The Reserve Bank of India governor should work in sync with the nation's government to support economic growth or he <a href="http://www.wionews.com/india-news/rbi-governor-urjit-patel-may-consider-resigning-after-rift-with-government-report-174513">should resign</a>, said the head of the economic wing of Rashtriya Swayamsevak Sangh.

<a href="http://www.wionews.com/india-news/a-govt-that-does-not-respect-rbis-independence-will-incur-wrath-of-markets-rbi-deputy-governor-173752">RBI Governor</a> Urjit Patel should also "restrain his officials from making differences public," said the RSS official, Ashwani Mahajan, in an interview on Wednesday. "If he doesn't follow discipline it would be better for him to resign," he added.

Mahajan is chief of the RSS's Swadeshi Jagran Manch (SJM) economic group.

Earlier in the day, some local TV channels reported that Patel could consider resigning from his post given a breakdown in relations with the government, sparking a sell-off in the rupee and bonds.

Tensions between the RBI and the government have become increasingly public after the bank's Deputy Governor Viral Acharya said last Friday night that undermining central bank independence could be "potentially catastrophic".

His comments indicated that the RBI was pushing back against government pressure to relax its policies and reduce its powers ahead of a general election due by May.

In a statement, the government said on Wednesday the RBI's independence was "an essential and accepted governance requirement" but it added that it would continue to extensively consult with the central bank to give its assessments on issues and suggest possible solutions.

Government officials on Wednesday declined to say whether it had for the first time ever used, or threatened to use, powers under the RBI Act that allow it to give the bank instructions. The Economic Times newspaper reported the government had sent letters to Patel in recent weeks exercising those powers.

Mahajan said that the government had every right to use the powers of the RBI act.

The Reserve Bank of India governor should work in sync with the nation's government to support economic growth or he should resign, said the head of the economic wing of Rashtriya Swayamsevak Sangh.

The Reserve Bank of India governor should work in sync with the nation's government to support economic growth or he should resign, said the head of the economic wing of Rashtriya Swayamsevak Sangh. RBI Governor Urjit Patel should also "restrain his officials from making differences public," said the RSS official, Ashwani Mahajan, in an interview on Wednesday. "If he doesn't follow discipline it would be better for him to resign," he added. Mahajan is chief of the RSS's Swadeshi Jagran Manch (SJM) economic group. Earlier in the day, some local TV channels reported that Patel could consider resigning from his post given a breakdown in relations with the government, sparking a sell-off in the rupee and bonds. Tensions between the RBI and the government have become increasingly public after the bank's Deputy Governor Viral Acharya said last Friday night that undermining central bank independence could be "potentially catastrophic". His comments indicated that the RBI was pushing back against government pressure to relax its policies and reduce its powers ahead of a general election due by May. In a statement, the government said on Wednesday the RBI's independence was "an essential and accepted governance requirement" but it added that it would continue to extensively consult with the central bank to give its assessments on issues and suggest possible solutions. Government officials on Wednesday declined to say whether it had for the first time ever used, or threatened to use, powers under the RBI Act that allow it to give the bank instructions. The Economic Times newspaper reported the government had sent letters to Patel in recent weeks exercising those powers. Mahajan said that the government had every right to use the powers of the RBI act.

RBI head should work with government or quit, says RSS official 

Reserve Bank of India Governor Urjit Patel may consider resigning from his post given a <a href="http://www.wionews.com/india-news/government-very-upset-with-rbi-for-making-rift-public-sources-174359">breakdown in relations</a> with the government, TV channels reported on Wednesday, sparking a sell-off in the rupee and bonds.

Indian television channels CNBC-TV18 and ET Now cited sources as saying that Patel could quit.

The RBI and the finance ministry declined to comment.

Also read:&nbsp;<a href="http://www.wionews.com/india-news/government-invokes-never-used-before-powers-to-issue-directions-to-rbi-report-174517">Government invokes never-used-before powers to issue directions to RBI governor</a>

The government has invoked never-before-used powers under the RBI Act that allow it to issue directions to the central bank governor on matters of public interest, the Economic Times newspaper reported.

It said the government had sent letters to the RBI governor in recent weeks exercising powers under Section 7 of the RBI Act on issues ranging from liquidity for non-bank finance companies, capital requirements for weak banks and lending to small- and medium-sized companies.

Section 7 says that 'the Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public interest', a statute that has not been used in independent India, according to the Economic Times.

The 10-year benchmark bond yield rose to 7.87 per cent from its previous close of 7.83 per cent.

The rupee fell to 73.99 to the dollar from 73.6750 on Tuesday, after touching 74.04, its lowest since October 15.

"It is difficult to believe that the RBI governor will resign because it is unprecedented and would look quite irresponsible and (an) immature step," said a senior trader at a foreign bank. "But it is quite worrisome to see the government trying to continuously interfere into the RBI's operations."

IN THE OPEN

Tensions between the RBI and the government have spilled into the public domain after Deputy Governor Viral Acharya said last week that undermining central bank independence could be "potentially catastrophic", indicating the authority is pushing back against government pressure to relax its policies and reduce its powers ahead of a general election due by May.

Adding to the row, Finance Minister Arun Jaitley blamed the central bank for failing to stop a lending spree during 2008-2014 that left banks with $150 billion of bad debt.

Patel and other regulators, including the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority and the Pension Fund Regulatory and Development Authority, met Jaitley and other top finance ministry officials at a meeting of the Financial Stability and Development Council on Tuesday to discuss the liquidity crunch.

However, there was no sign of resignation by Patel at the meeting, officials said.

Patel and his deputy governors are expected to meet top finance ministry officials on Friday.

Reserve Bank of India Governor Urjit Patel may consider resigning from his post given a breakdown in relations with the government, TV channels reported on Wednesday, sparking a sell-off in the rupee and bonds.

Reserve Bank of India Governor Urjit Patel may consider resigning from his post given a breakdown in relations with the government, TV channels reported on Wednesday, sparking a sell-off in the rupee and bonds. Indian television channels CNBC-TV18 and ET Now cited sources as saying that Patel could quit. The RBI and the finance ministry declined to comment. Also read: Government invokes never-used-before powers to issue directions to RBI governor The government has invoked never-before-used powers under the RBI Act that allow it to issue directions to the central bank governor on matters of public interest, the Economic Times newspaper reported. It said the government had sent letters to the RBI governor in recent weeks exercising powers under Section 7 of the RBI Act on issues ranging from liquidity for non-bank finance companies, capital requirements for weak banks and lending to small- and medium-sized companies. Section 7 says that 'the Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public interest', a statute that has not been used in independent India, according to the Economic Times. The 10-year benchmark bond yield rose to 7.87 per cent from its previous close of 7.83 per cent. The rupee fell to 73.99 to the dollar from 73.6750 on Tuesday, after touching 74.04, its lowest since October 15. "It is difficult to believe that the RBI governor will resign because it is unprecedented and would look quite irresponsible and (an) immature step," said a senior trader at a foreign bank. "But it is quite worrisome to see the government trying to continuously interfere into the RBI's operations." IN THE OPEN Tensions between the RBI and the government have spilled into the public domain after Deputy Governor Viral Acharya said last week that undermining central bank independence could be "potentially catastrophic", indicating the authority is pushing back against government pressure to relax its policies and reduce its powers ahead of a general election due by May. Adding to the row, Finance Minister Arun Jaitley blamed the central bank for failing to stop a lending spree during 2008-2014 that left banks with $150 billion of bad debt. Patel and other regulators, including the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority and the Pension Fund Regulatory and Development Authority, met Jaitley and other top finance ministry officials at a meeting of the Financial Stability and Development Council on Tuesday to discuss the liquidity crunch. However, there was no sign of resignation by Patel at the meeting, officials said. Patel and his deputy governors are expected to meet top finance ministry officials on Friday.

RBI Governor Urjit Patel may consider resigning after rift with government: Report

Asserting that the Indian economy turned in a resilient performance in 2017-18, Reserve Bank of India (RBI) Governor Urjit Patel has said the country's growth is expected to accelerate next fiscal.

Mr Patel was addressing the International Monetary Finance Committee here yesterday.

"The Indian economy turned in a resilient performance in 2017-18," Mr Patel said.

Although the real GDP growth was moderated to 6.6 per cent from 7.1 per cent a year ago, there was a strong rebound in the second half of the year on the back of a turnaround in investment demand, he said.

This was supported by an acceleration in manufacturing, rising sales growth, a pick-up in capacity utilisation, strong activity in the services sector and a record agricultural harvest, the RBI governor added.

"Several factors are expected to help accelerate the pace of growth in 2018-19. There are now clearer signs that the revival in investment activity will be sustained," he said.

Global demand has been improving, which should encourage exports and boost fresh investments, Patel said, adding that on the whole, real GDP growth was expected to expand at 7.4 per cent in 2018-19, with risks evenly balanced.

In his address, Mr Patel said since November 2016, headline consumer price inflation had generally remained below the medium-term target of four per cent.

An unusual spike in vegetables prices pushed up inflation to a recent peak of 5.2 per cent in December, but it eased in subsequent months to reach 4.3 per cent in March, he said.

Mr Patel said several factors were likely to influence the inflation outlook, including a possible moderation in food prices if the monsoon turned out to be normal and was supported by an effective food supply management.

"Countervailing this, upside risks emanate from the distinct hardening bias in crude oil prices, the steady firming up of inflation excluding food and fuel mirroring pick up in domestic demand, and spillovers from financial volatility as markets re-price the path of monetary policy normalisation by systemic central banks," he said.

Noting that risks to inflation are tilted to the upside, the monetary policy rate was kept unchanged at 6.0 per cent in April 2018 with a neutral stance, Mr Patel said.

Asserting that the government is committed to fiscal prudence, the RBI governor said aided by buoyancy in tax revenues and rationalisation of subsidies, the gross fiscal deficit (GFD) of the central government has been steadily brought down since 2013-14 to 3.5 per cent of GDP in 2017-18 without compromising on public investment requirements and social sector spending.

The GFD is budgeted lower at 3.3 per cent in 2018-19, he said. The government has accepted a debt rule that will bring down the debt-to-GDP ratio to 40 per cent over a period of time by 2024-25.

Mr Patel said the goods and services tax (GST), which was implemented from July 2017 has reformed the system of indirect taxes by simplifying payments and credits, and improving the efficiency of movement of goods across the country.

Automation of tax payments and 'team-based assessment with dynamic jurisdiction' without direct interface with tax payers has improved overall efficiency and transparency of revenue administration, he said.

Mr Patel said with the pace of import growth relative to that of exports, the current account deficit (CAD) expanded from 0.7 per cent in 2016-17 to 1.9 per cent for the first nine months of 2017-18.

External financing conditions remained comfortable, boosted mainly by robust inflows of foreign direct investment (FDI), he said.

The UNCTAD's survey of multinational enterprises ranked India as the third most favoured destination for FDI for 2017-19. Reflecting these developments, India's foreign exchange reserves at $424 billion were equivalent of 11 months of imports, he added. 
"India has persevered with structural reforms over a wide area ranging from a flexible inflation targeting framework for monetary policy liberalisation of FDI flows a unique identification (Aadhaar) backed direct benefit transfers an insolvency and bankruptcy code the GST realty reforms and a swathe of measures for improvement in the ease of doing business more generally," he said.

These factors have improved India's global ranking in the World Bank's Ease of Doing Business, Mr Patel added.

'Several factors are expected to help accelerate the pace of growth in 2018-19. There are now clearer signs that the revival in investment activity will be sustained,' he said

Asserting that the Indian economy turned in a resilient performance in 2017-18, Reserve Bank of India (RBI) Governor Urjit Patel has said the country's growth is expected to accelerate next fiscal. Mr Patel was addressing the International Monetary Finance Committee here yesterday. "The Indian economy turned in a resilient performance in 2017-18," Mr Patel said. Although the real GDP growth was moderated to 6.6 per cent from 7.1 per cent a year ago, there was a strong rebound in the second half of the year on the back of a turnaround in investment demand, he said. This was supported by an acceleration in manufacturing, rising sales growth, a pick-up in capacity utilisation, strong activity in the services sector and a record agricultural harvest, the RBI governor added. "Several factors are expected to help accelerate the pace of growth in 2018-19. There are now clearer signs that the revival in investment activity will be sustained," he said. Global demand has been improving, which should encourage exports and boost fresh investments, Patel said, adding that on the whole, real GDP growth was expected to expand at 7.4 per cent in 2018-19, with risks evenly balanced. In his address, Mr Patel said since November 2016, headline consumer price inflation had generally remained below the medium-term target of four per cent. An unusual spike in vegetables prices pushed up inflation to a recent peak of 5.2 per cent in December, but it eased in subsequent months to reach 4.3 per cent in March, he said. Mr Patel said several factors were likely to influence the inflation outlook, including a possible moderation in food prices if the monsoon turned out to be normal and was supported by an effective food supply management. "Countervailing this, upside risks emanate from the distinct hardening bias in crude oil prices, the steady firming up of inflation excluding food and fuel mirroring pick up in domestic demand, and spillovers from financial volatility as markets re-price the path of monetary policy normalisation by systemic central banks," he said. Noting that risks to inflation are tilted to the upside, the monetary policy rate was kept unchanged at 6.0 per cent in April 2018 with a neutral stance, Mr Patel said. Asserting that the government is committed to fiscal prudence, the RBI governor said aided by buoyancy in tax revenues and rationalisation of subsidies, the gross fiscal deficit (GFD) of the central government has been steadily brought down since 2013-14 to 3.5 per cent of GDP in 2017-18 without compromising on public investment requirements and social sector spending. The GFD is budgeted lower at 3.3 per cent in 2018-19, he said. The government has accepted a debt rule that will bring down the debt-to-GDP ratio to 40 per cent over a period of time by 2024-25. Mr Patel said the goods and services tax (GST), which was implemented from July 2017 has reformed the system of indirect taxes by simplifying payments and credits, and improving the efficiency of movement of goods across the country. Automation of tax payments and 'team-based assessment with dynamic jurisdiction' without direct interface with tax payers has improved overall efficiency and transparency of revenue administration, he said. Mr Patel said with the pace of import growth relative to that of exports, the current account deficit (CAD) expanded from 0.7 per cent in 2016-17 to 1.9 per cent for the first nine months of 2017-18. External financing conditions remained comfortable, boosted mainly by robust inflows of foreign direct investment (FDI), he said. The UNCTAD's survey of multinational enterprises ranked India as the third most favoured destination for FDI for 2017-19. Reflecting these developments, India's foreign exchange reserves at $424 billion were equivalent of 11 months of imports, he added. "India has persevered with structural reforms over a wide area ranging from a flexible inflation targeting framework for monetary policy liberalisation of FDI flows a unique identification (Aadhaar) backed direct benefit transfers an insolvency and bankruptcy code the GST realty reforms and a swathe of measures for improvement in the ease of doing business more generally," he said. These factors have improved India's global ranking in the World Bank's Ease of Doing Business, Mr Patel added.

