A press note seen by AFP said: “The Appointments Committee of Cabinet has approved the appointment of Dr. Urjit R. Patel as Governor, Reserve Bank of India (RBI) for a period of three years”.
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Ensuring undisruptive redemption of Dollars 20-25 billion, inflation control and bank cleanup will be the main challenges that will face Urjit Patel, who takes over as the 24th Governor of Reserve Bank early next month.
“Dr Urjit R Patel new Governor of RBI”, Frank Noronha, principal spokesperson for the Indian government posted on Twitter.
He has gained both private and public sector experience working as a consultant to the Indian Ministry of Finance between 1998 and 2001 and being on multiple government task forces.
His reputation suggests he will uphold the independence of the central bank while pushing Modi and his ministers towards fiscal prudence – all welcome traits for investors used to a steady hand at the RBI tiller. Also, he is in charge of the monetary policy department and advocating the more relevant consumer price index (CPI) and not the wholesale price index (WPI) as the inflation targetting benchmark. “There could be some knee-jerk sell-off in bond markets as the euphoria of extensive monetary easing moderates”, Samiran Chakraborty, chief economist Citi India, said, commenting on the appointment of the new governor. R3 was born Indian and chose to continue his US Green Card even though in India from 2007.”RBI had in June stated that Rajan is an Indian national and an Indian passport holder”. Yet he was the first RBI governor in more than two decades to not have his first contract renewed. “I hope Patel will come up to the expectation”, he added. A close lieutenant to Rajan, his appointment is widely seen as ensuring continuity in policy and reforms initiated since 2013.
Mr Patel, who headed a shortlist of candidates that also included IMF Executive Director Subir Gokarn and World Bank Chief Economist Kaushik Basu, will start his three-year term on Sept 4.
He was also with the International Monetary Fund (IMF) between 1990 and 1995 where he covered the US, India, Bahamas and Myanmar desks. He will replace Raghuram Rajan who demits office on September 4.
Not many market participants expect a rate cut in the October policy meeting as retail inflation is higher than the central bank’s March 2017 target of 5 per cent.
According to Moody’s, two sets of policies and decisions by the RBI are relevant to India’s sovereign credit profile.
That arrangement may benefit from the presence of a consensus-builder in the mould of some central bank heads in developed markets.
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As per the norms for MPC, each member shall have one vote and in case of a tie, the RBI Governor shall have a casting vote.
