After the completion of his first three-year-term of office, Urjit Patel was re-appointed on January 11, 2016, as deputy governor for another term.
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Other divisions under Patel were also reassigned, with the department of communication assigned to Deputy Governor N.S. Vishwanathan, and the department of statistics and information management going to S.S. Mundra.
The government announced Patel as the next RBI governor on August 20.
Patel is also known for his zero tolerance towards inflation. However, the formal oath-taking ceremony will be held on Tuesday since September 4 was Sunday followed by Ganesh Chaturthi on Monday.
It was in an interview with the New York Times that Rajan talked about his hopes of India finishing “the process of bank cleanup which is underway”.
He can also pat his back for embarking on the cleaning of the Augean stables that the banking sector has become by making them sort out their evergreened balancesheets.
The RBI Governor now has the salary of the Cabinet Secretary.
When Patel chairs his first meeting of the Monetary Policy Committee he will have to decide interest rates from October 4th policy announcement.
With Patel as the new governor, who served as RBI’s deputy governor since January 2013 and was in charge of monetary policy, every stakeholder in the market expects continuity in the monetary policy approach.
The wish list that “Dr Patel”, as he is commonly referred to as, faces is long and could be hard to fulfil on many fronts – lower the rates, go easy on banks and borrowers, be liberal with grant of banking licences, safeguard foreign reserves and further beef them up. They complained that he choked business by keeping interest rates high and requiring banks to clean up bad debts, which made credit expensive and hard to come by.
The earlier leadership of RBI, under former RBI governor Rajan, seemed to have reservations about this move since it perceived that a strong corpus of contingency funds with the central bank is crucial for the country in the long term. “And we have a change in government”, he said. On the other hand, economically there may be a case for further depreciation in the currency.
“The central banks should be independent and should be able to say no to seemingly attractive proposals”, Rajan said in a speech in New Delhi today.
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Rajan also called on the need to ensure the RBI’s independence, while saying its role would need to be clearly defined by the government, such as whether it can speak out when it believes the government’s fiscal action threatens economic stability.
