Industry, government expect new RBI chief to be less hawkish

The immediate pressure, which the new governor will have to grapple with, is to transfer more of its excess capital to the Centre, a contentious issue for the last one year.

Newly-appointed RBI governor Shaktikanta Das (File Photo | PTI)

NEW DELHI: As Shaktikanta Das will assume office as RBI governor after months of simmering tensions between North Block and Mint Street, industry leaders and officials at the finance ministry claim that the next RBI board meeting is going to be the litmus test.

“He is likely to assume office not before next week, so in his absence the RBI board meeting is likely to be pushed to another 10-15 days. In the meantime he will be better prepared with the immediate issues and agenda for the meeting,” a senior official in the PMO said.​

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Late in the evening, Economic Secretary Subhash Chandra Garg said: “The December 14 meeting stands as of now. If RBI decides otherwise, we will get to know.”Too many issues are riding on the meeting, since government-nominated members on the board had pushed hard to discuss tighter supervision of the RBI, and to set up committees to have oversight of various central bank functions, from foreign exchange management to financial stability.

While Economic Secretary Subhash Chandra Garg had openly said that he wanted to discuss changes to the central bank’s governance structure and seek more interim dividends from the RBI, the RBI saw it as an attack on its autonomy, which apparently became the reason for the tiff between RBI governor Urjit Patel and Subhash Chandra Garg.

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The immediate pressure, which the new governor will have to grapple with, is to transfer more of its excess capital to the Centre, a contentious issue for the last one year. The government and the industry want the liquidity taps to be opened more generously for banks, NBFCs and small businesses ahead of a general election early next year, which the RBI was reluctant to do.

Shaktikanta Das, a former bureaucrat, is expected to be less hawkish than Patel and more open to relaxing norms which had been troubling the government.Meanwhile the industry, which has welcomed his appointment, is pinning too many expectations on him. “We need to bring down the real interest rates, improve liquidity and promote growth and employment. Improving credit flow to the real economy, especially MSMEs and housing, is critical at this juncture,” Rashesh Shah, President, FICCI said.