RBI’s New Spearhead – Dr. Urjit Patel


Yes, the move that was on the cards has finally been executed. No, I am not talking about Game of Thrones (Generic humour appeal at the start), but yes the newest member in the hall of fame for RBI governors. Dr. Urjit Patel becomes the governor of RBI, taking over the reins from the former, Raghuram Rajan. But do we know our new governor? (Eh, we don’t). Aditya would tell you, no worries

bio of patel

  1.  He completed his Bachelor’s Degree in Economics from the London School of Economics, and went on to do an M. Phil from Oxford University in 1986, and a Ph.D. from Yale University in 1990.
  1.  Patel has worked for IMF desks in the US, India, the Bahamas, and Myanmar as an important contributor to the development of the debt market, banking sector reforms, pension fund reforms, real exchange rate targeting and evolution of the foreign exchange market in India.
  1.   He has worked with organisations such as the Boston Consulting Group, Reliance Industries Limited and has won the accreditation of many PMs and MPs in India.

It is said that with greater roles come greater responsibility, and all eyes are on Urjit since he is presiding over a man who was eminent at home and abroad and had set a high standard for talking truth to power. Serving as the deputy governor of RBI currently, he is considered to be an inflationary hawk and a disciple of the same school of thinking as that of Rajan. Although, the challenges that lie ahead of him are mammoth. Let us have a close look at them.

cover RBI

Challenges for the RBIs leading man:

  1. The first among many problems that the new Governor will face will be the changed circumstances of monetary policy formulation. When Dr. Patel chairs the first few meetings of the Monetary Policy Committee (the six-member panel that is expected to start deciding interest rates from the October 4 policy announcement onwards), it will be interesting and instructive to see how he helms the committee approach to rate-setting.
  1.  Dr. Patel will also have his task cut out in managing and future-proofing key cadres at the central bank itself. He will have to face the complexities of regulating the markets, the financial services industry and payments systems at a time of rapid technological change and disruption.
  1. Bad loans in the system from the public sector banks have tallied up to an alarming 8.5% from the previous 7.6%. In this hour of Pandora, he will have to find an excellent balance between cleaning the system so that banks can start lending again and maintaining the stability of the banking system.
  1. Controlling inflation, to say the least, also is highlighted on the to-do list of Mr. Patel. While his predecessor has a worldwide recognition for controlling the Indian inflation, he would also have the onus of capping inflation without the help of low oil prices.  Spurring growth by curbing inflation would be the top priority area for him. (on account of the rising CPI)
  1.  Paying off the massive dollar debt in September will haunt Dr. Patel as his first major test when Indians abroad will be able to redeem more than $20 billion in foreign-currency bonds issued by banks as an emergency measure to attract money to Indians. The RBI has a daunting task to print lots and lots of foreign currency in this regard, in the three months to November.

dollar debt crisis

Hence the water is already above the heads of RBI and they have to bring the shivers down. Considered as PM Modi’s first choice, Urjit Patel comes at a time when the economy needs to be revamped from the scratch. He needs to fill in the big shoes of Rajan, who allegedly denied a second three-year term following his stint with the government’s policy and administration.

rajan vs urjit

Let us all believe that the journey with Dr. Urjit turns as per the expectations and the dying state of the economy is restored to the situation of a pumping and developing one back again.

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