Finally, the months of speculation has ended as Prime Minister Narendra Modi appointing Urjit Patel as the successor to the dynamic Raghuram Rajan.
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Interesting then, that Patel, according to some reports, acquired an Indian passport just before his appointment as the RBI’s deputy governor.
Mr. Patel’s appointment will also “convince the market about the government’s resolve to fight inflation”, a market analyst said.
The Kenya-born Patel, who graduated from the London School of Economics and the universities of Oxford and Yale, will, like his outgoing boss Raghuram Rajan, have inflation on top of his mind as he settles into the corner office at the RBI.
Additionally, Patel, who is considered to be a major contender for the post, was reappointed in January for another three years and has been in execution of the central bank’s monetary policy department, since 2013.
In fact, following Patel’s appointment, rating agency Moody’s said Sunday that it believes he will continue the process of cleaning banks’ books of their burgeoning non-performing assets.
Bank Board Bureau chairman Vinod Rai said it was “an excellent choice and he can hit the ground running”.
“This is the second instance after the decision to retain the inflation target of 4 per cent (+/-2 per cent range), where the government has demonstrated that inflation will remain a policy priority”, DBS said.
The RBI cut interest rates 150 bps during Dr Rajan’s tenure and the central bank’s pledge to ease cash conditions had also contributed to a rally in bond markets, and investors will be encouraged that one of Rajan’s closest aides will succeed him.
Mr. Patel headed a committee, with members from across the spectrum in the financial sector, which was set up to revisit the monetary policy framework.
One of the main and nearly contentious issues that Mr Patel will have to tackle is that of the rising non-performing assets of the banks and the clean-up of their balance sheets.
“Once can link Swamy’s public attacks and the subsequent embarrassment caused to the government to him being sidelined during the recent cabinet reshuffle despite having decades of experience in the areas of finance, commerce and academia”. A soft-spoken, hardworking individual, who wouldn’t bother to talk on issues beyond his pay grade, is precisely what this government wanted in a RBI governor. I will give my best to live up to the expectation of people, Patel tweeted.
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The stock market is expected to cheer the appointment of Reserve Bank’s Deputy Governor Urjit Patel as the new Governor, which the experts say has sent a clear message to investors about continuity in policy.