India's pace of growth to accelerate in 2018-19: RBI governor

The Reserve Bank of India chief said on Wednesday that it had &quot;very limited authority&quot; over state-run banks and called for reforms in the wake of a $2 billion fraud to give the regulator the same powers to police state-run banks as it has over private lenders.

Reserve Bank of India (RBI) Governor Urjit Patel defended the central bank`s role in the aftermath of the Punjab National Bank (PNB) fraud case and launched an indirect broadside against the Indian government, which has been critical of the role of the regulator and auditors in failing to spot the huge alleged scam.

In a speech at a law university in the Western Indian state of Gujarat, Patel said there were numerous limitations in the RBI`s powers over state-run lenders, such as its inability to remove directors, replace management, push through a merger or initiate liquidation.

While the RBI regulates all banks in India, state-run banks are also regulated by the government, which owns majority-stakes in them.

This has, in effect, led to a system of &quot;dual regulation&quot;, said Patel, adding that this &quot;fault line is bound to lead to tremors such as the most recent fraud&quot;.

The unravelling PNB fraud, the biggest in Indian banking history, has stunned the financial sector and pushed the RBI and government to crack down on bank systems and lending practices.

In a speech at a law university in the Western Indian state of Gujarat, Patel said there were numerous limitations in the RBI`s powers over state-run lenders

The Reserve Bank of India chief said on Wednesday that it had "very limited authority" over state-run banks and called for reforms in the wake of a $2 billion fraud to give the regulator the same powers to police state-run banks as it has over private lenders. Reserve Bank of India (RBI) Governor Urjit Patel defended the central bank`s role in the aftermath of the Punjab National Bank (PNB) fraud case and launched an indirect broadside against the Indian government, which has been critical of the role of the regulator and auditors in failing to spot the huge alleged scam. In a speech at a law university in the Western Indian state of Gujarat, Patel said there were numerous limitations in the RBI`s powers over state-run lenders, such as its inability to remove directors, replace management, push through a merger or initiate liquidation. While the RBI regulates all banks in India, state-run banks are also regulated by the government, which owns majority-stakes in them. This has, in effect, led to a system of "dual regulation", said Patel, adding that this "fault line is bound to lead to tremors such as the most recent fraud". The unravelling PNB fraud, the biggest in Indian banking history, has stunned the financial sector and pushed the RBI and government to crack down on bank systems and lending practices.

RBI Governor Urjit Patel calls for more power over state-run banks in wake of PNB fraud

The Reserve Bank is likely to keep the key rate unchanged on Wednesday and stay focused on inflation control as the rebound in September quarter GDP growth - after a five quarter decline - seemed to have eased pressure on it to lower rates, experts said.

India Inc, however, is demanding interest rate cut to further build on positive sentiment generated by the rebound and upgrade of the country&#39;s sovereign rating by Moody&#39;s.

The Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel, will meet on December 5 and 6 for the Fifth Bi-monthly Monetary Policy Statement for 2017-18. The resolution of the MPC will be made public on December 6.

In its October review, it had kept the benchmark interest rate unchanged on fears of rising inflation while lowering growth forecast to 6.7 per cent for the current fiscal.

The central bank had reduced the benchmark lending rate by 0.25 percentage points to 6 per cent in August, bringing it to a 6-year low.

Bankers and experts are of the view that the RBI for the second time in a row may key repo-rate or short-term lending rate unchanged as inflation trajectory is likely to remain upward in the coming months.

&quot;It&#39;s going to be a status quo. The liquidity in the system is very low, deposit rates are firming up and there are concerns about inflation,&quot; said Union Bank MD and CEO Rajkiran Rai G.

Global financial services major Nomura said while lower GST rates have moderated output prices, input cost pressures are marginally higher, which along with higher food inflation is likely to push retail inflation slightly above the RBI midpoint target of 4 per cent in November and beyond.

&quot;We expect a hawkish hold from the RBI..And policy rates to remain unchanged through 2018,&quot; it said in a report.

Wholesale prices-based inflation had shot up to a 6-month high of 3.59 per cent in October. The retail inflation (Consumer Price Index) for October rose to a 7-month high of 3.58 per cent.

Meanwhile, industry body Ficci said there has been positive news in the form of improvement in ease of doing business rankings, Moody?s upgrade of India&#39;s rating and the massive recapitalisation plan for banks.

&quot;This is a good opportunity to further build the confidence levels. The monetary policy announcement next week will be a perfect timing to give another shot to boost the sentiment,&quot; said Ficci President Pankaj Patel in a statement.

Reversing a five-quarter slide in GDP growth, Indian economy bounced back from a three-year low to expand by 6.3 per cent in the July-September period as manufacturing revved up and businesses adjusted to the new GST tax regime.

The GDP growth in the second quarter of 2017-18 compares to 5.7 per cent in April-June.

Credit rating firm ICRA has said RBI is likely to keep the key policy rate unchanged at 6 per cent as it expects retail inflation to firm up in the coming months.

It said the (MPC) would leave the repo rate unchanged at 6 per cent &quot;in a non-unanimous decision in the December 2017 policy review, given the expectation of a further rise in the CPI inflation in the coming months&quot;.

With gross value added (GVA) growth estimated by the Central Statistics Office at 5.8 per cent in first half of FY&#39;18, a downward bias is likely to be placed on the MPC&#39;s baseline forecast for growth of GVA at basic prices of 6.7 per cent for ongoing fiscal.&nbsp;

The Monetary Policy Committee headed by RBI Governor Urjit Patel will meet on December 5 and 6 for the Fifth Bi-monthly Monetary Policy Statement for 2017-18

The Reserve Bank is likely to keep the key rate unchanged on Wednesday and stay focused on inflation control as the rebound in September quarter GDP growth - after a five quarter decline - seemed to have eased pressure on it to lower rates, experts said. India Inc, however, is demanding interest rate cut to further build on positive sentiment generated by the rebound and upgrade of the country's sovereign rating by Moody's. The Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel, will meet on December 5 and 6 for the Fifth Bi-monthly Monetary Policy Statement for 2017-18. The resolution of the MPC will be made public on December 6. In its October review, it had kept the benchmark interest rate unchanged on fears of rising inflation while lowering growth forecast to 6.7 per cent for the current fiscal. The central bank had reduced the benchmark lending rate by 0.25 percentage points to 6 per cent in August, bringing it to a 6-year low. Bankers and experts are of the view that the RBI for the second time in a row may key repo-rate or short-term lending rate unchanged as inflation trajectory is likely to remain upward in the coming months. "It's going to be a status quo. The liquidity in the system is very low, deposit rates are firming up and there are concerns about inflation," said Union Bank MD and CEO Rajkiran Rai G. Global financial services major Nomura said while lower GST rates have moderated output prices, input cost pressures are marginally higher, which along with higher food inflation is likely to push retail inflation slightly above the RBI midpoint target of 4 per cent in November and beyond. "We expect a hawkish hold from the RBI..And policy rates to remain unchanged through 2018," it said in a report. Wholesale prices-based inflation had shot up to a 6-month high of 3.59 per cent in October. The retail inflation (Consumer Price Index) for October rose to a 7-month high of 3.58 per cent. Meanwhile, industry body Ficci said there has been positive news in the form of improvement in ease of doing business rankings, Moody?s upgrade of India's rating and the massive recapitalisation plan for banks. "This is a good opportunity to further build the confidence levels. The monetary policy announcement next week will be a perfect timing to give another shot to boost the sentiment," said Ficci President Pankaj Patel in a statement. Reversing a five-quarter slide in GDP growth, Indian economy bounced back from a three-year low to expand by 6.3 per cent in the July-September period as manufacturing revved up and businesses adjusted to the new GST tax regime. The GDP growth in the second quarter of 2017-18 compares to 5.7 per cent in April-June. Credit rating firm ICRA has said RBI is likely to keep the key policy rate unchanged at 6 per cent as it expects retail inflation to firm up in the coming months. It said the (MPC) would leave the repo rate unchanged at 6 per cent "in a non-unanimous decision in the December 2017 policy review, given the expectation of a further rise in the CPI inflation in the coming months". With gross value added (GVA) growth estimated by the Central Statistics Office at 5.8 per cent in first half of FY'18, a downward bias is likely to be placed on the MPC's baseline forecast for growth of GVA at basic prices of 6.7 per cent for ongoing fiscal.

RBI likely to keep interest rate on hold for second time in row

The Reserve Bank of India (RBI) on Friday announced circulation of new currency denomination of Rs. 50 banknotes in the Mahatma Gandhi (New) Series.

Bearing signature of RBI Governor Urjit Patel, the new denomination has motif of Hampi with Chariot on the reverse, depicting the country`s cultural heritage.

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<a href="https://twitter.com/hashtag/FLASH?src=hash">#FLASH</a> RBI to shortly issue 50 denomination banknotes with motif of Hampi with Chariot on reverse, depicting country&rsquo;s cultural heritage <a href="https://t.co/Ao4MnMMNUG">pic.twitter.com/Ao4MnMMNUG</a>
&mdash; ANI (@ANI) <a href="https://twitter.com/ANI/status/898532465647599616">August 18, 2017</a></blockquote>
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With base colour in fluorescent blue, the note has other designs, geometric patterns aligning with the overall colour scheme, both at the obverse and reverse.

All the banknotes in the denomination of Rs. 50 issued by the RBI in the earlier series will continue to be legal tender.

Last year in December, the central bank had announced issue of Rs. 50 denomination banknotes in the Mahatma Gandhi Series-2005, without inset letter in both the number panels, bearing signature of Patel and the year of printing `2016` printed on the reverse of the banknote.

It added that the design and security features of the new notes will be similar to the old tender, which will continue in circulation.&nbsp;

The new note has a picture of Gandhi on the front and Hampi on the back

The Reserve Bank of India (RBI) on Friday announced circulation of new currency denomination of Rs. 50 banknotes in the Mahatma Gandhi (New) Series. Bearing signature of RBI Governor Urjit Patel, the new denomination has motif of Hampi with Chariot on the reverse, depicting the country`s cultural heritage. #FLASH RBI to shortly issue 50 denomination banknotes with motif of Hampi with Chariot on reverse, depicting country’s cultural heritage pic.twitter.com/Ao4MnMMNUG — ANI (@ANI) August 18, 2017 × With base colour in fluorescent blue, the note has other designs, geometric patterns aligning with the overall colour scheme, both at the obverse and reverse. All the banknotes in the denomination of Rs. 50 issued by the RBI in the earlier series will continue to be legal tender. Last year in December, the central bank had announced issue of Rs. 50 denomination banknotes in the Mahatma Gandhi Series-2005, without inset letter in both the number panels, bearing signature of Patel and the year of printing `2016` printed on the reverse of the banknote. It added that the design and security features of the new notes will be similar to the old tender, which will continue in circulation.

RBI introduces new Rs 50 note

Under Governor Urjit Patel, the Reserve Bank of India (RBI) will target inflation of 4 percent, three officials familiar with its thinking said, adopting a narrower reading of its mandate than markets in a bid to stamp out rampant price rises of the past.

The differing interpretations of amendments to last year&#39;s RBI Act reflect sometimes strained relations between the market and the central bank, and are proving a test for Patel some eight months into his tenure.

The amendments were part of landmark changes to India&#39;s monetary policy pushed by Patel, then deputy governor, and his predecessor as governor, Raghuram Rajan, and require the RBI &quot;to contain inflation within the specified target level&quot; of 4 percent, but within a tolerated band of 2-6 percent.

Markets have interpreted that as the range of 2-6 percent, arguing that pursuing a specific 4 percent target takes away the flexibility needed in an economy that must grow by at least 8 percent a year to allow for full employment.

