The government has announced Urjit Patel as the next governor of the Reserve Bank of India for a three-year term, succeeding Raghuram Rajan who in a surprise announcement in June said he did not want to stay on.
Patel, 52, is currently a deputy governor at the RBI and headed a committee on monetary policy reforms. The recommendations of the committee to set an inflation target and create a new Monetary Policy Committee were backed by Prime Minister Narendra Modi’s government. Here are a few reactions from India Inc and stock brokerages on his appointment.
Gautam Chhaochharia, head of research, UBS Securities India: “The appointment of Urjit Patel as the RBI governor, along with recent reconfirmation of 4 per cent CPI inflation target, suggests that a change in political economy and thus policy loosening may not be obviously imminent.”
Ajay Bodke, CEO & Chief Portfolio Manager, PMS Prabhudas Lilladher: “Institutional Investors both domestic & foreign would welcome the Indian government’s appointment of RBI Deputy Governor Dr Urjit Patel as successor to Dr Raghuram Rajan. It signals a seamless continuity in the policies pursued by the RBI to conduct it’s monetary policy in an independent many ner. One of the most seminal achievements of Dr Rajan was the signing of monetary policy agreement between the government and RBI for “flexible inflation targeting” which was based on the report of the panel headed by Dr Patel. Dr Patel’s path-breaking report has helped India join the league of developed nations where adoption of flexible inflation targeting has helped anchor inflationary expectations and brought about a structural control over inflation. Markets would strongly cheer the appointment”-
Sajjan Jindal, Chairman and Managing Director, JSW Steel group: “I am very glad the Govt has taken a decision on appointing RBI governor as an internal candidate versus from outside as this will support the continuation of the policy at the RBI.”
Gopal Srinivasan, Chairman & MD, TVS Capital Funds Limited: “The Modi administration has established it has the most rigorous process of evaluating personnel appointments. Hence we should see it as a carefully choice between the two eminent and equal candidates (that the press has consistently projected as front runners). I believe the administration wants continuity in anti-inflation policies and bank NPA amelioration. As well as a governor whose work will be celebrated, rather than a celebrity as a governor,”
Arundhati Bhattacharya, Chairman, SBI: “Appointment of Urjit Patel comes as a welcome move. Dr. Patel has been at the helm of institutionalizing the inflation targeting regime in the monetary policy framework. His appointment signals continuity of policy intent, both on part of RBI and Government.”
PhillipCapital: “This will mean continuity in monetary policy as all the monetary policies adopted by Rajan were in line with urjit patel committee recommendations. He (Patel) is expected to remain an inflation hawk, liquidity should remain in neutral (possibly not on surplus)… bond yields should react adversely on Monday.”
Edelweiss: “Just the right kind of appointment needed after Dr. Rajan’s exit. The architect of the inflation targeting mechanism. Gives credence to continuation of sound monetary policy. This appointment holds signal value. Modi govt. is not letting the reform agenda get taken over by populism in 2nd half of its tenure. As Banking NPAs go from front page news to indifference and PSB heal the continuation of policy will be a solid foundation for growth.”
Devendra Kumar Pant, chief economist, India Ratings & Research: “Continuation in monetary policy will remain. He is the architect of inflation targeting approach. Investors don’t want any change in policy direction. “He has worked with IMF, he has worked with the corporate sector and he was with the Brookings Institution. So, coming from different areas, he knows how things are and what kind of action is required. “The market will welcome it (his appointment). Maybe you will see a strengthening of rupee vis-à-vis dollar if globally there is no turmoil. You may also see bond yields responding.”
Ananth Narayan, regional head of financial markets, Asean and South Asia, Standard Chartered Bank: “It’s good to have the uncertainty and suspense out of the way; we can focus on the way forward now. Given the monetary policy framework was envisaged by the eponymous Dr. Urjit Patel committee, there should be continuity in this critical aspect. To that extent, global investors and other stakeholders will welcome this appointment.”
Chanda Kochhar, MD and CEO, ICICI Bank: “As the Deputy Governor of RBI, Dr Urjit Patel has played a key role in developing the new monetary policy framework that has focused on reigning in inflation and has imparted stability to the currency. His appointment would ensure a smooth transition and continuity in monetary policy, as India puts in place major structural reforms to transition to a higher growth path. I wish him all the very best in his new role.”
