Bankers across the board have welcomed D Subbarao?s appointment as the next RBI governor.

?Subbarao is a good choice. I believe he would play a very good role of being a regulator. He has got an excellent track record and is well informed about all the issues. Having served as the economic advisor, with an excellent academic background from IIT, he would do an impeccable job as a governor,? said TS Narayanasami, chairman and managing director, Bank of India. ?Reddy has also done a fabulous job serving as the governor of RBI. He has had a good innings during his career and has been very successful. His monetary management has been very good,? he added. Chanda Kochhar, joint managing director, ICICI Bank, said: ?We at ICCI Bank welcome D Subbarao’s appointment as the new RBI governor. As a finance secretary, he has performed very well and in his new role, I am sure, he will be able to deliver the best. At this juncture, Mr. Reddy too needs to congratulated since he has been a successful regulator and given the circumstances, he could deliver the best.?

The Reddy innings

Going by the numbers, Yaga Venugopal Reddy, the 21 st RBI governor had much going for him, except the spurt in inflation which was largely caused by external shocks and supply constraints. Reddy had taken over as the governor on September 5, 2003 when inflation was around 5.4%, and GDP growth was 8.5%

He had taken over at a time when the economy was looking up, with strong fundamentals and comfortable balance of payments position, coupled with burgeoning forex reserves at over $85 billion. After five years, he leaves RBI with forex reserves at a hefty $300 billion, but with inflation at 12.40% and a projected GDP growth figure of around 8%.

Reddy is possibly the first RBI governor to have been given a five-year stint right at the beginning. He succeeded Bimal Jalan, who, with his astute macro-economic management, was seen as having brought stability to the rupee besides moving the economy towards a soft interest rate regime. Reddy had a vast exposure to the world of banking and finance as he had served as banking secretary and then served as a deputy governor in the central bank before succeeding Jalan as governor.

After his first six-year tenure as deputy governor of RBI, Reddy left the bank on July 31, 2002 to join the IMF as executive director before returning to occupy the top slot in 2003.

Immediately after assuming office, Reddy had said there would be continuity in the management of the macro-economy by the bank. Reddy had said, “Continuity and change will be mixed appropriately depending on the context.”

Referring to the monetary policy, Reddy had said, “RBI believes in continuity.”

An IAS officer, he had looked after the department of economic analysis & policy, department of external investments and operations, and department of expenditure and budgetary control, among other things.

Chiefly using the tools of repo, reverse repo and the cash reserve ratio (CRR), Reddy has attempted, over the past several months, to anchor inflationary expectations to a more reasonable level, recognising the view that monetary policy must necessarily be the first line of defence against inflation. During the last part of his tenure, Reddy had also underscored what he said were the ?new realities? which India and the rest of the world would now have to deal with, those being heightened global uncertainties and high inflation.

A hard-boiled central banker, and widely seen as conservative, Reddy?s stance and style of operation was generally seen as contrasting that of his predecessor Jalan. Even before he launched a frontal attack on inflation, Reddy has been sounding the warning bells on some sectors where, in his view, banks had been overexposed, in particular, sectors like real estate, where he increased risk weightages.

In his personal style too, Reddy, despite his trademark ready wit, remained a governor who, unlike his predecessor, hardly gave interviews or had off-record conversations, letting, instead, his policy actions do the talking.

While he had his quarterly pressers after his monetary policy review meetings, only twice a year?during the annual monetary policy statement and the half-year review ?did Reddy talk to the media by way of one-on-one interviews. Prior to becoming a key member of finance minister P Chidambaram’s team, Subbarao was secretary of the Prime Minister’s Economic Advisory Council.

His penchant for solving mathematical puzzles and number crunching would come in handy as the RBI governor.

Known for his meticulous working style and a capacity to get the best out of colleagues, Subbarao will now move to the country’s financial capital, Mumbai, after holding the fort atop Raising Hill in the North Block, years after he moved from his hometown in Eluru, a small village near Vizianagaram, Andhra Pradesh.

Like their father, Subbarao’s children are also IIT alumni.