But the RBI is determined to chase the 4 percent figure, the officials said, as Patel and the other five members of his monetary policy committee (MPC) seek to defend the RBI&#39;s credibility on inflation.

&quot;Markets should read the Act carefully and think as if they are a member of the MPC, and then think: how would they conduct policy?&quot; said one of the officials.

&quot;The Act clearly says 4 percent is the target and the 2-6 percent band has been given only to absorb temporary or one-time shocks.&quot;

All three officials spoke on condition of anonymity, because they were not authorised to speak to the press on sensitive policy issues.

The RBI did not give official comment.

Such a stance could open the prospect of earlier interest rate hikes than expected by markets, should prices start to move higher unexpectedly and remain there for some time.

The officials stressed, however, that the RBI was also mindful of growth, in line with an Act that tasks the MPC with &quot;maintaining price stability, while keeping in mind the objective of growth.&quot;

Consumer inflation stood at 3.81 percent in March, but weaker-than-expected monsoon rains and planned hikes to government employee salaries could easily see the 4 percent target under threat.

But any move to hike the repo rate of 6.25 percent would need to be balanced by concerns among market participants that the economy is weaker than the 7.0 percent growth in the October-December quarter, as India&#39;s move last year to ban higher-valued bank notes continues to reverberate.

&quot;So far as the 4 percent target goes, the MPC has to decide how to go ahead in a calibrated way, balancing out the costs associated with that stance,&quot; said the second of the three officials.

RBI VERSUS MARKETS

The pursuit of the 4 percent target will likely continue to remain a source of disagreement between the RBI and some market players, even as investors begin to adjust to a more hawkish monetary policy.

A Reuters poll last month showed only seven out of 38 economists expected a rate cut this year, down from 21 out of 36 earlier.

However, Indranil Sengupta, economist and co-head of India Research at Bank of America Merrill Lynch, said inflation was &quot;a long, long way&quot; from becoming an issue since the economy has yet to accelerate meaningfully.

&quot;In our opinion there is a case for a 25 bps rate cut in August,&quot; he said.

The differing views reflect how markets are still adjusting to the changes to the monetary policy framework over the past two years in a country with a history of volatile and double-digit inflation.

Patel started his tenure by cutting rates in October, priming investors to believe he would soften his focus on inflation, only to then stun investors by changing the monetary policy stance to &quot;neutral&quot; from &quot;accommodative&quot; in February and adopting a much more hawkish tone.

Since then, the 10-year benchmark government bond yield has risen about 50 basis points.

The officials defended the actions as consistent with the RBI&#39;s views on the trajectory of inflation, which hit as low as 3.17 percent in January.

But it has since accelerated, and becoming too tolerant could dent the bank&#39;s credibility, the officials argued.

&quot;If people start doubting RBI&#39;s credibility in controlling inflation, then producers will start raising prices, which in turn will push up inflation expectations. It is very important to keep inflation expectations well anchored,&quot; said the second official.&nbsp;

(Reuters)

The stance could open the prospect of earlier interest rate hikes than expected by markets

Under Governor Urjit Patel, the Reserve Bank of India (RBI) will target inflation of 4 percent, three officials familiar with its thinking said, adopting a narrower reading of its mandate than markets in a bid to stamp out rampant price rises of the past. The differing interpretations of amendments to last year's RBI Act reflect sometimes strained relations between the market and the central bank, and are proving a test for Patel some eight months into his tenure. The amendments were part of landmark changes to India's monetary policy pushed by Patel, then deputy governor, and his predecessor as governor, Raghuram Rajan, and require the RBI "to contain inflation within the specified target level" of 4 percent, but within a tolerated band of 2-6 percent. Markets have interpreted that as the range of 2-6 percent, arguing that pursuing a specific 4 percent target takes away the flexibility needed in an economy that must grow by at least 8 percent a year to allow for full employment. But the RBI is determined to chase the 4 percent figure, the officials said, as Patel and the other five members of his monetary policy committee (MPC) seek to defend the RBI's credibility on inflation. "Markets should read the Act carefully and think as if they are a member of the MPC, and then think: how would they conduct policy?" said one of the officials. "The Act clearly says 4 percent is the target and the 2-6 percent band has been given only to absorb temporary or one-time shocks." All three officials spoke on condition of anonymity, because they were not authorised to speak to the press on sensitive policy issues. The RBI did not give official comment. Such a stance could open the prospect of earlier interest rate hikes than expected by markets, should prices start to move higher unexpectedly and remain there for some time. The officials stressed, however, that the RBI was also mindful of growth, in line with an Act that tasks the MPC with "maintaining price stability, while keeping in mind the objective of growth." Consumer inflation stood at 3.81 percent in March, but weaker-than-expected monsoon rains and planned hikes to government employee salaries could easily see the 4 percent target under threat. But any move to hike the repo rate of 6.25 percent would need to be balanced by concerns among market participants that the economy is weaker than the 7.0 percent growth in the October-December quarter, as India's move last year to ban higher-valued bank notes continues to reverberate. "So far as the 4 percent target goes, the MPC has to decide how to go ahead in a calibrated way, balancing out the costs associated with that stance," said the second of the three officials. RBI VERSUS MARKETS The pursuit of the 4 percent target will likely continue to remain a source of disagreement between the RBI and some market players, even as investors begin to adjust to a more hawkish monetary policy. A Reuters poll last month showed only seven out of 38 economists expected a rate cut this year, down from 21 out of 36 earlier. However, Indranil Sengupta, economist and co-head of India Research at Bank of America Merrill Lynch, said inflation was "a long, long way" from becoming an issue since the economy has yet to accelerate meaningfully. "In our opinion there is a case for a 25 bps rate cut in August," he said. The differing views reflect how markets are still adjusting to the changes to the monetary policy framework over the past two years in a country with a history of volatile and double-digit inflation. Patel started his tenure by cutting rates in October, priming investors to believe he would soften his focus on inflation, only to then stun investors by changing the monetary policy stance to "neutral" from "accommodative" in February and adopting a much more hawkish tone. Since then, the 10-year benchmark government bond yield has risen about 50 basis points. The officials defended the actions as consistent with the RBI's views on the trajectory of inflation, which hit as low as 3.17 percent in January. But it has since accelerated, and becoming too tolerant could dent the bank's credibility, the officials argued. "If people start doubting RBI's credibility in controlling inflation, then producers will start raising prices, which in turn will push up inflation expectations. It is very important to keep inflation expectations well anchored," said the second official. (Reuters)

RBI to target 4 per cent inflation

Cautioning against protectionism, RBI Governor Urjit Patel has said where would giant American corporations like Apple, Cisco and IBM be if they had not sourced the best products and talent from across the world.

&quot;I don&#39;t think that we have heard the last word on US policy talk about this because there is a push back internationally that the world has benefited from an open trading system,&quot; the Reserve Bank of India (RBI) governor said after delivering a lecture in New York.

He made the remarks in response to a question on the rise of protectionist tendencies in major world economies after he delivered the Third Kotak Family Distinguished Lecture, sponsored by the Raj Center on Indian Economic Policies at the Columbia University&#39;s School of International and Public Affairs.

He said the share prices of the most efficient corporations in the world, including in the US, are where they are because of the global supply chains.

&quot;Where would Apple be, where would Cisco be, where would IBM be if they were not sourcing the best products and talent from across the world. And if policies come in the way of that, then the big wealth creators in a country that advocates protectionism are ultimately affected,&quot; he said yesterday.

Patel said the calls for protectionism in the US&nbsp;were on account of equity and domestic distribution issues which &quot;textbook economics tells us should be addressed through domestic fiscal policy&quot; such as taxation and income transfers.

He noted that using trade instruments for protectionism may take a nation on a trajectory different from that of growth.

&quot;Using trade instruments like customs duties, border tax etc is not the most efficient way to do this. In fact, you could end up at somewhere else. You do not know what are the implications of some of these policies on equity and distribution besides objectives that you want to address,&quot; he said.

&quot;It should be a domestic policy issue, using domestic fiscal policy if those are the objectives that need to be addressed,&quot; Patel said.

(PTI)

Patel made the remarks in response to a question on the rise of protectionist tendencies in major world economies

Cautioning against protectionism, RBI Governor Urjit Patel has said where would giant American corporations like Apple, Cisco and IBM be if they had not sourced the best products and talent from across the world. "I don't think that we have heard the last word on US policy talk about this because there is a push back internationally that the world has benefited from an open trading system," the Reserve Bank of India (RBI) governor said after delivering a lecture in New York. He made the remarks in response to a question on the rise of protectionist tendencies in major world economies after he delivered the Third Kotak Family Distinguished Lecture, sponsored by the Raj Center on Indian Economic Policies at the Columbia University's School of International and Public Affairs. He said the share prices of the most efficient corporations in the world, including in the US, are where they are because of the global supply chains. "Where would Apple be, where would Cisco be, where would IBM be if they were not sourcing the best products and talent from across the world. And if policies come in the way of that, then the big wealth creators in a country that advocates protectionism are ultimately affected," he said yesterday. Patel said the calls for protectionism in the US were on account of equity and domestic distribution issues which "textbook economics tells us should be addressed through domestic fiscal policy" such as taxation and income transfers. He noted that using trade instruments for protectionism may take a nation on a trajectory different from that of growth. "Using trade instruments like customs duties, border tax etc is not the most efficient way to do this. In fact, you could end up at somewhere else. You do not know what are the implications of some of these policies on equity and distribution besides objectives that you want to address," he said. "It should be a domestic policy issue, using domestic fiscal policy if those are the objectives that need to be addressed," Patel said. (PTI)

Where would Apple, IBM be if not for talent from across globe: RBI chief Urjit Patel

RBI Governor Urjit Patel today attributed the banks grappling with high bad loans to legacy issues saying they are mostly on account of credit facility provided for long-gestation projects before 2011-12.

He further said the problem of non-performing assets (NPAs) was earlier also but it is only recently that the issue is being recognised.

Patel said that sectors in which bad loans have emerged over the years pertain to long-gestation projects, which were mostly funded before 2011-12.

&quot;Therefore, ...By definition, this proportionate amount is a legacy issue, although the recognition and reporting of these have taken place only recently,&quot; the RBI Governor said.

Finance Minister Arun Jaitley after addressing the RBI board said a legal and executive framework to deal with NPAs has been put in place by the government as its resolution is an ongoing process.

Jaitley also said the bad loans figure has increased owing to emergence of some new NPAs or loans that have been continuing. Congress leader Veerappa Moily had recently raised the bad loans issue in Parliament and said the NPAs figure has grown since 2014.

&quot;I was in Parliament responding to a comment which Moily had made. What was figure in 2014, then 2015, 16, 17 it increased. So I had said these are all loans which have been continuing and what&#39;s have been added is either the discovery of some non-performing assets as a result of some exercise that RBI had directed to be undertaken and also the interest factor has increased,&quot; Jaitley said.

After the Asset Quality Review (AQR), there was huge surge in NPA. In the third quarter of the last fiscal alone, NPAs rose over Rs 1-lakh crore.

&quot;Now resolution of these is an ongoing process...Now for individual bankers to get into exercise of resolving each one of the pending issues,&quot; he said.

On when the RBI will be able to come out with the figures of scrapped notes which have been deposited with the banks, the Governor said the number that should divulge should be a verified number and a number that is congruent with the complex accounting.

&quot;Given that the window is open until March 31 and then at a lower level until June 30 we need to be careful and try as hard as possible that this is a number that is not a mere estimate but a verifiable number both physically and in accounting stance,&quot; he said.

Following the shock demonetisation announcement on November 8, the government had asked people to deposit old notes in banks by December 30.

Indians who were abroad during November 9 to December 30 have been given a 3-month grace period till March 31 to deposit the junked notes, while for the NRIs, it is 6 months till June 30.

Earlier this week, RBI Deputy Governor S S Mundra said the final numbers can only be revealed after counting the notes deposited in cooperative banks, receipt of information from Nepal and Bhutan and close of the window for deposit of notes by NRIs.

(PTI)

Patel said that sectors in which bad loans have emerged over the years pertain to long-gestation projects

RBI Governor Urjit Patel today attributed the banks grappling with high bad loans to legacy issues saying they are mostly on account of credit facility provided for long-gestation projects before 2011-12. He further said the problem of non-performing assets (NPAs) was earlier also but it is only recently that the issue is being recognised. Patel said that sectors in which bad loans have emerged over the years pertain to long-gestation projects, which were mostly funded before 2011-12. "Therefore, ...By definition, this proportionate amount is a legacy issue, although the recognition and reporting of these have taken place only recently," the RBI Governor said. Finance Minister Arun Jaitley after addressing the RBI board said a legal and executive framework to deal with NPAs has been put in place by the government as its resolution is an ongoing process. Jaitley also said the bad loans figure has increased owing to emergence of some new NPAs or loans that have been continuing. Congress leader Veerappa Moily had recently raised the bad loans issue in Parliament and said the NPAs figure has grown since 2014. "I was in Parliament responding to a comment which Moily had made. What was figure in 2014, then 2015, 16, 17 it increased. So I had said these are all loans which have been continuing and what's have been added is either the discovery of some non-performing assets as a result of some exercise that RBI had directed to be undertaken and also the interest factor has increased," Jaitley said. After the Asset Quality Review (AQR), there was huge surge in NPA. In the third quarter of the last fiscal alone, NPAs rose over Rs 1-lakh crore. "Now resolution of these is an ongoing process...Now for individual bankers to get into exercise of resolving each one of the pending issues," he said. On when the RBI will be able to come out with the figures of scrapped notes which have been deposited with the banks, the Governor said the number that should divulge should be a verified number and a number that is congruent with the complex accounting. "Given that the window is open until March 31 and then at a lower level until June 30 we need to be careful and try as hard as possible that this is a number that is not a mere estimate but a verifiable number both physically and in accounting stance," he said. Following the shock demonetisation announcement on November 8, the government had asked people to deposit old notes in banks by December 30. Indians who were abroad during November 9 to December 30 have been given a 3-month grace period till March 31 to deposit the junked notes, while for the NRIs, it is 6 months till June 30. Earlier this week, RBI Deputy Governor S S Mundra said the final numbers can only be revealed after counting the notes deposited in cooperative banks, receipt of information from Nepal and Bhutan and close of the window for deposit of notes by NRIs. (PTI)

Non-performing assets a legacy issue, RBI governor says

India pushed ahead with its decision to scrap banknotes even as the Reserve Bank of India&#39;s (RBI) own board expressed concern whether the cash could be replaced quickly enough, the central bank has said in written testimony to parliament.

