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Dr. Urjit Patel
RBI’s New Spearhead

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1.
Urjit Patel
At a glance….

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Bachelor’s Degree in Economics from the London School of Economics
M. Phil from Oxford University
Ph.D. from Yale University
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
worked with organizations such as the Boston Consulting Group, Reliance
Industries Limited

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2.
Challenges

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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.

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Face the complexities of Regulating the Markets
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.

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Bad Loans
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.

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Inflation
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)

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Dollar Debt
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.

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