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Urjit Patel checks in at RBI to complete Rajan's 'deep surgery'

PTI | DECCAN CHRONICLE
Published Sep 4, 2016, 4:48 pm IST
Updated Sep 4, 2016, 5:40 pm IST
New Governor of RBI Urjit Patel
 New Governor of RBI Urjit Patel

Mumbai: Urjit Patel, the new Governor of RBI who has maintained a contrasting low-profile to outspoken and rockstar-like Raghuram Rajan, has his immediate task cut out finishing the 'unfinished agenda' of his predecessor on completing 'deep surgery' of banks and winning the war on inflation.

Incidentally, it was Patel  often referred to as 'Dr Patel' by Rajan  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 the 'unwarranted urgency' shown by the 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 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.

52-year-old Patel's appointment as the 24th RBI Governor is effective today, though his first working day could be September 6, due to today being a Sunday and tomorrow being a holiday for Ganesh Chaturthi.

A number of corporate leaders and bankers who have previously worked with Patel, including during his tenure as 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 AQR (Asset Quality Review) directive.

Some are even hopeful that the AQR regime may actually see some change, though Rajan kept on repeatedly saying in his last days at 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 the 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.

On his part, Rajan never admitted to being a hawk  a central banker is said to be hawkish if he or she prefers keeping rates extra high -- and once famously quoted Patel as telling him repeatedly that they at RBI "are neither a hawk nor a dove, but an owl which is symbol of wisdom".

Markets and industry are now waiting for the 'owlish' monetary policy after the James Bond-like commentary they have had for the past three years from a Governor known for

numerous quotable quotes -- one of them being "My name is Rajan and I do what I do".

Asked once by a student why the humble dosa -- the South Indian dish -- continued to cost high when RBI was claiming a victory over inflation, Rajan blamed it on lack of technology upgrades from its traditional tawa preparation and high wages

of the person making it.

So far, Patel has been rarely heard in the media and analyst conferences, though like Rajan, he too has worked with International Monetary Fund (IMF) before coming to India -- first at the Finance Ministry and then at RBI.

Born on October 28, 1963, Patel is a PhD (Economics) from Yale University (1990) and M Phil from Oxford (1986). He has been a non resident Senior Fellow at The Brookings Institution since 2009.

He was with IMF between 1990 and 1995 and worked on the US, India, Bahamas and Myanmar desks. He was on deputation (1996-1997) from the IMF to RBI. In 1996-97, he had nearly two years of association with the RBI, when he was sent on deputation from the IMF to advice on development of the debt market, banking sector reforms, pension fund reforms, real exchange rate targeting and evolution of the forex market.

This was followed by a three-year stint as a consultant with the Department of Economic Affairs in the Finance Ministry.

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