Industry leaders went all out in welcoming the news of appointment of Urjit Patel, current deputy governor of the Reserve Bank of India, as the next central bank chief on Saturday.
“Appointment of Urjit Patel comes as a welcome move. Dr Patel has been at the helm of institutionalising the inflation targeting regime in the monetary policy framework. His appointment signals continuity of policy intent, both on part of RBI and the government,” said State Bank of India chairman Arundhati Bhattacharya. Bhattacharya was reported to be one of the contenders for the job.
ICICI Bank MD and CEO Chanda Kochhar said 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.”
Patel, 52, is currently a deputy governor and headed a committee on monetary policy reforms whose recommendations to set inflation and create a new Monetary Policy Committee were backed by the government.
Rana Kapoor, MD and CEO of Yes Bank, said the transition into Patel’s term will ensure efficient monetary policy management. “Dr 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.”
Veteran industrialist and chairman of the Bajaj Group, Rahul Bajaj, said he hopes Patel’s decisions regarding interest rates, monetary policy and cleaning the non-performing assets of banks “will be balanced keeping in mind the circumstances prevailing from time to time.”
“I am not one of those who keeps harping on lower interest rates though my customers in my companies like Bajaj Auto and Bajaj Finance would naturally stand to benefit. While we naturally need higher growth, inflation hurts everyone, especially the weaker sections of society and also the corporate sector. I would like to mention that, I believe, Mr Patel has worked very closely with Mr Rajan whom I hold in very high regard,” Bajaj added.
Bank Board Bureau chairman Vinod Rai said it was “an excellent choice and he can hit the ground running. He is familiar with the situation and has a great understanding of the economy and there is absolutely no doubt that things will be handled extremely well.”
“He is young, qualified and experienced. Above all the appointment signals policy continuity. I think markets should exhale,” Anand Mahindra, chairman of the Mahindra Group, said.
The announcement of Patel’s appointment over the weekend is likely to impact the stock markets once they open on August 22 after a holiday-shortened week. “One of the most speculated events in Indian financial history comes to an end,” said Harsh Goenka, chairman, RPG Enterprises.
“No other RBI guv has had a 360 degree view like Urjit Patel. He has worked in the private sector (Reliance Industries and Boston Consultancy Group), in a quasi-government organization like IDFC and as deputy governor with RBI. He has been involved in the creation of the monetary policy committee right from the beginning. It signals continuity of the current RBI policies.”
Chandrajit Banerjee, director general at industry chambers, said the CII is confident that the new governor “will lead the central bank and take its developmental and regulatory agenda to new heights.”
Experts expect the appointment will boost market sentiment. “It is a big positive for the markets as the appointment is that of a known person,” said Hemendra Kothari, veteran investment banker. “The world is going through a difficult period and it is good to have a man of such experience. He has worked with the current RBI governor, so the transition will be smooth. His leadership at the RBI will be good in trying to find solutions to the problem of stressed assets.”
Nilesh Shah, managing director of Kotak Mahindra Asset Management, said the appointment provides continuity to monetary policy-making, especially related to inflation targeting. “It reassures both debt and equity markets. Market participants will be keenly looking forward to next credit policy to hear the governor’s view point on macro-economic environment and agenda for the future.”
Ajay Bodke, CEO (PMS) at Prabhudas Lilladher, said: “Institutional investors, both domestic and foreign would welcome the appointment. It signals a seamless continuity in the policies pursued by the RBI to conduct its monetary policy in an independent manner.”
“One of the most seminal achievements of Dr Rajan was the signing of monetary policy agreement for flexible inflation targeting which was based on the report of the panel headed by Dr Patel. His 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.”