The revelation comes amid growing criticism about whether the central bank and the government had sufficiently assessed the potential fallout from the November 8 ban of about 86 per cent of the cash then in circulation.

Prime Minister Narendra Modi&#39;s shock move caused a severe cash shortage that brought large parts of the economy to a virtual standstill, as the central bank struggled to print new 500-rupee and 2,000-rupee notes to replace the old currency.

A copy of the private testimony to a parliament panel, seen by Reuters, showed the central bank had also warned the government of &quot;possible inconvenience to the public for some time,&quot; among the potential consequences of the massive exercise.

Despite its own doubts, the testimony showed, the RBI board approved the plan to ban 500-rupee and 1,000-rupee notes, as it believed the move would rein in counterfeiting and reliance on cash, and pull unaccounted cash into the financial system.

&quot;It might not immediately be possible to replace these notes fully in terms of both value and volume,&quot; the board felt at a meeting ahead of Modi&#39;s November 8 announcement, according to the central bank submission.

But the RBI&#39;s board ultimately believed that &quot;corrective&quot; action could be taken and decided to recommend the move, the document showed. The RBI also believed the impact of such an exercise would be &quot;transitory&quot;, given its efforts to quickly replace the old notes, it said in the testimony.

The RBI&#39;s endorsement of the government action has drawn strong criticism from several former policymakers, including former Prime Minister Manmohan Singh, the architect of India&#39;s 1991 financial reforms and a former central bank governor.

The document also notes the proposal to ban the cash had come from the government, in a letter a day before the announcement that advised the RBI to &quot;immediately&quot; put the plan before its board for approval.

Under India&#39;s RBI Act, such a move was necessary.

The central bank did not immediately respond to Reuters` request for comments on its submission to parliament.

&quot;Painful&quot; for RBI

Since Modi declared the ban, the central bank has been forced to announce a barrage of measures to soften the impact, including several high-profile reversals, undermining confidence in it.

In a letter to RBI Governor Urjit Patel, unions of central bank employees called such criticism &quot;painful&quot;, and accused the government of steering decisions behind the replacement of the banned notes, saying that &quot;blatantly encroaches&quot; on the central bank&#39;s jurisdiction.

The government, however, has denied it was taking the decisions during the implementation, saying that it was merely cooperating with the RBI and reiterating that it fully respected the autonomy of the central bank.

Power and Coal Minister Piyush Goyal said such cooperation was necessary, since it involved an unprecedented &quot;exercise&quot; and that the flurry of action showed India`s flexibility in taking the necessary measures.&nbsp;

&quot;They never had got an experience of this kind of a war-type situation,&quot; Goyal said, referring to the RBI. &quot;So, every organization which is doing this is doing it for the first time. You will learn as you go along.&quot;

Previous banknote bans have not had such a dramatic impact as they removed only a small fraction of cash from circulation.&nbsp;

(Reuters) 
&nbsp;

The RBI clarified that it ultimately believed that 'corrective' action could be taken and decided to recommend the move

India pushed ahead with its decision to scrap banknotes even as the Reserve Bank of India's (RBI) own board expressed concern whether the cash could be replaced quickly enough, the central bank has said in written testimony to parliament. The revelation comes amid growing criticism about whether the central bank and the government had sufficiently assessed the potential fallout from the November 8 ban of about 86 per cent of the cash then in circulation. Prime Minister Narendra Modi's shock move caused a severe cash shortage that brought large parts of the economy to a virtual standstill, as the central bank struggled to print new 500-rupee and 2,000-rupee notes to replace the old currency. A copy of the private testimony to a parliament panel, seen by Reuters, showed the central bank had also warned the government of "possible inconvenience to the public for some time," among the potential consequences of the massive exercise. Despite its own doubts, the testimony showed, the RBI board approved the plan to ban 500-rupee and 1,000-rupee notes, as it believed the move would rein in counterfeiting and reliance on cash, and pull unaccounted cash into the financial system. "It might not immediately be possible to replace these notes fully in terms of both value and volume," the board felt at a meeting ahead of Modi's November 8 announcement, according to the central bank submission. But the RBI's board ultimately believed that "corrective" action could be taken and decided to recommend the move, the document showed. The RBI also believed the impact of such an exercise would be "transitory", given its efforts to quickly replace the old notes, it said in the testimony. The RBI's endorsement of the government action has drawn strong criticism from several former policymakers, including former Prime Minister Manmohan Singh, the architect of India's 1991 financial reforms and a former central bank governor. The document also notes the proposal to ban the cash had come from the government, in a letter a day before the announcement that advised the RBI to "immediately" put the plan before its board for approval. Under India's RBI Act, such a move was necessary. The central bank did not immediately respond to Reuters` request for comments on its submission to parliament. "Painful" for RBI Since Modi declared the ban, the central bank has been forced to announce a barrage of measures to soften the impact, including several high-profile reversals, undermining confidence in it. In a letter to RBI Governor Urjit Patel, unions of central bank employees called such criticism "painful", and accused the government of steering decisions behind the replacement of the banned notes, saying that "blatantly encroaches" on the central bank's jurisdiction. The government, however, has denied it was taking the decisions during the implementation, saying that it was merely cooperating with the RBI and reiterating that it fully respected the autonomy of the central bank. Power and Coal Minister Piyush Goyal said such cooperation was necessary, since it involved an unprecedented "exercise" and that the flurry of action showed India`s flexibility in taking the necessary measures. "They never had got an experience of this kind of a war-type situation," Goyal said, referring to the RBI. "So, every organization which is doing this is doing it for the first time. You will learn as you go along." Previous banknote bans have not had such a dramatic impact as they removed only a small fraction of cash from circulation. (Reuters)

Govt went ahead with demonetisation despite 'central bank concerns'

The Public Accounts Committee (PAC) of the Indian Parliament headed by KV Thomas grilled the Governor of Reserve Bank of India on Friday. Highly placed sources confirmed to WION that when members asked Urjit Patel as to who took the decision for demonetisation, Urjit Patel chose to remain silent.&nbsp;

PAC also saw a&nbsp;heated debate between the opposition and ruling party members as some members said that committee meeting was on the state of the&nbsp;economy and not demonetisation per say. Sources also said that there were many questions on demonetisation on which Urjit Patel chose to remain silent or gave general answers.

The committee members also asked the RBI governor to look into cases of irregular deposits in the cooperative banks of which he took note of. Some members also requested the RBI that it must look into the issue of cess which is charged when a digital transaction takes place. The members were of the opinion that the current reprieve should continue till things normalise in the economic system.

Sources said that Patel will be called again for questioning as many questions remained answered. Both the PAC and the Standing Committee of Finance are looking into the issue of demonetisation. 
 
(WION)

Highly placed sources told WION that Urjit Patel chose to remain silent or gave generic replies to several questions

The Public Accounts Committee (PAC) of the Indian Parliament headed by KV Thomas grilled the Governor of Reserve Bank of India on Friday. Highly placed sources confirmed to WION that when members asked Urjit Patel as to who took the decision for demonetisation, Urjit Patel chose to remain silent. PAC also saw a heated debate between the opposition and ruling party members as some members said that committee meeting was on the state of the economy and not demonetisation per say. Sources also said that there were many questions on demonetisation on which Urjit Patel chose to remain silent or gave general answers. The committee members also asked the RBI governor to look into cases of irregular deposits in the cooperative banks of which he took note of. Some members also requested the RBI that it must look into the issue of cess which is charged when a digital transaction takes place. The members were of the opinion that the current reprieve should continue till things normalise in the economic system. Sources said that Patel will be called again for questioning as many questions remained answered. Both the PAC and the Standing Committee of Finance are looking into the issue of demonetisation. (WION)

India's central bank chief remains mum during demonetisation grilling

The chief of India&#39;s central bank, Urjit Patel, received support from the most unlikely quarter while he was being grilled by an opposition party leader Digvijay Singh during a meeting with the parliamentary committee about demonetisation on Wednesday.

When asked by Digvijay Singh, a member of the Congress party, as to whether there would be chaos when the withdrawal limit is removed, former prime minister Manmohan Singh, who is also a Congress member, told Patel that he need not answer that question.

The government yesterday (January&nbsp;17) raised the withdrawal limit from Rs 4,500 per day to Rs 10,000 per day, although the weekly limit remains Rs 24,000.

It was an unexpected show of support because Singh is not only a member of the same party as Digivijay Singh is, the renowned economist has in the past flayed the government&#39;s decision to scrap old banknotes as he believes the move will pare down India&#39;s economy by two percentage points.

During the Wednesday meeting, Patel, who is the governor of Reserve Bank of India, was chastised for not satisfactorily replying to questions regarding demonetisation, nearly three weeks after the deadline for people to exchange their old currency notes with new ones elapsed.

Saugata Roy, a member of the panel and a lawmaker affiliated to Trinamool Congress, said Patel was &quot;unable to tell us how much money (old currency) has come back to the banks&quot;.

One of the members of the standing committee of finance, wishing anonymity, confirmed to WION that when asked as to when the details would be available, the RBI officials replied that they were calculating at the moment and could not give a timeline to the committee.

The federal government had given the public time till December 30 to replace their old currency notes with new ones.

As of December 14, various media reports stated that the banks in India had received 80 per cent of the old bank notes amounting to Rs 12.44 lakh crores (roughly $184 billion).

But Patel did inform the quantum of amount infused into the economy. He said Rs 9.2 lakh crore (approximately $135 billion) worth of new currency notes has been injected back into the economy so far.

The Standing Committee of Finance, headed by Veerapa Moily, grilled the finance ministry officials and Patel for nearly two hours. Overall, the meeting lasted for four&nbsp;hours but Patel joined the briefing session in the second half.

When one of the members questioned Patel on the emphasis been given by the prime minister and finance minister on turning India into a cash-less economy, Patel replied: &quot;The demand will be met with supply and it is the prerogative of the Reserve Bank of India.&rdquo;

Government officials also informed the committee that demonetisation was a well thought-out decision and preparations were on since January 2016.

India&#39;s central bank had earlier given a seven-page reply that it received advisory instructions from the government to consider the government&#39;s plan to replace the hitherto currency notes.&nbsp;But several questions were raised when it came to light that the RBI had received the advisory on November 7, barely 24 hours before the government rolled out the nationwide scheme.

