Centre’s RBI pick to cheer Dalal Street

The list of probable candidates short-listed by the government to replace RBI governor Raghuram Rajan is expected to lift the confidence of financial market participants.

Dr Rajan whose tenure as the governor of RBI ends in September 2016 shocked markets by announcing that he would not seek a reappointment amidst controversy regarding his monetary policy to target inflation.

According to reports, the government has shortlisted the current deputy governor Urjit Patel, former deputy governors Rakesh Mohan and Subir Gokarn and SBI chairperson Arundhati Bhattacharya to replace Dr Rajan.

While Mr Patel is part of the current team, which has taken a number of initiatives to strengthen and deepen the Indian banking sector, experts said Mr Mohan and Dr Gokarn are remembered for being part of the team that steered and guarded the domestic banking industry during the 2008 subprime crisis and European sovereign debt crisis that led to a crisis of confidence and liquidity in the global credit markets.

“At this stage, the government would not put its reputation at stake and it is prudentially and politically necessary to put a person of eminence in Dr Rajan’s place who can continue with the good work that the previous governor has undertaken,” said J.N Gupta, managing director, Stakeholders Empowerment Services and former executive director of Sebi. “Both Mr Mohan and Dr Gokarn are distinguished economists who were part of RBI that took crucial decisions to guard domestic financial sector against any risk posed by the crisis in global markets,” he added.

According to market participants, the financial markets would give a big thumps-up to anyone who would uphold the autonomy and independence of RBI. “All the individuals being considered are proven names, which is expected to provide a certain degree of confidence to financial market participants. What is required is the continuation of initiatives taken by the current governor,” said Deven Choksey, MD, K.R. Choksey Securities.