Shaktikanta Das appointed as new RBI Governor

Former economic affairs secretary Shaktikanta Das appointed as the 25th governor of the Reserve Bank of India for a period of three years to succeed Urjit Patel, who resigned on Monday amid a bitter dispute over the regulator’s autonomy. The appointment means that the central bank will once again be headed by a former Indian Administrative Services (IAS) officer. Patel, who had said he was resigning for personal reasons, and his predecessor Raghuram Rajan are economists. The appointment came within 24 hours of Urjit Patel’s sudden resignation.

Das, who retired as Secretary of the Department of Economic Affairs, had served in various capacities in the Finance Ministry, including as Secretary in the Revenue department and as a key official in the Budget division. He is a former top bureaucrat in the Finance Ministry and key face of the government during demonetization. After his retirement on May 28, 2017, he was appointed as a member of the 15th Finance Commission and as the G20 Sherpa.

Das, 61, a 1980-batch IAS officer of the TamilNadu cadre, is a post-graduate in history from St. Stephen’s College, Delhi. During demonetization, he held regular briefings on behalf of the government as Economic Affairs Secretary to announce key changes, even as then RBI Governor Patel maintained silence.

“Among the many plans during that phase in 2016, Das had announced a proposal to put indelible ink on the index fingers of people to prevent them from exchanging old currency multiple times beyond specified limits. Following widespread outrage, the move was later withdrawn.”

In January 2017, after External Affairs Minister Sushma Swaraj’s objection to doormats depicting the Indian flag being sold on Amazon’s Canada portal elicited “regret” from the company, Das had tweeted on the issue, asking the e-commerce firm to “behave” and “desist from being flippant about Indian symbols & icons”.

The market players see Das as someone who would be more communicative than the reclusive Patel, and hope that he would reopen lines between the government and the RBI. The appointment also comes ahead of the crucial RBI Board meeting on December 14.

Das is also familiar with key issues facing RBI, having served on the Central Bank`s Board and overseen the setting up of the Monetary Policy Committee. He was also the secretary responsible for drafting the Insolvency & Bankruptcy Code.

Banking sources expect Das to be “more realistic”in understanding the need for leniency on public sector banks. They also expect discussions to gather pace on pulling some PSU banks out of the RBI’s Prompt Corrective Action framework.

The government, which suffered a setback in state election results on Tuesday, will be keen to get cracking on programmes to accelerate economic activity and generate employment ahead of national elections next year. It has been seeking a special liquidity window for Non-Banking finance companies (NBFCs) that lend to Small and Medium enterprises (SMEs) and create jobs in smaller towns. 

Despite the government’s suggestions to RBI for opening liquidity support to NBFCs, the regulator continues to remain firm that measures have been taken to ensure adequate liquidity. At the last monetary policy meeting, deputy governor Viral Acharya said the central bank was not planning to open an additional window to support these companies. The market will be keenly watching whether Das does a U-turn on this issue.

For recent updates, please subscribe us and follow us on various social platforms.

Leave a Reply

Your email address will not be published. Required fields are marked *