Press Trust Of India
Mumbai, Sept 4: Urjit Patel, the new governor of Reserve Bank of India (RBI), who has maintained a low-profile in contrast to his outspoken predecessor Raghuram Rajan, has his immediate task cut out: finishing Rajan’s “unfinished agenda” on completing a “deep surgery” of banks and winning the war on inflation.
Incidentally, it was Patel who scripted a new framework for fighting price rise, which earned him the informal title of ‘inflation warrior’.
However, it is the “deep surgery” ordered by Rajan to cleanse the balance sheets of the banks from bad loans that may pose greater challenges for Patel, as a number of banks, corporates and others have been lobbying hard against what they call “unwarranted urgency” shown by RBI in this regard at the cost of hurting investment climate.
Unlike Rajan, who took charge at a time when global markets were volatile and concerns were being raised about the rupee, the Gujarati-origin and once Kenyan citizen Mr Patel has come in when financial markets are much more stable and concerns have also subsided about any potential dollar flight due to impending redemption of NRI bonds.
The 52-year-old Patel’s appointment as the 24th RBI governor is effective September 4, though his first working day could be September 6, due to the Ganesh Chaturthi festival holiday Monday.
A number of corporate leaders and bankers who have previously worked with Mr Patel, including during his tenure as the RBI’s deputy governor and earlier on boards of some companies, said he is expected to show “much better understanding” of the problems the companies and banks are facing due to the central bank’s Asset Quality Review directive.
Some are even hopeful that the AQR regime may actually see some change, though Rajan kept on saying repeatedly in his last days at the RBI that the process should be completed by March 2017, a target he had set for cleaning up of the banks’ balance sheets.
With public sector banks accounting for a large portion of bad loans, the clean-up exercise has raised heckles of many in the government as well, though not many have been public with their views, fearing adverse commentary.
Besides having worked with the International Monetary Fund (IMF) and the Finance Ministry, Patel also has corporate experience – probably the first for any RBI governor – including with the country’s biggest corporate house, Mukesh Ambani-led Reliance Industries Ltd.
Besides, he was associated with Gujarat State Petroleum Corporation, IDFC and MCX, among others, as member on their boards and other roles.
“The change in personality that Patel brings in to the top job at RBI appears to be very comforting to the industry and bankers who were often at the receiving end of the barbs, mostly in form of policy actions, from Rajan,” a veteran banker said.