Ritika Mankar, economist, Ambit Capital: “Choice of Urjit Patel is in line with our expectations as he was one among the top two candidates we were working with. “What we like about him is: One, he’s seen RBI change from being a loosely inflation-focused central bank to one that formally targets CPI inflation. And second, his experience as a deputy governor in charge of monetary policy under the governorship of Rajan will hold him in good stead. However, what remains to be seen is how he handles banking as a sector, he probably lacks what a candidate like Arundhati Bhattacharya, would have brought to the table.”
Sunil Godhwani, Whole-time Director & CEO, Religare Enterprises: “The news of Dr. Urjit Patel’s appointment as the RBI Governor is a step in the right direction. Having worked with Dr. Rajan, and being an existing part of the RBI machinery, this is a welcome and natural progression. We are hopeful that he will continue the good work of balancing inflation while encouraging economic growth”
Venu Srinivasan, chairman, TVS Motor and past president, CII: “It is a very good thing, for the continuity. They got somebody from the Reserve Bank of India itself, that too with wide experience in IMF and others. Very well qualified and very well respected and I think that it is good continuity in the bank that somebody from the bank is elevated rather than somebody from outside. In the last three to four years many of the companies have caught into serious erosion of their equity and NPAs. Broader policy view has to be taken on a one time basis, a major restructuring of loans will be taken and done rather than say that you just have to write it off as NPAs, because these are not mistakes that happened due to the promoter or to the bank’s diligence.
Kiran Mazumdar Shaw, chairperson and managing director, Biocon: “The appointment of Urjit Patel as the new RBI governor is a wonderful decision. It will ensure continuity and stability in the policies. Urjit has worked very closely with Raghuram Rajan. He has a deep understanding of the policies. He has worked with Raghuram for containing inflation, currency volatility and cleaning balance sheet of banks. Also he starts on a very firm footing. The banks now have much more stronger balance sheets than before. It is now time to spur India Inc. The cost of capital for this is high we should try and attract more investment for India Inc.”
Jay Shankar, Chief India Economist & Director, Religare Capital Markets: “His appointment would ensure continuity of RBI’s policy stance. He should be able to hit ground zero on day one, without needing a lead time to become familiar with policy making process and procedures. Markets – equity and bond – should react positively on Monday.”
Rahul Bajaj of Bajaj Auto: “I am delighted that the Government of India has appointed Mr. Urjit Patel as the new Governor of RBI to succeed Mr. Raghuram Rajan. I do not know Mr. Urjit Patel personally but have heard and read a great deal about him during his two terms as the Dy. Governor of RBI. All very positive.”
Rupa Rege Nitsure, Group Chief Economist, L&T Finance Holdings: “Dr. Patel’s appointment as the RBI Governor would give a sense of policy continuity. It will assure international investors that the flexible inflation targetting framework will be taken to its logical end and it’s absolutely essential for India’s monetary policy credibility.”
Aneesh Srivastava, CIO, IDBI Federal: “There were few factors we were looking at when it comes to new Governor’s appointment. They are: monetary policy framework, inflation target range, systemic liquidity and continuation of existing policies. The choice of Urjit Patel ensures all these factors are taken care of. Being the man who has seen RBI’s policies and framework, we can expect continuation of what we saw from Rajan.”
Chandrajit Banerjee, Director General, CII: “I’m confident that the new Governor will lead the Central Bank and take its developmental and regulatory agenda to new heights. As in the past, CII is committed to work closely with the Government and the RBI to support the creation of a stable, low inflation and high growth economy. We congratulate Dr Patel on his appointment and wish him all the very best for his new role.”
Harshavardhan Neotia, President, FICCI: “FICCI welcomes appointment of Dr Urjit Patel as Governor, RBI. He is the architect of the current monetary policy stance focussing on inflation and being part of team RBI with current governor will also ensure continuity of ongoing initiatives launched at RBI in recent times.”
Motilal Oswal, CMD, Motilal Oswal Financial Services Ltd: “By appointing Urjit Patel, the author of the monetary policy framework report, as RBI Governor, the government increases its credibility to maintain its fight against inflation. I wish him all the best”