India Inc on new RBI Governor Urjit Patel: Elevation ‘signals continuity’, markets to draw comfort

Patel is expected to announce his first monetary policy on October 4, 2016.

According to Chanda Kochhar, MD and CEO, ICICI Bank, as the Deputy Governor of the RBI, Patel 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,” Kochhar said.

Bankers don’t expect any radical changes in the RBI policies. The formation of the Monetary Policy Committee will be the only big and immediate change under Urjit Patel. “I am confident that this transition will ensure efficient monetary policy management. 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,” said Rana Kapoor, MD & CEO, YES Bank.

Agreeing to Kochhar, Nilesh Shah, MD, Kotak Mahindra Asset Management, said, “Patel’s appointment provides continuity to the monetary policy making especially related to inflation targeting. It reassures both debt and equity market for continuity in policy making at the RBI.”

Market participants will be keenly looking forward to next credit policy to hear the Governor’s viewpoint on macro-economic environment and agenda for the future, Shah said.

While several market players had feared a negative impact in currency and debt market following Rajan’s exit and called for a competent replacement, Patel’s appointment seems to have provided that comfort.

C J George, MD, Geojit BNP Paribas Financial Services who had in June said that markets would be wary as Rajan provided confidence, especially on currency stability and inflation, and it will be important to have an equally competent replacement, said on Saturday, “It is a good decision and will address the concerns. Urjit Patel is very competent and has worked very closely with Rajan. His appointment also means continuity in RBI’s policies and markets are expected to draw comfort from it,” George said.

India Inc, which was lobbying for deeper cuts in interest rates, is also optimistic about Patel’s elevation. “We have had the opportunity to work with Patel in his earlier roles. CII is confident that the new Governor will lead the central bank and take its developmental and regulatory agenda to new heights,” said Chandrajit Banerjee, Director General, CII.

Industry chambers were arguing for more focus on growth instead of targeting inflation alone. 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, Banerjee said.

“Having worked with Raghuram 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,” said Sunil Godhwani, Whole-time Director and CEO, Religare Enterprises.