The Indian government has appointed a well-respected deputy governor Urjit Patel at the Reserve Bank of India to become the country’s next central bank governor, ending months of uncertainty over the appointment. He will replace Rajan on September 4.
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He will be taking over at a time when his wings will be clipped on rate decisions as the newly set up six-member Monetary Policy Committee (MPC) will take a call on the rate movement.
“From that perspective, this would be work in progress”.
Ashutosh Datar, Chief Economist, IIFL Institutional Equities said the appointment showed a desire to continue on the same course. “He will also keep in mind the requirements of growth which is a mandate of the Reserve Bank of India Act”, Economic Affairs Secretary Shaktikanta Das said.
Patel, 52, a Deputy Governor since January 2013, will take over as the 24th chief of India’s central bank on September 4. Besides, at least five former Governors had served at International Monetary Fund before becoming RBI chief, while a few others went on to work at International Monetary Fund after leaving the central bank.
The monetary policy announcement scheduled for October 4 would be the first by this committee.
Doctorate in Economics from Yale and M Phil from Oxford, Patel joined the RBI as Deputy Governor on January 11, 2013 and was given a second term in January this year. “The shift to inflation targeting at the beginning of previous year has contributed to enhance the credibility and transparency of India’s monetary policy”, she said.
I would like Patel to focus on several issues allowing cooperative banks to collect tax from their members and deposit to the government through HDFC bank as before.
“He (Patel) will hopefully control inflation rate since he has experience of monetary policy”, minister of state for finance Arjun Ram Meghwal told reporters on Monday.
The Nifty Bank index dropped 0.61 percent, with State Bank of India SBI.NS and Punjab National Bank PNBK.NS falling 1 percent each.
Patel is considered close to Rajan, a darling of the financial world for his policies that have tackled inflation and worked to cleaned up bad bank loans.
“We expect inflation to remain broadly stable around recent levels although there are sources of upside risks”.
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His appointment ends weeks of speculation about a successor to Rajan, who announced unexpectedly in June that he planned to return to academia. He also served at the International Monetary Fund where he covered the US, India, Bahamas and Myanmar desks before joining RBI.
