Mumbai: As the Mint Street readies for a new sheriff, industry and markets want much more than a change in the quintessential signature on currency notes when a soft-spoken but effective Urjit Patel takes over from an outspoken and rockstar-like Raghuram Rajan.
Figuratively and symbolically, the change in personality that Patel brings in to the top job at RBI appears to be very comforting to the industry and bankers who were often at the receiving end of the barbs, mostly in form of policy actions, from Rajan, a veteran banker said.
While everyone has been effusive in showering praise on Patel being chosen to succeed Rajan, many industry leaders, top bankers and influential marketmen said they are also keeping their fingers crossed on whether Patel will continue as the ‘inflation warrior’ he was for his current Governor or his corporate and finance background would help taper down RBI’s hawk-eye fixation on checking inflation and the ‘deep surgery’ to remove bad loans.
The wish list that ‘Dr Patel’, as he is commonly referred to as, faces is long and could be difficult to fulfil on many fronts -- lower the rates, go easy on banks and borrowers, be liberal with grant of banking licences, safeguard foreign reserves and rather beef it up.
Ironically, Patel himself was the Brahmastra or the master tool, as described by a top functionary at an informal industry gathering here, that Rajan used in his battlefield -- where RBI is required to control inflation without hurting growth while also catering to unending demands for rate cuts, and also clean up books of the banks from bad loans including those induced upon them.
The top functionary also told the industrialists and bankers present there that Rajan had been rooting for Patel as his successor as RBI Governor, presumably to ensure that his legacy continues and a continuity ensues in the monetary policy -- an idea which also gained currency with the government which did not want any further negative publicity or any adverse impact on currency, bonds and stock markets.
This was also precisely the reason, why the government decided to make the announcement of Patel’s appointment on a Saturday -- that is to ensure that the markets do not see any knee jerk reaction and influential marketmen and banks are asked to ensure availability of sufficient liquidity of securities as well as cash, a high-level source said.
Incidentally, Rajan had also made the surprise announcement on a Saturday that he would not take a second term after his current three-year tenure ends on September 4, which interestingly will be a Sunday. After Rajan’s announcement, elaborate arrangements were made to ring-fence and beef up the risk management and surveillance systems to check any mishaps and the same exercise has been kicked off in run up to the opening up of various financial markets tomorrow, sources said.
In what could be probably just another coincident, Finance Minister Arun Jaitley was in Mumbai, the country’s financial capital and home to RBI’s headquarters, on the day Patel was named as the next RBI chief. The government and corporates are hopeful that Patel, who has kept a low profile so far, would keep away from the rockstar-like public utterances and candid views that Rajan was used to on each and every topic under the sun, except for ‘dance and music’ as himself admitted to by the former chief economist of IMF.
As he has worked with the Finance Ministry as well as corporates like Reliance Industries, IDFC and Gujarat State Petroleum Corp Ltd, besides his tenure at IMF and other organisations, they expect better understanding by Patel when he would be faced with various demands from the industry, government or the bankers.
To start with, Patel also seems to have got a favourable rating from BJP MP Subramanian Swamy, who was among the most vocal critics of Rajan and appears to have even dismissed concerns about his reported Kenyan roots. It was Swamy’s scathing remark calling Rajan mentally not fully Indian which prompted Rajan’s public retort against such ad hominem attacks.
On his part, Rajan never admitted 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 people 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.