India&#39;s central bank came under a deluge of criticism as many felt that the institution&#39;s autonomy had been undermined. The theme of RBI&#39;s autonomy dominated the Wednesday meeting as well, with Patel fielding a raft of questions about the issue, another member of the panel told WION.&nbsp;

Meanwhile, WION has learnt that Patel will be summoned again either during the Budget Session (February 1) or just after it as a&nbsp;lot of questions remained pending due to paucity of time.&nbsp;

But problems&nbsp;don&#39;t end for Patel there as he is expected to depose before the Public Accounts Committee on January 20, where opposition parties are expected to ask him uncomfortable questions about how the decision on demonetisation was reached upon. The very debate on demonetisation and the RBI&#39;s autonomy has become extremely political as regional elections in five states of India are merely 20 days away.&nbsp;

(WION with inputs from ANI)

&nbsp;

The former premier told Urjit Patel that he need not answer the question when asked if there would be chaos once withdrawal limit is lifted

The chief of India's central bank, Urjit Patel, received support from the most unlikely quarter while he was being grilled by an opposition party leader Digvijay Singh during a meeting with the parliamentary committee about demonetisation on Wednesday. When asked by Digvijay Singh, a member of the Congress party, as to whether there would be chaos when the withdrawal limit is removed, former prime minister Manmohan Singh, who is also a Congress member, told Patel that he need not answer that question. The government yesterday (January 17) raised the withdrawal limit from Rs 4,500 per day to Rs 10,000 per day, although the weekly limit remains Rs 24,000. It was an unexpected show of support because Singh is not only a member of the same party as Digivijay Singh is, the renowned economist has in the past flayed the government's decision to scrap old banknotes as he believes the move will pare down India's economy by two percentage points. During the Wednesday meeting, Patel, who is the governor of Reserve Bank of India, was chastised for not satisfactorily replying to questions regarding demonetisation, nearly three weeks after the deadline for people to exchange their old currency notes with new ones elapsed. Saugata Roy, a member of the panel and a lawmaker affiliated to Trinamool Congress, said Patel was "unable to tell us how much money (old currency) has come back to the banks". One of the members of the standing committee of finance, wishing anonymity, confirmed to WION that when asked as to when the details would be available, the RBI officials replied that they were calculating at the moment and could not give a timeline to the committee. The federal government had given the public time till December 30 to replace their old currency notes with new ones. As of December 14, various media reports stated that the banks in India had received 80 per cent of the old bank notes amounting to Rs 12.44 lakh crores (roughly $184 billion). But Patel did inform the quantum of amount infused into the economy. He said Rs 9.2 lakh crore (approximately $135 billion) worth of new currency notes has been injected back into the economy so far. The Standing Committee of Finance, headed by Veerapa Moily, grilled the finance ministry officials and Patel for nearly two hours. Overall, the meeting lasted for four hours but Patel joined the briefing session in the second half. When one of the members questioned Patel on the emphasis been given by the prime minister and finance minister on turning India into a cash-less economy, Patel replied: "The demand will be met with supply and it is the prerogative of the Reserve Bank of India.” Government officials also informed the committee that demonetisation was a well thought-out decision and preparations were on since January 2016. India's central bank had earlier given a seven-page reply that it received advisory instructions from the government to consider the government's plan to replace the hitherto currency notes. But several questions were raised when it came to light that the RBI had received the advisory on November 7, barely 24 hours before the government rolled out the nationwide scheme. India's central bank came under a deluge of criticism as many felt that the institution's autonomy had been undermined. The theme of RBI's autonomy dominated the Wednesday meeting as well, with Patel fielding a raft of questions about the issue, another member of the panel told WION. Meanwhile, WION has learnt that Patel will be summoned again either during the Budget Session (February 1) or just after it as a lot of questions remained pending due to paucity of time. But problems don't end for Patel there as he is expected to depose before the Public Accounts Committee on January 20, where opposition parties are expected to ask him uncomfortable questions about how the decision on demonetisation was reached upon. The very debate on demonetisation and the RBI's autonomy has become extremely political as regional elections in five states of India are merely 20 days away. (WION with inputs from ANI)

Demonetisation: Ex-PM Manmohan Singh comes to central bank chief's help

Supporting the letter written by the Reserve Bank of India (RBI) employees to Governor Urjit Patel protesting against operational &quot;mismanagement&quot; post demonetisation, Congress leader Kapil Sibal has said that the RBI was created to be independent of the government which has now been interfered during the drive.

&quot;RBI is created to be entirely independent of the government and this tradition is sought to be interfered with and I think that the feeling of the establishments are justified,&quot; Sibal told ANI.

Further commenting on the silence maintained by RBI governor over the same, Sibal said that the former may have done some things which require being silent.

In a letter, the employees said that the autonomy and image of RBI had been &quot;dented beyond repair&quot; due to mismanagement and termed the appointment of a senior Finance Ministry official for currency coordination as a &quot;blatant encroachment&quot; of the RBI`s exclusive turf.

In a strongly worded letter addressed to Reserve Bank of India (RBI) Governor Urjit Patel, the United Forum of Reserve Bank Officers and Employees have alleged that post the government&#39;s demonetisation move, the image of the Central bank has been dented beyond repair.

&quot;We request the Governor of the RBI, its highest functionary and protector of its autonomy and prestige, to do the needful urgently to do away with this unwarranted interference from the Finance Ministry and assure the staff accordingly as the staff feels humiliated,&quot; the letter added.

Various employee unions of the central bank have objected to the government &quot;impinging on RBI autonomy&quot; and have written to Patel to take action against the &quot;unwarranted interference&quot;.

Meanwhile, the Finance Ministry has clarified its stand stating that the Government fully respects the independence and autonomy of the Central Bank.

In a statement, the Ministry said that consultations between the Centre and the RBI are undertaken on various matters of public importance, wherever such consultation is mandated by law or has evolved as a practice. &quot;Consultations mandated by law or as evolved by practice should not be taken as infringement of autonomy of RBI,&quot; the statement added.

(ANI)&nbsp;

Referring to the letter written by RBI employees to the bank's Governor, Sibal said the feeling of the establishments was justified

Supporting the letter written by the Reserve Bank of India (RBI) employees to Governor Urjit Patel protesting against operational "mismanagement" post demonetisation, Congress leader Kapil Sibal has said that the RBI was created to be independent of the government which has now been interfered during the drive. "RBI is created to be entirely independent of the government and this tradition is sought to be interfered with and I think that the feeling of the establishments are justified," Sibal told ANI. Further commenting on the silence maintained by RBI governor over the same, Sibal said that the former may have done some things which require being silent. In a letter, the employees said that the autonomy and image of RBI had been "dented beyond repair" due to mismanagement and termed the appointment of a senior Finance Ministry official for currency coordination as a "blatant encroachment" of the RBI`s exclusive turf. In a strongly worded letter addressed to Reserve Bank of India (RBI) Governor Urjit Patel, the United Forum of Reserve Bank Officers and Employees have alleged that post the government's demonetisation move, the image of the Central bank has been dented beyond repair. "We request the Governor of the RBI, its highest functionary and protector of its autonomy and prestige, to do the needful urgently to do away with this unwarranted interference from the Finance Ministry and assure the staff accordingly as the staff feels humiliated," the letter added. Various employee unions of the central bank have objected to the government "impinging on RBI autonomy" and have written to Patel to take action against the "unwarranted interference". Meanwhile, the Finance Ministry has clarified its stand stating that the Government fully respects the independence and autonomy of the Central Bank. In a statement, the Ministry said that consultations between the Centre and the RBI are undertaken on various matters of public importance, wherever such consultation is mandated by law or has evolved as a practice. "Consultations mandated by law or as evolved by practice should not be taken as infringement of autonomy of RBI," the statement added. (ANI)

RBI was created to be independent of the Centre: Kapil Sibal

RBI employees who felt &ldquo;humiliated&rdquo; by events since the demonetisation move on Friday wrote a letter to RBI chief Urjit Patel against operational &quot;mismanagement&quot; in the exercise, the Press Trust of India reported.

In a letter addressed to Patel, they termed the appointment of a senior finance ministry official as a &quot;blatant encroachment&quot; on RBI&rsquo;s exclusive jurisdiction on currency management and accused the government of &quot;impinging on RBI autonomy&quot;.

&quot;An image of efficiency and independence that RBI assiduously built up over decades by the strenuous efforts of its staff and judicious policy making has gone into smithereens in no time. We feel extremely pained,&quot; the United Forum of Reserve Bank Officers and Employees said in the letter.

The letter also said the RBI&#39;s autonomy and image have been &ldquo;dented beyond repair&quot;.

At least two of the four signatories, Samir Ghosh of All India Reserve Bank Employees&#39; Association and Suryakant Mahadik of All India Reserve Bank Workers&#39; Federation, confirmed the writing of the letter, PTI reported.

The other signatories are CM Paulsil of All India Reserve Bank Officers&#39; Association and RN Vatsa of RBI Officers&#39; Association.

&quot;May we request that as the Governor of RBI, its highest functionary, and protector of its autonomy and prestige, you will please do the needful urgently to do away with this unwarranted interference from the Ministry of Finance, and assure the staff accordingly, as the staff feel humiliated,&quot; the letter said.

&ldquo;We want to reiterate that the RBI is fully capable of coordinating its currency chest operations. We do not need assistance from anywhere,&rdquo; the forum leaders said.

(WION with inputs from PTI)

Their letter complained about the operational 'mismanagement' of demonetisation and the government impinging on the central bank's autonomy

RBI employees who felt “humiliated” by events since the demonetisation move on Friday wrote a letter to RBI chief Urjit Patel against operational "mismanagement" in the exercise, the Press Trust of India reported. In a letter addressed to Patel, they termed the appointment of a senior finance ministry official as a "blatant encroachment" on RBI’s exclusive jurisdiction on currency management and accused the government of "impinging on RBI autonomy". "An image of efficiency and independence that RBI assiduously built up over decades by the strenuous efforts of its staff and judicious policy making has gone into smithereens in no time. We feel extremely pained," the United Forum of Reserve Bank Officers and Employees said in the letter. The letter also said the RBI's autonomy and image have been “dented beyond repair". At least two of the four signatories, Samir Ghosh of All India Reserve Bank Employees' Association and Suryakant Mahadik of All India Reserve Bank Workers' Federation, confirmed the writing of the letter, PTI reported. The other signatories are CM Paulsil of All India Reserve Bank Officers' Association and RN Vatsa of RBI Officers' Association. "May we request that as the Governor of RBI, its highest functionary, and protector of its autonomy and prestige, you will please do the needful urgently to do away with this unwarranted interference from the Ministry of Finance, and assure the staff accordingly, as the staff feel humiliated," the letter said. “We want to reiterate that the RBI is fully capable of coordinating its currency chest operations. We do not need assistance from anywhere,” the forum leaders said. (WION with inputs from PTI)

'Humiliated' RBI staff write to Urjit Patel, say bank's image 'dented beyond repair'

The chief of India&#39;s central bank on Wednesday warned the federal government that not wresting a ballooning fiscal deficit might cause long-term economic damage.

Reserve Bank of India governor Urjit Patel said not reducing the high borrowing levels was also hampering the country&#39;s sovereign ratings.

Patel, speaking at an investors&#39; summit in India&#39;s western Gujarat state, said both the federal government and state governments had to &quot;take cognisance&quot; of the matter to &quot;mitigate financial volatility&quot; in near future.

India&#39;s total fiscal deficit is targeted at 6.4 per cent of GDP in 2016-17, which is above the norm for most emerging markets and G20 countries. In comparison, China&#39;s government deficit was a little above two percentage points in 2016.

Patel&#39;s comments come weeks before the Narendra Modi administration is set to announce its annual budget.&nbsp;

The high debt burden has also scuttled India&#39;s chance of upgrading credit rating. Recently, Reuters had reported that the Indian government had pushed Moody&#39;s to get a better rating from its existing Baa3 rating -- the lowest investment grade.

But the international credit rating agency remained unmoved, with&nbsp;the company&#39;s senior vice president and sovereign analyst&nbsp;Marie Diron reasoning that high debt levels and the saddled banking sector&nbsp;were key reasons for the status quo.

(WION with inputs from Reuters)

&nbsp;

India's total fiscal deficit is targeted at 6.4 per cent of GDP in 2016-17, which is higher than most G20 countries

The chief of India's central bank on Wednesday warned the federal government that not wresting a ballooning fiscal deficit might cause long-term economic damage. Reserve Bank of India governor Urjit Patel said not reducing the high borrowing levels was also hampering the country's sovereign ratings. Patel, speaking at an investors' summit in India's western Gujarat state, said both the federal government and state governments had to "take cognisance" of the matter to "mitigate financial volatility" in near future. India's total fiscal deficit is targeted at 6.4 per cent of GDP in 2016-17, which is above the norm for most emerging markets and G20 countries. In comparison, China's government deficit was a little above two percentage points in 2016. Patel's comments come weeks before the Narendra Modi administration is set to announce its annual budget. The high debt burden has also scuttled India's chance of upgrading credit rating. Recently, Reuters had reported that the Indian government had pushed Moody's to get a better rating from its existing Baa3 rating -- the lowest investment grade. But the international credit rating agency remained unmoved, with the company's senior vice president and sovereign analyst Marie Diron reasoning that high debt levels and the saddled banking sector were key reasons for the status quo. (WION with inputs from Reuters)

Reduce borrowing levels to avoid economic volatility, warns RBI

A parliamentary committee has asked the governor of India&#39;s central bank to appear before it and explain how the decision of demonetisation was taken and for details on how it has impacted the economy, Reuters reported.

The Public Accounts Committee (PAC), which is probing the government&#39;s decision to scrap high-value Rs 500 and Rs 1000 bank notes (($7.34-$14.69) has asked Reserve Bank of India (RBI) governor, Urjit Patel, to appear before it on January 20, the commmitte&#39;s chairman, KV Thomas, also a senior member of the opposition Congress party, told Reuters.

The PAC has asked Patel to provide details on the value of currency that has been returned to the bank, the quantity of 
&quot;black money&quot; it has received and the amount of new currency released so far, Thomas said.

The committee has sent the RBI governor a list of questions on the demonetisation process. It has also asked other finance ministry officials, including the revenue secretary and finance secretary to appear before it, Thomas said.

In an unexpected move, PM Modi announced the demonetisation of Rs 500 and Rs 1000 notes on November 8 to curb the influence of black money circulating in the economy.

The opposition parties have criticised the government and the central bank over shortages of new currency notes and restrictions on depositing old notes that have caused long queues at banks and ATMs.

Thomas added that the governor has also been asked about the country&#39;s preparedness to handle cashless transactions.

&quot;We had decided to call the RBI governor sometime in December but because the prime minister had asked for 50 days, we 
decided to postpone it to sometime January,&quot; Thomas told Reuters. &quot;We did not want to give it a political colour.&quot;

Urijit Patel is already set to testify before another parliamentary committee on the demonetisation issue.

Last month, the RBI unexpectedly kept its key policy rate unchanged at 6.25 per cent, despite calls for action in the face of an intense cash shortage. The bank was widely expected to cut the rate by at least 25 bps. 
 
