A day after Urjit Patel’s surprise resignation as RBI governor, the government appointed former finance ministry official Shaktikanta Das for a three-year tenure.
Mumbai: India named Shaktikanta Das as the new governor of the central bank a day after Urjit Patel shocked investors by stepping down before his term ended.
Das, a former top finance ministry official, was appointed for a three-year tenure, making him the 25th governor of the 83-year-old institution. The appointment comes at a tumultuous time for the Reserve Bank of India, which is ensnared in a spat with the government over central bank autonomy.
The new governor has choices to make: whether to let Prime Minister Narendra Modi’s government have a tighter supervision of its functioning and extract more capital from the central bank to meet budget deficit or defend the institution’s independence. Modi, who is facing re-election early next year, also wants the RBI to loosen curbs on some of the weakest banks to ensure lending continues and economic growth gets a boost.
Besides, the government wants liquidity taps to be opened for the crisis-ridden shadow banking sector, which has been making at least 3 out of 10 fresh loans in the past few years. The crisis in the sector threatens consumption, the bedrock to growth in Asia’s third largest economy. – Bloomberg