Treasury Secretary were unavailable for comment on these developments and it was unclear as to the reason for the request for an outside appointment.
The sources also point out that while the practice and convention is for an internal appointment to be made, it doesn’t legally bar the Finance Minister from influencing such an appointment. For instance the Monetary Law provides for the board to appoint one or more deputy governors ‘with the concurrence of the Minister in charge of the subject of Finance’.
It also doesn’t legally disqualify a candidate from outside the bank from being appointed as deputy governor. Section 23 of the law stipulates that a person shall be disqualified for appointment as a deputy governor only if he/she is a member of Parliament, or a member of any local authority; or a public officer or holds any office or position (other than an academic position) either by election or appointment and is a director, officer, employee or shareholder of any banking institution (other than the Central Bank).
Persons who qualify for appointment include officers of the bank who have been temporarily released to serve in any office or position in the public service.
The only known occasion when an outside appointment was made was when the Central Bank was established under the John Exter report in 1950. N.U. Jayawardena, who was serving in one of the committees pertaining to the creation of the bank, was then appointed as deputy governor. However bank sources argue that at that time all appointments were made from outside as the institution was new.