(WION with inputs from Reuters) 
&nbsp;

RBI governor Urjit Patel has been asked to explain how the decision of demonetisation was taken

A parliamentary committee has asked the governor of India's central bank to appear before it and explain how the decision of demonetisation was taken and for details on how it has impacted the economy, Reuters reported. The Public Accounts Committee (PAC), which is probing the government's decision to scrap high-value Rs 500 and Rs 1000 bank notes (($7.34-$14.69) has asked Reserve Bank of India (RBI) governor, Urjit Patel, to appear before it on January 20, the commmitte's chairman, KV Thomas, also a senior member of the opposition Congress party, told Reuters. The PAC has asked Patel to provide details on the value of currency that has been returned to the bank, the quantity of "black money" it has received and the amount of new currency released so far, Thomas said. The committee has sent the RBI governor a list of questions on the demonetisation process. It has also asked other finance ministry officials, including the revenue secretary and finance secretary to appear before it, Thomas said. In an unexpected move, PM Modi announced the demonetisation of Rs 500 and Rs 1000 notes on November 8 to curb the influence of black money circulating in the economy. The opposition parties have criticised the government and the central bank over shortages of new currency notes and restrictions on depositing old notes that have caused long queues at banks and ATMs. Thomas added that the governor has also been asked about the country's preparedness to handle cashless transactions. "We had decided to call the RBI governor sometime in December but because the prime minister had asked for 50 days, we decided to postpone it to sometime January," Thomas told Reuters. "We did not want to give it a political colour." Urijit Patel is already set to testify before another parliamentary committee on the demonetisation issue. Last month, the RBI unexpectedly kept its key policy rate unchanged at 6.25 per cent, despite calls for action in the face of an intense cash shortage. The bank was widely expected to cut the rate by at least 25 bps. (WION with inputs from Reuters)

Parliamentary committee to question governor of India's central bank over demonetisation

Urjit Patel, the governor of Reserve Bank of India -- the country&#39;s central banking institution, was under the cosh during his Kolkata trip on Thursday as Congress and&nbsp;Trinamool Congress supporters waved black flags and resorted to high-decibel sloganeering to mark their protest against demonetisation.

Black flags and chants of &#39;go back Urjit&#39; followed Patel wherever he went&nbsp;-- he was first greeted with derision by Trinamool Congress workers when he visited RBI&#39;s regional office in West Bengal&#39;s capital city of Kolkata and a few hours later, he was condemned to a similar behaviour when he reached the airport.

The Left in the city were in good numbers as well to rail against the government&#39;s decision to flush out old currency notes.

Patel was in India&#39;s eastern city of Kolkata to take stock of the situation in east and northeast India in the aftermath of the unprecedented and unexpected cash scrap.

In the morning, Patel reached RBI&#39;s Kolkata branch to convene a central board meeting much ahead of the scheduled time of 10 am and entered the building from the rear side&nbsp;to evade media spotlight. But supporters of Trinamool Congress, which enjoys formidable support in Bengal, had already massed outside the building to wave black flags and raise anti-establishment cries.

Patel subsequently met Trinamool chief and West Bengal chief minister Mamata Banerjee at 3.30 in the afternoon to discuss issues plaguing the banks in the state.

&quot;From Maharashtra to Gujarat, Uttar Pradesh to Bihar, Chennai to Kolkata I gave my views on behalf of the commoners. But after meeting him, I felt immensely satisfied as I got an opportunity to express my views before him,&quot; Banerjee later told a media gathering.

And when he reached the Kolkata International Airport, he was subjected to similar vitriol as Congress workers allegedly heckled him. The 53-year-old economist&nbsp;had to be escorted inside the airport by the police.

Both Trinamool Congress and the Congress have been vociferous opponets of the demonetisation policy.

(WION)

&nbsp;

Congress and?Trinamool Congress supporters waved black flags and resorted to high-decibel sloganeering to mark their protest

Urjit Patel, the governor of Reserve Bank of India -- the country's central banking institution, was under the cosh during his Kolkata trip on Thursday as Congress and Trinamool Congress supporters waved black flags and resorted to high-decibel sloganeering to mark their protest against demonetisation. Black flags and chants of 'go back Urjit' followed Patel wherever he went -- he was first greeted with derision by Trinamool Congress workers when he visited RBI's regional office in West Bengal's capital city of Kolkata and a few hours later, he was condemned to a similar behaviour when he reached the airport. The Left in the city were in good numbers as well to rail against the government's decision to flush out old currency notes. Patel was in India's eastern city of Kolkata to take stock of the situation in east and northeast India in the aftermath of the unprecedented and unexpected cash scrap. In the morning, Patel reached RBI's Kolkata branch to convene a central board meeting much ahead of the scheduled time of 10 am and entered the building from the rear side to evade media spotlight. But supporters of Trinamool Congress, which enjoys formidable support in Bengal, had already massed outside the building to wave black flags and raise anti-establishment cries. Patel subsequently met Trinamool chief and West Bengal chief minister Mamata Banerjee at 3.30 in the afternoon to discuss issues plaguing the banks in the state. "From Maharashtra to Gujarat, Uttar Pradesh to Bihar, Chennai to Kolkata I gave my views on behalf of the commoners. But after meeting him, I felt immensely satisfied as I got an opportunity to express my views before him," Banerjee later told a media gathering. And when he reached the Kolkata International Airport, he was subjected to similar vitriol as Congress workers allegedly heckled him. The 53-year-old economist had to be escorted inside the airport by the police. Both Trinamool Congress and the Congress have been vociferous opponets of the demonetisation policy. (WION)

Demonetisation: RBI governor heckled by Congress, Trinamool supporters in Kolkata

Taking markets by surprise, RBI Governor Urjit Patel today kept short term lending rate unchanged even as the central bank lowered GDP growth rate to 7.1 per cent and short term disruption in economic activities due to demonetisation.

Patel-led 6-member Monetary Policy Committee, which had in its first policy review cut interest rate by 0.25 per cent in October, belied expectations to keep benchmark repo rate unchanged at 6.25 per cent unanimously.

In view of disruption in economic activities due to demonetisation, RBI lowered growth forecast from 7.6 per cent to 7.1 per cent for the current fiscal.

The headline inflation is projected at 5 per cent by the fourth quarter of 2016-17 with risks tilted to the upside but lower than in the October policy review.

The fuller effects of the house rent allowances under the Seventh Pay Commission award are yet to be assessed, pending implementation, and have not been reckoned in this baseline inflation path, the fifth bi-monthly monthly monetary policy said.

On demonetisation, it said, the withdrawal of old high value currency notes could transiently interrupt some part of industrial activity in November-December due to delays in payments of wages and purchases of inputs, although a fuller assessment is awaited.

&quot;In the services sector, the outlook is mixed with construction, trade, transport, hotels and communication impacted by temporary old currency notes effects, while public administration, defence and other services would continue to be buoyed by the 7th Central Pay Commission (CPC) award and one rank one pension (OROP),&quot; it added.

The central bank also said that almost Rs 12 lakh crore out of total Rs 14.5 lakh crore in scrapped notes have already been deposited in banks.

RBI has also withdraw 100 per cent incremental Cash Reserve Ratio (CRR) from December 10, a move that would allow banks to retain the deposits coming to them as part of demonetisation.

All the six members of Monetary Policy Committee headed by the RBI Governor voted in favour of the today&#39;s decision. 
In the view of the Committee, this bi-monthly review is set against the backdrop of heightened uncertainty.

&quot;Globally, the imminent tightening of monetary policy in the US is triggering bouts of high volatility in financial markets, with the possibility of large spillovers that could have macroeconomic implications for emerging markets,&quot; it said.

While supply disruptions in the backdrop of currency replacement may drag down growth this year in India, it is important to analyse more information and experience before judging their full effects and their persistence, RBI said, adding that short-term developments that influence the outlook disproportionately warrant caution with respect to setting the monetary policy stance.

&quot;On balance, therefore, it is prudent to wait and watch how these factors play out and impinge upon the outlook. Accordingly, the policy repo rate has been kept on hold in this review, while retaining an accommodative policy stance,&quot; it said.&nbsp;

 
Highlights of RBI&#39;s fifth bi-monthly monetary policy statement, 2016-17:

<ul>
	<li>&nbsp;Repo rate unchanged at 6.25%, Reverse Repo at 5.75%</li>
	<li>&nbsp;Cash reserve ratio or CRR unchanged at 4%</li>
	<li>&nbsp;Cuts growth forecast to 7.1%, from 7.6% for this fiscal</li>
	<li>&nbsp;Inflation target remains 5% for March 2017, upside risk</li>
	<li>&nbsp;Demonetisation to lower prices of perishables</li>
	<li>Could reduce inflation by 10-15 basis points by December</li>
	<li>&nbsp;All MPC members voted in favour of status quo in policy</li>
	<li>&nbsp;Demonetisation to result in short-run disruptions in Cash-intensive sectors</li>
	<li>Crude price volatility, surge in financial market</li>
	<li>Turbulence could put March end inflation target at risk</li>
	<li>&nbsp;Foreign exchange reserve rose to all-time high of</li>
	<li>USD 364 billion on December 2</li>
	<li>&nbsp;RBI injected Rs 1.1 lakh crore liquidity through OMO purchases this fiscal</li>
	<li>Next monetary policy on February 8</li>
</ul>

(PTI)

The RBI's monetary policy committee voted 6-0 to leave the repo rate unchanged, after cutting it by 25 basis points (bps) last October

Taking markets by surprise, RBI Governor Urjit Patel today kept short term lending rate unchanged even as the central bank lowered GDP growth rate to 7.1 per cent and short term disruption in economic activities due to demonetisation. Patel-led 6-member Monetary Policy Committee, which had in its first policy review cut interest rate by 0.25 per cent in October, belied expectations to keep benchmark repo rate unchanged at 6.25 per cent unanimously. In view of disruption in economic activities due to demonetisation, RBI lowered growth forecast from 7.6 per cent to 7.1 per cent for the current fiscal. The headline inflation is projected at 5 per cent by the fourth quarter of 2016-17 with risks tilted to the upside but lower than in the October policy review. The fuller effects of the house rent allowances under the Seventh Pay Commission award are yet to be assessed, pending implementation, and have not been reckoned in this baseline inflation path, the fifth bi-monthly monthly monetary policy said. On demonetisation, it said, the withdrawal of old high value currency notes could transiently interrupt some part of industrial activity in November-December due to delays in payments of wages and purchases of inputs, although a fuller assessment is awaited. "In the services sector, the outlook is mixed with construction, trade, transport, hotels and communication impacted by temporary old currency notes effects, while public administration, defence and other services would continue to be buoyed by the 7th Central Pay Commission (CPC) award and one rank one pension (OROP)," it added. The central bank also said that almost Rs 12 lakh crore out of total Rs 14.5 lakh crore in scrapped notes have already been deposited in banks. RBI has also withdraw 100 per cent incremental Cash Reserve Ratio (CRR) from December 10, a move that would allow banks to retain the deposits coming to them as part of demonetisation. All the six members of Monetary Policy Committee headed by the RBI Governor voted in favour of the today's decision. In the view of the Committee, this bi-monthly review is set against the backdrop of heightened uncertainty. "Globally, the imminent tightening of monetary policy in the US is triggering bouts of high volatility in financial markets, with the possibility of large spillovers that could have macroeconomic implications for emerging markets," it said. While supply disruptions in the backdrop of currency replacement may drag down growth this year in India, it is important to analyse more information and experience before judging their full effects and their persistence, RBI said, adding that short-term developments that influence the outlook disproportionately warrant caution with respect to setting the monetary policy stance. "On balance, therefore, it is prudent to wait and watch how these factors play out and impinge upon the outlook. Accordingly, the policy repo rate has been kept on hold in this review, while retaining an accommodative policy stance," it said. Highlights of RBI's fifth bi-monthly monetary policy statement, 2016-17: Repo rate unchanged at 6.25%, Reverse Repo at 5.75% Cash reserve ratio or CRR unchanged at 4% Cuts growth forecast to 7.1%, from 7.6% for this fiscal Inflation target remains 5% for March 2017, upside risk Demonetisation to lower prices of perishables Could reduce inflation by 10-15 basis points by December All MPC members voted in favour of status quo in policy Demonetisation to result in short-run disruptions in Cash-intensive sectors Crude price volatility, surge in financial market Turbulence could put March end inflation target at risk Foreign exchange reserve rose to all-time high of USD 364 billion on December 2 RBI injected Rs 1.1 lakh crore liquidity through OMO purchases this fiscal Next monetary policy on February 8 (PTI)

Reserve Bank of India keeps repo rate unchanged at 6.25%

The Reserve Bank of India (RBI) on Monday late night said that the general public has withdrawn Rs 2.16 lakh crore from their accounts since beginning of demonetisation on November 9, 2016.

RBI further said that deposits in bank accounts during this period, amounted to Rs 8.11 lakh crore. Interestingly, Government had told the Supreme Court earlier this month that it expects around Rs 10-11 lakh crore to be deposited in banks till December 30, 2016 &ndash; the last day of depositing the now illegal tender of Rs 500 and Rs 1000 notes.

However, the long queues and frequent running out of cash has ensured that nearly 50% of this total currency (Rs 14 lakh crore) has already been deposited in banks in two weeks.

Moreover, there has been a sudden surge in deposits with Jan Dhan Accounts.

