Corporate India surprised and worried as RBI governor Urjit Patel steps down

Corproate executives and economists that Moneycontrol spoke to expressed concerns of instability at the RBI and the impact it will have on attracting long-term investments.

The corporate sector in India was taken by surprise on December 10 with Reserve Bank of India Governor Urjit Patel's decision to step down.

Patel has resigned from the post citing personal issues.

Analysts attributed the resignation to the simmering differences between RBI and government over the former's autonomy as the Centre has sought to reduce curbs on lending and to gain access to RBI reserves.

"On account of personal reasons, I have decided to step down from my current position effective immediately," Patel said in a brief statement.

Corporate executives and economists that Moneycontrol spoke to have expressed concerns of instability at RBI and the impact it will have on attracting long-term investment in India.

One executive on the board of a public sector bank called the resignation a  "sensitive" matter at this juncture.

The executive said he didn't expect Patel to resign as the RBI had recently signaled that the government and central bank had compromised by agreeing to study a demand for sharing a part of its capital.

A chief executive officer of a South-based bank echoed the same.

"The news of the exit had died down after the board meeting. But we had heard that the surplus transfer issue was not resolved amicably. With its autonomy at stake, I believe that the governor took this call," he added.

"RBI Governor #UrjitPatel resignation gives me mixed emotions. There should always be healthy creative tension between RBI and government; but when it turns to destructive tension one of the parties have got to wilt," Harsh Goenka, Chairman of RPG Group, tweeted.

"It will be interesting to see how the monetary markets react. Rupee may fall against all major currency. Will  rupee hit Rs 75 against US dollar," said an aviation executive who didn't want to be named.

Sending wrong signals to global investors

"This was unexpected," said Sujan Hajra, Chief Economist at Anand Rathi Financial Services.

"This seems the culmination of the differences of opinion between government and RBI on a large range of issues. We had the feeling that the difference are bridging but today’s event suggests otherwise. This will create uncertainty. Appointment of a credible governor quickly can dispel the situation," Hajra said.

A chief investment officer of a large private life insurance company said that Patel's sudden exit will present a wrong picture about the Indian market and that foreign inflows could be curtailed for the next few weeks.

"Instability in the role of RBI and its independence is not good for attracting long-term investment in India," said Bhagwan Chowdhry, Professor of Finance, UCLA Anderson School of Management and Visiting Faculty, ISB.

Source: https://www .moneycontrol.com/news/business/economy/corporate-India-surprised-and-worried-as-rbi-governor-urjit-patel-steps-down-3274141.html 

If you want more information regarding the Market News & many other tips like Intraday Tips, MCX Normal Calls, Bullion Market Tips, Share Market Services, NSE & BSE Market Tips, Free MCX Market Tips, MCX Premium Tips, Bullion Energy Tips, commodity market tips.

Visit: Trade India research

Whatsapp User Join Our Group: 9300421111