The Reserve Bank of India (RBI) announced the confirmation of Urjit Patel as the Governor of the central bank of India. Patel, 52, succeeds Raghuram Rajan, who after serving a three-year term, is going back to academia.
With this announcement, India Inc and the corporates, who have worked closely with Patel are very optimistic on the country’s financial sector growth.
“Dr. Patel has also served at the International Monetary Fund (IMF). He was on deputation from the IMF to the Reserve Bank during 1996-1997, and in that capacity he provided advice on development of the debt market, banking sector reforms, pension fund reforms, and evolution of the foreign exchange market,” RBI said.
He was also a consultant to the Ministry of Finance (Department of Economic Affairs), from 1998 to 2001. Since 2013 he has been serving as the Deputy Governor, RBI.
But a tough road ahead: He surely has some tough task in maintaining the legacy of his predecessor, Raghuram Rajan, and balancing the need to contain inflation without hurting growth.
- Continuing with the inflation battle and taking ahead the banking sector reforms:
Though the government has agreed to a 4 percent target, it may not have unending patience to tolerate high interest rates in the economy. If the upside risks to inflation picks up substantially in the coming time, the RBI may prefer to continue on pause mode for a longer-than-expected period which may not be necessarily acceptable to the government.
2. The clean-up of non-performing assets (NPAs)
The large-scale digging out of NPAs has eroded substantial capital from public sector banks’ coffers, resulting in a much bigger burden on the government which owns 70 percent of the Indian banking system through state-run banks.
How Patel will handle this pressure, is a wait & watch game!
In the mean time Urjit Patel is certainly drawing all accolades from all the circles
At a time when comparisons will be drawn between contrasting styles, a low profile will surely help #UrjitPatel guide the economy astutely
— S Ravi (@CA_Sravi) September 6, 2016
Urjit Patel reallocates portfolios between three deputy governors of RBI: Patel distributed the ten departmen… https://t.co/PQoJQgNLlJ
— Glittery Glam (@aWink_aSmile) September 6, 2016
— OVBI Canada (@OVBICanada) September 6, 2016