Sudden exit of Urjit Patel highlights risks to policy priorities in India, a global rating agency said.
Sudden exit of Urjit Patel highlights risks to RBI’s policy priorities, a global rating agency said. Escalating influence of the government could undermine the progress done by RBI to address bad loan problems, Fitch Ratings said. “The government has unsuccessfully pushed the RBI to relax the PCA thresholds to allow some troubled banks to step up lending”, it added.
However, it’s early to look into the complete impact of Urjit Patel’s resignation, the rating agency said. “The full implications of Urjit Patel’s resignation will only become clearer once there is some indication of the RBI’s policy approach under his replacement, Shaktikanta Das, an experienced government bureaucrat,” Fitch Ratings further said.
Adding further, Fitch said that RBI’s macroeconomic policy framework is credible and effective. However, that assessment could change if government influence pushes the RBI away from its mandate, it also noted.
Meanwhile, new RBI Governor Shaktikanta Das has assumed charge today. “Assumed charge as Governor, Reserve Bank of India. Thank you each and everyone for your good wishes,” he said in a tweet. Finance Minister Arun Jaitley termed Das as a person with “right credentials” for the RBI top job. “Das has been a very senior and an experienced civil servant. He has almost his entire career in the management of finances and economic management of the country both, when he was in the state government of Tamil Nadu and also when he was in the Government of India in the Ministry of Finance,” Jaitley said.