Raghuram Rajan’s action-packed three-year tenure as the governor of Reserve Bank of India is something the incumbent governor Urjit Patel may find difficult to match. Having taken the country’s top banker’s post in a difficult time, Rajan left behind a great legacy and lessons for all bankers of the future.
Rajan’s statements against some irresponsible corporates, who defaulted on bank loans but maintained a lavish lifestyle, earned him the tag of India’s ‘Robin Hood’ banker. Rajan has been praised across the world for taking the Indian economy out of trouble — not only stabilising it but also setting it on a growth path.
Now, Rajan is not just being praised in China but, in fact, it has been suggested that the country’s central banker can learn a lot from his tenure to put the Chinese economy back on track.
An article in the Chinese state media Global Times praises Rajan as “India’s debonair central banker” and says China can take some lessons from Rajan’s “experience in steering India’s financial markets.”
Chinese financial market didn’t perform well last year as stocks crashed and the yuan depreciated.
Talking about how Rajan’s experience can come handy in putting the Chinese financial market on track, the article suggests the Chinese central banker should first have the “credibility” that Rajan had earned in his career. When Rajan took over as the chief of RBI, the rupee was at an all-time low of 68.87 to the US dollar on August 28, 2013. But when Rajan made his agenda clear, not only markets took note, but even the RBI started “removing restrictive measures in the currency market the exchange rate did not stir.”
The article says Chinese policymakers can learn from Rajan’s “communication and navigation of the economy and financial markets”. With his “quick wit, charm and demeanour”, Rajan provided “confidence to the markets and common man.”
China should also learn from Rajan’s “deep surgery” to clean up balance sheets of banks. This forced banks to show a non-compromising attitude towards defaulters.
Rajan also lashed out at promoters of defaulting companies who maintained lavish lifestyles despite owing thousands of millions to banks. “This stance made him popular with the masses and the law-abiding corporates who hailed him as a “Robin Hood” banker.”
In a similar vein, the article suggests, high debt levels of a few large Chinese state-owned companies should be looked into.