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<h5>As on November 9, the Government claimed that the 25.5 crore accounts opened under Jan-Dhan Yojana (PMJDY) garnered Rs 45,636.61 crore. The number of accounts now stand at 25.68 crore while deposits have risen to Rs 72,834.72 crore.</h5>
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&nbsp;

PM Modi and Finance Minister Arun Jaitley have been pushing citizens towards a more &#39;less-cash&#39; economy. The Government, on Monday, removed excise duty on &#39;point of sale&#39; machines in order to expedite use of digital currency than hard cash.&nbsp;

However, with over Rs 2 lakh crore withdrawn in two weeks from the Rs 8.11 lakh deposited, it is amply clear that Indians are still not ready to go completely cash-less.&nbsp;

On the evening of November 8, Prime Minister Narendra Modi in a televised address said that nearly 86% of Rs 16 lakh crore that oiled the Indian economy by way of Rs 500 and Rs 1000 notes were illegal tender from midnight.

He said that citizens have&nbsp;50 days to deposit this old currency in banks, exchange it with new or withdraw through ATMs, etc.

The RBI on Monday released data that showed nearly 50% of all demonetised currency in Rs 500 and Rs 1000 notes has been deposited with banks

The Reserve Bank of India (RBI) on Monday late night said that the general public has withdrawn Rs 2.16 lakh crore from their accounts since beginning of demonetisation on November 9, 2016. RBI further said that deposits in bank accounts during this period, amounted to Rs 8.11 lakh crore. Interestingly, Government had told the Supreme Court earlier this month that it expects around Rs 10-11 lakh crore to be deposited in banks till December 30, 2016 – the last day of depositing the now illegal tender of Rs 500 and Rs 1000 notes. However, the long queues and frequent running out of cash has ensured that nearly 50% of this total currency (Rs 14 lakh crore) has already been deposited in banks in two weeks. Moreover, there has been a sudden surge in deposits with Jan Dhan Accounts. As on November 9, the Government claimed that the 25.5 crore accounts opened under Jan-Dhan Yojana (PMJDY) garnered Rs 45,636.61 crore. The number of accounts now stand at 25.68 crore while deposits have risen to Rs 72,834.72 crore. × PM Modi and Finance Minister Arun Jaitley have been pushing citizens towards a more 'less-cash' economy. The Government, on Monday, removed excise duty on 'point of sale' machines in order to expedite use of digital currency than hard cash. However, with over Rs 2 lakh crore withdrawn in two weeks from the Rs 8.11 lakh deposited, it is amply clear that Indians are still not ready to go completely cash-less. On the evening of November 8, Prime Minister Narendra Modi in a televised address said that nearly 86% of Rs 16 lakh crore that oiled the Indian economy by way of Rs 500 and Rs 1000 notes were illegal tender from midnight. He said that citizens have 50 days to deposit this old currency in banks, exchange it with new or withdraw through ATMs, etc.

Demonetisation: Indians withdrew over 2 lakh crore since November 9

Breaking his silence over the demonetisation issue, Resrve Bank of India&nbsp;Governor Urjit Patel today said the central bank is monitoring the situation on a daily basis and taking all necessary actions to &quot;ease the genuine pain of citizens&quot; with a clear intent to normalise the things as early as possible.

Patel also said the RBI has announced an incremental CRR (Cash Reserve Ratio) of 100 per cent &quot;because of the large increase in deposits of banks on account of the return of Rs 1,000 and Rs 500 notes&quot; and the decision would be reviewed immediately once the government issues adequate quantum of MSS (Market Stablisation Scheme) bonds which they have promised to do.

In an exclusive interview to PTI, Patel said the situation arising out of the decision to withdraw Rs 500/1,000 notes is being monitored on a daily basis and the printing presses have started to rebalance the production of new notes towards Rs 100 and Rs 500 bills.

He also urged the people to start using cash substitutes like debit cards and digital wallets, saying it will make transactions cheaper and easier and in the long term, it will help India &quot;leapfrog into a less cash-use economy at par with more developed nations.&quot;

&quot;We are also urging banks to make a big push with PoS (Point of Sale) machines with traders so that debit card use becomes more prevalent,&quot; he said.

Giving details of the steps being taken by RBI, he said, &quot;Both RBI and government have been getting the printing presses to work at capacity to get the new notes available to meet demand.

&quot;The RBI is interacting with the banks every day. They are telling us that the situation is gradually easing. The queues in branches and ATMs are shorter and the markets are starting to function, and there are no reported shortages of daily items of consumption.

&quot;Also, about 40-50,000 people were deployed to refit the ATMs. Currency is available and banks are working in a mission mode to lift currency and take them to their branches and ATMs. The staff members of all banks have worked very hard, and we all owe them our gratitude,&quot; Patel said.

&quot;Having said that, it is important to regularly review the situation, and taking the required decisions to ease the genuine pain of citizens who are honest and who have been hurt. There are no precedents on this subject at this scale and we have to be reactive to the situation.

&quot;People have asked why the new currency introduced was different in size and thickness from the old. This is because the new currency has been designed to make it hard to counterfeit. When you are going to make a change of this magnitude, you need to get the best standards in place,&quot; Patel said.

This is the first-ever interview as RBI Governor by Patel, who is known to keep a low profile.&nbsp;

(PTI)

Urjit Patel, governor of India's central bank, also urged people to start using cash substitutes like debit cards and digital wallets

Breaking his silence over the demonetisation issue, Resrve Bank of India Governor Urjit Patel today said the central bank is monitoring the situation on a daily basis and taking all necessary actions to "ease the genuine pain of citizens" with a clear intent to normalise the things as early as possible. Patel also said the RBI has announced an incremental CRR (Cash Reserve Ratio) of 100 per cent "because of the large increase in deposits of banks on account of the return of Rs 1,000 and Rs 500 notes" and the decision would be reviewed immediately once the government issues adequate quantum of MSS (Market Stablisation Scheme) bonds which they have promised to do. In an exclusive interview to PTI, Patel said the situation arising out of the decision to withdraw Rs 500/1,000 notes is being monitored on a daily basis and the printing presses have started to rebalance the production of new notes towards Rs 100 and Rs 500 bills. He also urged the people to start using cash substitutes like debit cards and digital wallets, saying it will make transactions cheaper and easier and in the long term, it will help India "leapfrog into a less cash-use economy at par with more developed nations." "We are also urging banks to make a big push with PoS (Point of Sale) machines with traders so that debit card use becomes more prevalent," he said. Giving details of the steps being taken by RBI, he said, "Both RBI and government have been getting the printing presses to work at capacity to get the new notes available to meet demand. "The RBI is interacting with the banks every day. They are telling us that the situation is gradually easing. The queues in branches and ATMs are shorter and the markets are starting to function, and there are no reported shortages of daily items of consumption. "Also, about 40-50,000 people were deployed to refit the ATMs. Currency is available and banks are working in a mission mode to lift currency and take them to their branches and ATMs. The staff members of all banks have worked very hard, and we all owe them our gratitude," Patel said. "Having said that, it is important to regularly review the situation, and taking the required decisions to ease the genuine pain of citizens who are honest and who have been hurt. There are no precedents on this subject at this scale and we have to be reactive to the situation. "People have asked why the new currency introduced was different in size and thickness from the old. This is because the new currency has been designed to make it hard to counterfeit. When you are going to make a change of this magnitude, you need to get the best standards in place," Patel said. This is the first-ever interview as RBI Governor by Patel, who is known to keep a low profile. (PTI)

Demonetisation: Trying to ease pain of citizens, says RBI chief

India has appointed three independent experts to Reserve Bank of India&rsquo;s (RBI) Monetary Policy Committee (MPC) to set interest rates as the central banking institution gears up for a switch in terms of deciding its new policy.&nbsp; 
 
The three experts -- Chetan Ghate, professor at Indian Statistical Institute, Pami Dua, director at Delhi School of Economics, and Ravindra Dholakia, professor at Indian Institute of Management, Ahmedabad -- will join RBI Governor Urjit Patel and two senior officials from the bank&#39;s monetary policy department. 
 
Deputy governor R Gandhi and executive director Michael Patra are the two other senior officials from RBI.&nbsp; 
 
The commitee will be responsible for setting the key interest rates in the monetary policy review, thereby diluting the power of the RBI governor. It will meet four times in a year to decide on the monetary policy of India by a majority vote. In case of a tie, the RBI governor has the deciding vote.&nbsp; 
 
The three independent experts were recommended by a search committee.&nbsp; 
 
It&#39;s pertinent to mention that the Indian government amended the RBI Act on June 27, 2016 to shift the job of monetary policy-making in India to a newly constituted Monetary Policy Committee (MPC). 
 
Until recently, a technical advisory committee was constituted by the RBI, which consisted of governor, deputy governor and external advisors to give their opinion and suggestions for deciding RBI&#39;s monetary policy.&nbsp; 
 
However, the governor&#39;s word was final on the rates and the recommendations of the technical advisors were not binding on the RBI. 
&nbsp; 
In 2014, it was the Urjit Patel Committee that recommended the setting up of an MPC for determining interest rates and also, move from multiple indicator approach to inflation targeting. Having both Government and RBI members on the MPC was suggested for accountability.&nbsp; 
 
The Indian government would have to keep its deficit under check and RBI would owe an explanation for runaway inflation. 
&nbsp; 
Monetary policy decisions by central banks have far-reaching implications for the economy, investors, savers and borrowers. Hence, with only governor having the decision-making authority raises questions the accountability of the entire process. 
 
Across the world, several countries, including New Zealand, England, Canada, South Africa, Sweden, have tried to make the process transparent by appointing a committee and adopting inflation targeting as a monetary policy objective.&nbsp; 
 
(WION)

Newly-constituted Monetary Policy Committee will make the process for setting key interest rates more transparent

India has appointed three independent experts to Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) to set interest rates as the central banking institution gears up for a switch in terms of deciding its new policy. The three experts -- Chetan Ghate, professor at Indian Statistical Institute, Pami Dua, director at Delhi School of Economics, and Ravindra Dholakia, professor at Indian Institute of Management, Ahmedabad -- will join RBI Governor Urjit Patel and two senior officials from the bank's monetary policy department. Deputy governor R Gandhi and executive director Michael Patra are the two other senior officials from RBI. The commitee will be responsible for setting the key interest rates in the monetary policy review, thereby diluting the power of the RBI governor. It will meet four times in a year to decide on the monetary policy of India by a majority vote. In case of a tie, the RBI governor has the deciding vote. The three independent experts were recommended by a search committee. It's pertinent to mention that the Indian government amended the RBI Act on June 27, 2016 to shift the job of monetary policy-making in India to a newly constituted Monetary Policy Committee (MPC). Until recently, a technical advisory committee was constituted by the RBI, which consisted of governor, deputy governor and external advisors to give their opinion and suggestions for deciding RBI's monetary policy. However, the governor's word was final on the rates and the recommendations of the technical advisors were not binding on the RBI. In 2014, it was the Urjit Patel Committee that recommended the setting up of an MPC for determining interest rates and also, move from multiple indicator approach to inflation targeting. Having both Government and RBI members on the MPC was suggested for accountability. The Indian government would have to keep its deficit under check and RBI would owe an explanation for runaway inflation. Monetary policy decisions by central banks have far-reaching implications for the economy, investors, savers and borrowers. Hence, with only governor having the decision-making authority raises questions the accountability of the entire process. Across the world, several countries, including New Zealand, England, Canada, South Africa, Sweden, have tried to make the process transparent by appointing a committee and adopting inflation targeting as a monetary policy objective. (WION)

India appoints three experts for RBI's Monetary Policy Committee

Indian bonds and currency fell on Monday as investors took the appointment of Urjit Patel as the next governor of the Reserve Bank of India as a signal of policy continuity at the central bank, making a near term cut in interest rates unlikely. 
 
The benchmark 10-year bond yield rose 4 basis points to 7.14 percent, while the rupee fell to a near one-month low of 67.17/67.18 to the Dollar, compared with its close of 67.07. 
 
Patel, currently an RBI deputy governor, had been seen as among the more hawkish candidates that had been in the running to take over from Raghuram Rajan, who steps down as governor on Sept. 4. 
 
Traders expect Patel to keep the repo rate on hold at the RBI&#39;s next policy review on Oct. 4 after inflation accelerated to 6.07 percent in July, above the RBI&#39;s near-term target of 5 percent. 
 
The RBI had cut the policy repo rate by 150 bps from January 2015 to April this year but has held them steady since then. 
 
During his time as deputy governor, Patel had headed a panel that recommended landmark changes to monetary policy in India, including a switch to inflation-targeting and the creation of a committee to set interest rates. 
 
The RBI cut interest rates 150 bps during Rajan&#39;s tenure and the central bank&#39;s pledge to ease cash conditions had also contributed to a rally in bond markets, and investors will be encouraged that one of Rajan&#39;s closest aides will succeed him. 
 
&quot;All investors, both foreign and domestic should take comfort in the fact that there will be policy continuity,&quot; said Kenneth Akintewe, Senior Investment Manager at Aberdeen Asset Management Asia Ltd in Singapore. 
 
&quot;Nevertheless, some of the dovish sentiment that had crept into the market will likely be re-priced given that Dr Patel is viewed as being more hawkish, therefore yields could correct slightly higher in the near term.&quot; 
 
The 10-year bond yield slumped 36 bps, and hit a seven-year low of 7.07 percent earlier this month as some buyers speculated that a more dovish governor would emerge, and there was also strong buying by foreign investors, though that cooled this month. 
 
