On debut, new RBI Guv Das promises to work closely with govt
Shaktikanta Das took charge as the 25th Governor of the Reserve Bank early Wednesday and promised to take all stakeholders, including the government, along on key policy issues to maintain growth while keeping inflation under check.
Das was appointed Tuesday evening -- within a day after the sudden resignation of Urjit Patel following deep friction between the RBI and the government over a host of issues, including the central bank's governance, capital reserves and also certain regulatory policies like the PCA framework for half the state-run banks and credit concerns to some key vote-banks in the industry.
"The government is not just a stakeholder, it also runs the economy and the country and manages major policy decisions. There has to be free, fair, objective, and frank discussions between the government and RBI," Das, the former finance secretary who oversaw the controversial note-ban exercise, told reporters in his maiden address at the RBI headquarters on Mint Road.
Expecting Das, the government's pointman during the note-ban months and who worked in getting the monetary policy committee in place, to work more closely with the government, Dalal Street lapped up the appointment with 630-point salute.
Ignoring the BJP's defeat in the recent state elections, the Sensex soared over 750 points intra-day and closed with 630-point gains, while the broader Nifty rallied over 188 points to reclaim the 10,700-mark.
Analysts attributed the rally to the quick appointment of Das -- within a day of Patel's resignation -- and expectations of more steps to ease the liquidity situation bolstered trading sentiment.
"I would like to believe that all the issues, howsoever contentious, can be resolved through discussions," said Das, known for his good conversational skill across all the stakeholders.
He said he will meet heads of the city-based state-run banks Thursday to have a "general discussion", which will be followed with a similar exercise with those based elsewhere within a few days and finally the private sector ones.
The banking sector, which is reeling under bad debts of over Rs 12 trillion, has been listed by Das as his immediate point of focus.
It can be noted RBI's deemed refusals to liberalise the prompt corrective action (PCA) norms, which restrict regular lending and expansion of as many as 11 of the 21 state-run lenders, was one of the major contentious issues between the RBI and the government, along with regulatory issues like the February 12 circular on toxic assets recognition wherein one-day's default makes it an NPA. These 11 banks control a fifth of the credit and deposit markets.
When asked is the channel of communication between the government and the Reserve Bank blocked, Das said he does not know about any such blockage or the nature of the relationship between the two. He also parried all questions in this regard.
Das affirmed his commitment to uphold the "professionalism, the core values, credibility, integrity and the autonomy" of the "great institution of RBI", but also underlined that every institution has to "adhere to the principles accountability".
Drawing from his past interactions and engagement with RBI officials, he said central bankers "possess inherent core competence and professionalism" to deal with all technical issues on monetary and currency aspects.
Das has worked in the finance ministry for over 10 years in his long civil service career spanning four decades before retiring in May this year as finance secretary after which he was appointed a member of the 15th Finance Commission chaired by N K Singh and the country's Sherpa to the G-20.
There have been many precedents of career bureaucrats appointed as RBI governors in the past, but Das is the first such official to occupy the Mint Road corner office in the past five years and the first one after the retirement.
Earlier bureaucrats, especially D Subbarao and YV Reddy, are widely respected for having fiercely protected RBI's interests in the face of demanding governments.
On liquidity, another of the contentious issues, Das said he will interact with all the stakeholders, take internal feedbacks and then take a view.
Stating that inflation being under control with a benign outlook is "heartening", Das said "maintaining the growth trajectory is also important" dropping enough hints that he has a dovish stance on the policy rates.
Das said the scheduled central board meeting of the RBI on Friday -- which comes after two marathon meets in the past two months where the directors from the RBI and those part-timers appointed by the government are reported to have differed on many issues -- will go as planned and discuss all the necessary details.
He said all the challenges that come under the domain of the RBI will be addressed and any decision necessary for the economy will be taken in a timely manner.
"It's a great opportunity for me to work in RBI and serve the country. I will work as a team with other officials in the best interest of the country and the economy in a timely manner," Das concluded.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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