Urjit Patel appointed as new RBI governor

Andrew Cummings
September 1, 2016

The government nominees to the MPC have been shortlisted by a search-cum-selection committee headed by the cabinet secretary with the RBI governor and the economic affairs secretary and three experts in the field of economics or banking or finance or monetary policy as its members.

Even though he has over three years of RBI experience under his belt, Patel as the governor would also want his team to be in place as soon as possible.

Under the chairmanship of Patel, the panel had proposed inflation-targeting and the setting up of a Monetary Policy Committee, which has been accepted by the government.

"From that perspective, this would be work in progress".

"Patel is an astute economist with a clear vision, who will surely continue to de-risk the Indian economy and strike the fine balance between growth imperatives and inflation management", he said. Mr Patel will take charge as RBI governor on September 4.

"Dr Urjit R Patel new Governor of RBI", Frank Noronha, principal spokesperson for the Indian government posted on Twitter. He will be the eighth Deputy Governor to be made Governor at RBI.

Prior to his appointment as the deputy governor, Mr Patel was Advisor (energy & infrastructure), Boston Consulting Group.

According to Diron, future inflation developments will provide further indications of monetary policy credibility. Also, market is considering it as a hint of policy continuity by the RBI. "I hope Patel will come up to the expectation", he added.

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.

Prime Minister Narendra Modi's government this month formally agreed to adopt Rajan's inflation target of 2 to 6 percent in the medium term. The renowned economist had also won plaudits for helping arrest the rupee's decline against the dollar and promote price stability but his focus on arresting inflation by not cutting interest rates also led to bitter criticism from politicians particularly BJP MP Subramanian Swamy.

He worked on the USA, India, Bahamas and Myanmar desks at the International Monetary Fund until 1995.

This ends weeks of speculation on who will succeed Rajan after he announced in June that he will not seek a second term. Over the same period, foreign portfolio investors have net bought $5.85 billion of equities and net sold $1.10 billion of debt instruments.The 10-year benchmark bond too fell on Monday, with yields expanding as much as 5 basis points.

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