New Delhi: Last week, the government appointed the recently retired Department of Economic Affairs (DEA) secretary, Ajay Seth, as chairman of the Insurance Regulatory and Development Authority of India (IRDAI).
The former 1987-batch IAS officer’s appointment ensures that the regulatory trinity—the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and IRDAI—continues to be helmed by three retired IAS officers.
Seth, who retired as DEA secretary just last month, succeeded Debasish Panda, also a retired IAS officer, whose tenure ended in March this year.
The appointment followed a pattern.
In December 2024, the Modi government sprung a surprise by naming then revenue secretary, Sanjay Malhotra—a 1990-batch IAS officer—as RBI governor three years before his retirement. His name was announced a day before the long tenure of his predecessor, another IAS officer, Shaktikanta Das, ended.
Two months later, in February, the government announced the appointment of Tuhin Kanta Pandey, a 1987-batch officer serving as finance and revenue secretary, as SEBI chairman.
The appointment of recently retired government officers in key regulatory positions has sparked some concern about regulatory independence.
“This is quite an unprecedented situation where finance secretaries, all of whom have retired very, very recently, are leading these organisations meant to perform the role of independent regulators,” said former finance secretary Subhash Garg told ThePrint.
“It is a dangerous situation because we are seeing regulators turn into government officers,” he added.
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Not just the regulatory trinity
It isn’t just the RBI, SEBI and IRDAI.
Across the board, many financial regulatory bodies, and even private banks, are headed by former civil servants, particularly, though not exclusively, those from the finance ministry.
Consider the following.
Last week, Nitin Gupta, a retired Indian Revenue Service (IRS) officer who served as chairman of the Central Board of Direct Taxes (CBDT) from June 2022 to June 2024, was appointed chairman of the National Financial Reporting Authority (NFRA).
Set up after the 2018 IL&FS crisis, the NFRA keeps a close check on auditors and audit quality in India.
Gupta succeeded Ajay Bhushan Pandey, a retired IAS officer of the 1984 batch, who served as finance secretary until February 2021.
Immediately after his tenure as NFRA chairperson, Pandey joined the Asian Infrastructure Investment Bank (AIIB) as its vice-president in April 2025. India is the second-largest shareholder of the AIIB, a multilateral development bank and international financial institution.
Meanwhile, the International Financial Services Centres Authority (IFSCA), the regulatory body for the country’s special economic zones—including the GIFT International Financial Services Centre (GIFT IFSC), an SEZ in the GIFT city—is headed by K. Rajaraman, a retired 1989-batch IAS officer of the Tamil Nadu cadre.
Rajaraman was appointed in July 2023 while he was still serving as secretary in the Department of Telecom (DoT). Before assuming the charge of DoT secretary, he was serving as additional secretary (Investments & Infrastructure) in the DEA.
Then there is the Financial Services Institutions Bureau (FSIB) constituted in July 2022 to recommend persons for appointment as whole-time directors and non-executive chairpersons on the boards of financial services institutions, and to advice on personnel management in these institutions.
One of the top bureau members of the FSIB is B.P. Sharma, a former 1981-batch IAS officer of the Bihar cadre, who served as the secretary, Department of Personnel and Training (DoPT), until 2017.
The FSIB had replaced the Banks Board Bureau (BBB), which performed similar functions, and was headed by former Comptroller and Auditor General (CAG) and IAS officer Vinod Rai.
Finally, the Competition Commission of India (CCI), formed in 2002 to keep a check on anti-competitive agreements and abuse of dominant positions by enterprises, is also headed by a former IAS officer. Ravneet Kaur, a 1988-batch Punjab cadre officer, has been the chairperson of the CCI since 2023.
Two of the three members of the CCI – Anil Agrawal and Deepak Anurag – are retired officers of the Indian Police Service (IPS) and the Indian Accounts and Audit Service (IA&AS), respectively. Only one member, Sweta Kakkad, belongs to the private sector.
Private banks
The trend of former civil servants heading financial bodies has spread to private banks as well.
Atanu Chakraborty, a retired 1985-batch Gujarat cadre IAS officer, who served as finance secretary until April 2020, has held the position of part-time chairman and independent director of HDFC Bank since May 2021. While his first tenure ended in 2024, the RBI gave a nod for his reappointment for another three years last year.
P.K. Sinha, who served as cabinet secretary and later as advisor to the prime minister until 2021, is the non-executive part-time chairman of ICICI Bank.
Sinha, a 1977-batch Uttar Pradesh cadre IAS officer, served as cabinet secretary from June 2015 to August 2019. In 2019, the government amended a 60-year-old rule that capped a cabinet secretary’s four years, including one extension, to give him a third extension that exceeded his tenure over the previously stipulated time.
Meanwhile, C.S. Rajan, who retired as chief secretary of Rajasthan in 2016, is the Non-Executive Independent Part-time Chairman at Kotak.
Hasmukh Adhia, who also served as finance secretary under the Modi government, was the non-executive chairman of the Bank of Baroda from March 2019 to February 2024. Months later, in July 2024, he was appointed chief principal secretary to the Gujarat chief minister.
‘A dangerous trend’
Most former civil servants agree that the trend speaks poorly of the independence of financial systems and banks in the country.
“In 1992, when all these regulatory bodies were formed, they were neither headed by former bureaucrats, nor was that envisaged,” said Garg. “This is a dangerous trend that has crept in gradually.”
“The government is as much of a player in the financial markets as the private players. To have a barely retired government officer as a regulator raises stark questions on the independence of the regulator,” he added.
To be sure, this trend is not entirely new. It was as early as 2010 that an article in the Economic and Political Weekly (EPW) argued, “That the government’s lackadaisical attitude towards regulatory institutions is entirely influenced by the selfish interests of bureaucracy is evident from the manning of those institutions, with all regulatory bodies now headed by retired or serving members of the civil services.”
In fact, in 2010, the central government announced the constitution of the Financial Stability and Development Council (FSDC), which would oversee issues concerning “financial stability, financial sector development, inter–regulatory coordination, financial literacy, financial inclusion and macro prudential supervision of the economy including the functioning of large financial conglomerates”.
The Council was thus meant to be a super-regulator, with the finance minister as its chairman and the RBI, SEBI and IRDAI heads as its members.
While this is not a new phenomenon, it does raise questions of whether there should be some distance between regulators and the government, says D.V. Subbarao, himself an IAS officer who later served as RBI governor.
“Some of these things really depend on the personality of the IAS officer,” said Subbarao. “It is not a given that because one has just retired from the government as a finance bureaucrat, they would succumb to all instructions.”
“To be from the government can also have its benefits. The overview that a top job in the government gives you cannot be replicated from any other experience,” he said.
“Knowing the government culture, knowledge of people within the government are assets, but they have to be balanced,” he said. “Someone like Raghuram Rajan, who was the Chief Economic Advisor before he was appointed RBI governor, had that balance.”
As for the private banks, they are a symptom of a larger malaise, said Garg. “Theoretically, private banks can choose to not have retired IAS officers. They do it because they are compelled to believe that they can have a better dialogue with the government if they have a retired government officer on their board.”
“It is a symptom of an unhealthy system where private sector banks feel they cannot exist independently from the government,” he added.
A retired IAS officer currently posted in one of the bodies, however, said that the presence of a government official helps rein in recklessness in the system.
“If you see this trend has grown after the NPA (non-performing assets) crisis… If there is a need felt to have some oversight on financial systems after a crisis of that magnitude, it is within reason,” the officer said.
(Edited by Sugita Katyal)
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