Experts wary of December 14 meeting

The RBI board is expected to deliberate on issues of concern to the government that were left unresolved in the last meeting

Update: 2018-12-11 21:23 GMT
Urjit Patel

Hyderabad: The appointment of a new RBI governor by the government within 24 hours of his predecessor’s resignation, despite adverse political developments in three major states, is unprecedented, according to analysts.

The general practice is to let the senior most deputy governor don the mantle of the RBI chief until the government decides upon its choice.

Though there were suggestions of RBI deputy governor N.S. Vishwanathan would fort until the Centre makes its mind, the government appointed Shaktikanta Das in a shortest record time.

The rupee on Tuesday plunged 110 paise in early trade but recovered later to end 53 paise lower at 71.85 against the US dollar following Urjit Patel’s shock exit coupled with the loss of the ruling BJP in key state elections.

Niti Aayog vice-chairman Rajiv Kumar batted for the government by saying that the functioning of the RBI is not dependent on any particular individual and its institutional capabilities are very strong.

While some analysts feel that the unprecedented haste was caused by the government’s intention to reassure equity and currency markets that things are in control, others say the real reason for the appointment appears to be the impending RBI board's meeting on December 14.

The RBI board is expected to deliberate on issues of concern to the government that were left unresolved in the last meeting.

The board was also expected to appointed its representatives to a three-member panel that would decide the amount of capital that the central bank could hold.

The government has set its eyes on over '3 lakh crore from the RBI’s capital, which Dr Patel and his colleagues had refused to part with as the asset appreciation was notional in nature.

It is speculated that the appointment of a bureaucrat would make things easier. A section of analysts also claimed that Dr Patel had informed the PM Narendra Modi of his intention to resign, but he was asked to wait till the state elections were over as his decision could have wider ramifications.

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