By Mukund Abhyankar
Nomination of Urjit Patel, serving senior most of four Deputy Governors of RBI since January 2013,as the new Governor to succeed Raghuram Rajan from 4th September 2016 has to be welcomed open heartedly and without any doubt by the entire banking sector as the most suitable choice made by PM & FM from among candidates under consideration.
Patel has two distinct advantages over other choices, which I feel, may make him more successful and effective with the RBI’s role in India’s financial system.
Foremost, he was already handling the Monetary Policy Department (MPD) in the RBI under the overall guidance of Rajan.
Naturally, the benefits of Rajan’s policy in
(1) stabilising Indian Rupee in international markets,
(2) keeping domestic inflation under control by holding bank rate more or less stable despite expectations & even pressures from the industrial sector and
(3) Recent tightening of supervision over the banking sector- introduction of ‘AQR’formula and “S-4A” model and also on the non banking sectors of India are likely to be continued by Patel.
Another advantage of Patel is that he is already an insider in the RBI since past 3 years and naturally has been working cohesively with colleagues and other departmental heads of the RBI. For any other contenders, this would have not been possible and it would have cost them some time getting tuned to the internal working of the RBI.
Besides, the already established cordiality of Patel in working with heads of commercial banks will rule out any problem which generally inheres in any change of the guard.
I as a co-operative banker have a very little personal rapport with Patel himself compared to my contact with Rajan. But Urjit Patel’s equation with R.Gandhi, N.S.Vishwanathan and Mundhra – other 3 Deputy Governors will certainly ensure continuity of Rajan’s most policies.
I am however, only anxious about the future of improvements already set into motion by Rajan’ in the structure of the banking system in India viz Payment Banks, Universal Banks and Small Finance Banks. I hope except Postal Banks, no other Payment Banks shall be functional. The same can be the fate of Small Finance Banks. Patel may need to modify and amend certain conditions.
However, let all of us look forward positively to Urjit Patel’s career and welcome him as the new Governor of the RBI.