| Outgoing Governor D.Subbarao welcomes successor Raghuram Rajan |
Raghuram
Rajan, 50, took charge as the Reserve Bank of India (RBI) Governor from Duvvuri
Subbarao on 4th September 2013. He is the 23rd Governor
of the RBI and has been appointed for a period of three years.
Mr.
Raghuram Rajan earned his bachelor’s degree in electrical engineering from
IIT-Delhi, before pursuing his MBA in 1987 from the Indian Institute of
Management, Ahmedabad, followed by a PhD in 1991 from Massachusetts Institute
of Technology. He was a gold medalist at both IIT and IIM. Mr. Rajan’s claim to
fame is his prediction of the 2008 global financial crisis in his paper titled ‘Has
Financial Development Made the World Riskier?’ He had previously served as a
Chief Economist to the IMF from 2003 to 2007, and more recently as the Chief
Economic Advisor to the Finance Ministry of India for the past one year.
A
few critics were concerned with his appointment as the RBI Governor, since he
has never held a decision making post. His previous posts at the Government of
India and the IMF were purely advisory roles. However, these concerns have been
put to rest as Mr. Rajan brilliantly began his innings at the RBI spelling out
plans to reform the country’s banking industry and reshape its financial
infrastructure.
A few key decisions
that he took are as follows:
·
Limits for exporters to re-book
cancelled forward exchange contracts doubled to 50% of valued contracts; for
importers it has been increased to 25% from 0%
·
Special concessional window for swapping
foreign currency non-resident (FCNR) deposits and dollar funds
·
Overseas borrowing limit for banks hiked
from 50% to 100%
·
A committee led by former RBI Governor
Bimal Jalan has been formed for looking in to the new banking license
applications
·
A committee led by Nachiket Mor formed
to study every aspect of financial inclusion
·
Inflation indexed savings certificates
linked to CPI to be launched by November end
The
markets have responded spectacularly. The BSE Sensex has gained almost 675
points in the last two days to settle at 19270 (as on 6th September
2013) since Mr. Rajan has taken charge. The rupee too has gained almost 1.5
rupees settling at 65.24/dollar (as on 6th September 2013).
All
eyes are now on the monetary policy that will be announced on 20th
September 2013. It was earlier scheduled for 18th September.
Although no specific reason was mentioned, it is understood that the RBI will
take into consideration the decisions taken by the US Federal Reserve in their
monetary policy to be announced on 18th September.
Mr
. Rajan, as he has himself admitted, has no magic wand. However, with his
maiden speech, he has instilled a lot of confidence in the market. His bold
entry to the job, announcing a raft of financial deregulatory measures has
received rave reviews from economists and the local media. To conclude, I quote
the outgoing Governor, D. Subbarao, on Mr. Raghuram Rajan - “The country could
not have asked for more capable person to lead RBI in most difficult times”.
3 comments:
Very informative...Nice job Sufiyan :D
good one Sufiyan :)
Nice article. Hoping the new governor is even more successful than the previous one
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