Mumbai: Urjit Patel took charge as Reserve Bank’s Governor on September 4, 2016, and little did he know that he would be facing one of the biggest challenges in his life with the most controversial economic move by the current ruling government, demonetization.
Patel, who had succeeded former governor of RBI Raghuram Rajan, had to witness the hardship faced by millions of citizens as they wait in ques, worried to deposit their hard earned money apart from struggles of withdrawing the new currency, Indian Express reported.
A well-accomplished macroeconomist with degrees from London School of Economics and Oxford and a PhD from Yale University could easily manage the sudden change and has now completed two years as Reserve Bank’s Governor.
Well, demonetization came quite hard for the common man and the nation’s economy badly disrupted with GDP falling to 5.7 per cent last year.
Well, the two major initiatives- formalisation of Monetary Policy Committee (MPC) and cleaning up of bad loans in the system with huge numbers of loan defaulters is being exercised now by Patel.
“Getting the monetary policy process streamlined with the MPC is another major achievement which ensures that the decision is now based on a committee with a fixed target,” said Madan Sabnavis, chief economist, Care Ratings.
The RBI has utilised the Insolvency and Bankruptcy Code (IBC) to address the huge debt pile of some of the biggest defaulters and has already come up two different lists of 40 corporates having the debt of around Rs 4 lakh crore.
The third list has around 60-70 corporates having the debt of around Rs 3 lakh crore.
Sabnavis said, “Unlike his predecessor, Patel had a more challenging first two years of tenure as it involved resolving the contradictions within the system, unlike Rajan who had a delicate external account to handle. Starting with demonetisation where the RBI had to carry out the scheme which the government had implemented to address the issue of quality of assets that was flagged by Rajan, the present RBI Governor has steered the central bank in an adept manner.”
“The NPA resolution process is probably the biggest achievement of the Governor where we have now in place a firm process for resolving NPAs based on the February 12 circular. This has been challenging given that it means working through the interests of the government which owns the PSBs and companies which have an interest in ensuring that their cases do not go to the IBC framework,” Sabnavis added.