Prime Minister Narendra Modi&#39;s government this month formally agreed to adopt Rajan&#39;s inflation target of 2 to 6 percent in the medium term. 
 
Analysts said they expect Patel, like Rajan, would steer policy towards keeping inflation at the midpoint of 4 percent, instead of the upper end of the range. 
 
Still, analysts, say they still see scope for an interest rate cut at the end of this year or early in 2017 should food prices moderate in coming months as monsoon rains have been above average. 
 
&quot;The perception is that he is hawkish but he has room to maneuver,&quot; said Radhika Rao, economist, DBS, Singapore.

(Reuters)

Urjit Patel is viewed to be among the more hawkish candidates that had been in the running to take over from Raghuram Rajan

Indian bonds and currency fell on Monday as investors took the appointment of Urjit Patel as the next governor of the Reserve Bank of India as a signal of policy continuity at the central bank, making a near term cut in interest rates unlikely. The benchmark 10-year bond yield rose 4 basis points to 7.14 percent, while the rupee fell to a near one-month low of 67.17/67.18 to the Dollar, compared with its close of 67.07. Patel, currently an RBI deputy governor, had been seen as among the more hawkish candidates that had been in the running to take over from Raghuram Rajan, who steps down as governor on Sept. 4. Traders expect Patel to keep the repo rate on hold at the RBI's next policy review on Oct. 4 after inflation accelerated to 6.07 percent in July, above the RBI's near-term target of 5 percent. The RBI had cut the policy repo rate by 150 bps from January 2015 to April this year but has held them steady since then. During his time as deputy governor, Patel had headed a panel that recommended landmark changes to monetary policy in India, including a switch to inflation-targeting and the creation of a committee to set interest rates. The RBI cut interest rates 150 bps during Rajan's tenure and the central bank's pledge to ease cash conditions had also contributed to a rally in bond markets, and investors will be encouraged that one of Rajan's closest aides will succeed him. "All investors, both foreign and domestic should take comfort in the fact that there will be policy continuity," said Kenneth Akintewe, Senior Investment Manager at Aberdeen Asset Management Asia Ltd in Singapore. "Nevertheless, some of the dovish sentiment that had crept into the market will likely be re-priced given that Dr Patel is viewed as being more hawkish, therefore yields could correct slightly higher in the near term." The 10-year bond yield slumped 36 bps, and hit a seven-year low of 7.07 percent earlier this month as some buyers speculated that a more dovish governor would emerge, and there was also strong buying by foreign investors, though that cooled this month. Prime Minister Narendra Modi's government this month formally agreed to adopt Rajan's inflation target of 2 to 6 percent in the medium term. Analysts said they expect Patel, like Rajan, would steer policy towards keeping inflation at the midpoint of 4 percent, instead of the upper end of the range. Still, analysts, say they still see scope for an interest rate cut at the end of this year or early in 2017 should food prices moderate in coming months as monsoon rains have been above average. "The perception is that he is hawkish but he has room to maneuver," said Radhika Rao, economist, DBS, Singapore. (Reuters)

Indian bonds, rupee fall as Urjit Patel, Rajan's close aide, chosen to head RBI

India&#39;s former central bank governor Raghuram Rajan&#39;s abrupt announcement of his departure as governor of the Reserve Bank of India (RBI) came as a nasty surprise to many, especially his fans in the investment community, but the way Urjit Patel was chosen as his successor has been anything but. 
 
Aides to Indian Prime Minister Narendra Modi have sought to show that the search and selection process has been deliberate and controlled, that the nation&rsquo;s leader and the finance minister Arun Jaitley were closely involved, and that the government is fully behind the RBI&rsquo;s battle to control inflation. 
 
Critically for the stability of financial markets, Patel lent his name to the panel that drew up the blueprint for formally adopting a consumer inflation target of 4 per cent, as well as creating a new Monetary Policy Committee to steer interest rates and help India hit that goal. 
 
At the same time, the officials have stressed that no single individual should again dominate the RBI in the way that Rajan did over his three-year term. Where Rajan is known for pithy one-liners at news conferences and speeches larded with social criticism, Patel is seen as more of a backroom technocrat who avoids the limelight. 
 
Rajan&#39;s shock announcement on the afternoon of June 18, a Saturday, caught the government off-guard &ndash; Jaitley was watching a movie at home with his family and took more than two hours to issue a public statement. 
 
The recovery of composure was quick, though. A shortlist of potential successors was floated before the evening was out. Patel, the 52-year-old deputy governor who takes over from Rajan on September 4, was on it, along with a clutch of other contenders that included veterans of the RBI. 
 
On Saturday evening, exactly nine weeks later, the choice was made public. And it was done without Modi holding meetings about the job with any of the candidates, according to sources with direct knowledge of the process. 
 
While Modi may have been involved in the final decision on Patel, he wanted to &quot;keep his distance&quot; in the weeks before as the appointment committee ran the process, one aide said. 
 
&quot;Lobbying does not get you such a job - but Modi ji&#39;s confidence in Patel was a big factor,&rdquo; the official said, using the honorific Indian suffix. 
 
Patel has wide international policy experience. He worked at the IMF as an economist from 1990 to 1995, and for Boston Consulting Group and Indian conglomerate Reliance Industries. 
 
Sources said Patel had been vetted and his candidacy blessed by the Hindu-nationalist umbrella group, the Rashtriya Swayamsevak Sangh (RSS), that backs Modi&#39;s nationalist party. 
 
That marks a big change from its attitude to Rajan, who came under fire from the Rashtriya Swayamsevak Sangh&nbsp;(RSS), a right-wing ,Hindu nationalist Party and in particular from lawmaker Subramanian Swamy who demanded he be fired for being &quot;mentally not fully Indian&quot;. Rajan this month denounced the personal attacks he had faced as &quot;abominable&quot;. 
 
Patel is looked on favourably as dependable and low-key, with no ambition to upstage the government. Rajan, by contrast, drew RSS ire by straying into politically sensitive territory in high-profile speeches in which he said social tolerance was vital to a country&rsquo;s economic development. 
 
That was perceived as an implied attack on the Hindu-nationalist agenda of the RSS and other supporters of Modi. Rajan has denied criticising the government. 
 
Getting to know you 
 
Modi warmed to Patel at a face-to-face meeting earlier this year, when the central banker was given an extension to his term as deputy governor in charge of monetary policy, said a second Modi aide. 
 
&quot;Patel has a direct working equation with the Prime Minister,&quot; this aide said, using an Indian-English expression for a personal relationship, adding the Prime Minister valued Patel as a &quot;clear thinker&quot; and appreciated his &quot;direct approach&quot;. 
 
The only sign of nervousness senior officials betrayed was in their initial suggestion that the next governor would be named by the time of Rajan&#39;s final policy meeting on August 9. 
 
But, after financial markets remained calm despite Rajan&#39;s announcement that he would not seek a second term, they reverted to a timeline that would allow just enough time for an orderly handover - as was the case with Rajan&#39;s own appointment three years ago. 
 
Throughout, the Prime Minister&#39;s Office has owned the process - reflecting Modi&#39;s determination to centralise decision-making in India&#39;s sprawling and often recalcitrant bureaucracy - with cabinet secretary PK Sinha heading the selection committee. 
 
In its initial recommendations in July, the panel called for the next RBI governor to be a technocrat, and not a bureaucrat; a macroeconomist; and team player. 
 
The successful candidate needed to be an individual of stature who could also ensure continuity at the RBI, one of the panel&#39;s members said after Patel&rsquo;s appointment. 
 
Jaitley met Modi to discuss the RBI succession on Thursday. A five-strong candidate list was then submitted to the selection panel, with the field led by Patel and also featuring contenders such as India&#39;s IMF executive director Subir Gokarn and World Bank chief economist Kaushik Basu. 
 
The selection committee provided its feedback after a lengthy session on Friday. It did not recommend any name; nor did it formally interview candidates, the member said, adding the final decision to pick Patel was made by Modi and Jaitley. 
 
&nbsp;Inflation hawk 
 
The choice shows that Modi is paying more than just lip-service to the fight against inflation. 
 
Modi endorsed the inflation fight in his Independence Day speech last Monday, and that will shield Patel as he seeks to consolidate the inflation-targeting framework brought in under the leadership of Rajan. 
 
&quot;While we have embraced the idea of the MPC, it has yet to be tested,&quot; said another senior government official. &nbsp;&quot;You need a smooth transition from the current system of decision making. Patel can ensure that there are no hiccoughs.&quot; 
 
&nbsp;Also, with the inflation rate now pushing above 6 per cent, it is vital to send a clear message to investors that the government would not waver in its resolve to keep inflation in check, this official added. 
 
&nbsp;&quot;It is very important that the credibility we have acquired in managing inflation doesn&#39;t get dented,&quot; the official also said. 
 
(Reuters)

Officials stress no single individual to dominate the Reserve Bank of India, the way former governor Raghuram Rajan did

India's former central bank governor Raghuram Rajan's abrupt announcement of his departure as governor of the Reserve Bank of India (RBI) came as a nasty surprise to many, especially his fans in the investment community, but the way Urjit Patel was chosen as his successor has been anything but. Aides to Indian Prime Minister Narendra Modi have sought to show that the search and selection process has been deliberate and controlled, that the nation’s leader and the finance minister Arun Jaitley were closely involved, and that the government is fully behind the RBI’s battle to control inflation. Critically for the stability of financial markets, Patel lent his name to the panel that drew up the blueprint for formally adopting a consumer inflation target of 4 per cent, as well as creating a new Monetary Policy Committee to steer interest rates and help India hit that goal. At the same time, the officials have stressed that no single individual should again dominate the RBI in the way that Rajan did over his three-year term. Where Rajan is known for pithy one-liners at news conferences and speeches larded with social criticism, Patel is seen as more of a backroom technocrat who avoids the limelight. Rajan's shock announcement on the afternoon of June 18, a Saturday, caught the government off-guard – Jaitley was watching a movie at home with his family and took more than two hours to issue a public statement. The recovery of composure was quick, though. A shortlist of potential successors was floated before the evening was out. Patel, the 52-year-old deputy governor who takes over from Rajan on September 4, was on it, along with a clutch of other contenders that included veterans of the RBI. On Saturday evening, exactly nine weeks later, the choice was made public. And it was done without Modi holding meetings about the job with any of the candidates, according to sources with direct knowledge of the process. While Modi may have been involved in the final decision on Patel, he wanted to "keep his distance" in the weeks before as the appointment committee ran the process, one aide said. "Lobbying does not get you such a job - but Modi ji's confidence in Patel was a big factor,” the official said, using the honorific Indian suffix. Patel has wide international policy experience. He worked at the IMF as an economist from 1990 to 1995, and for Boston Consulting Group and Indian conglomerate Reliance Industries. Sources said Patel had been vetted and his candidacy blessed by the Hindu-nationalist umbrella group, the Rashtriya Swayamsevak Sangh (RSS), that backs Modi's nationalist party. That marks a big change from its attitude to Rajan, who came under fire from the Rashtriya Swayamsevak Sangh (RSS), a right-wing ,Hindu nationalist Party and in particular from lawmaker Subramanian Swamy who demanded he be fired for being "mentally not fully Indian". Rajan this month denounced the personal attacks he had faced as "abominable". Patel is looked on favourably as dependable and low-key, with no ambition to upstage the government. Rajan, by contrast, drew RSS ire by straying into politically sensitive territory in high-profile speeches in which he said social tolerance was vital to a country’s economic development. That was perceived as an implied attack on the Hindu-nationalist agenda of the RSS and other supporters of Modi. Rajan has denied criticising the government. Getting to know you Modi warmed to Patel at a face-to-face meeting earlier this year, when the central banker was given an extension to his term as deputy governor in charge of monetary policy, said a second Modi aide. "Patel has a direct working equation with the Prime Minister," this aide said, using an Indian-English expression for a personal relationship, adding the Prime Minister valued Patel as a "clear thinker" and appreciated his "direct approach". The only sign of nervousness senior officials betrayed was in their initial suggestion that the next governor would be named by the time of Rajan's final policy meeting on August 9. But, after financial markets remained calm despite Rajan's announcement that he would not seek a second term, they reverted to a timeline that would allow just enough time for an orderly handover - as was the case with Rajan's own appointment three years ago. Throughout, the Prime Minister's Office has owned the process - reflecting Modi's determination to centralise decision-making in India's sprawling and often recalcitrant bureaucracy - with cabinet secretary PK Sinha heading the selection committee. In its initial recommendations in July, the panel called for the next RBI governor to be a technocrat, and not a bureaucrat; a macroeconomist; and team player. The successful candidate needed to be an individual of stature who could also ensure continuity at the RBI, one of the panel's members said after Patel’s appointment. Jaitley met Modi to discuss the RBI succession on Thursday. A five-strong candidate list was then submitted to the selection panel, with the field led by Patel and also featuring contenders such as India's IMF executive director Subir Gokarn and World Bank chief economist Kaushik Basu. The selection committee provided its feedback after a lengthy session on Friday. It did not recommend any name; nor did it formally interview candidates, the member said, adding the final decision to pick Patel was made by Modi and Jaitley. Inflation hawk The choice shows that Modi is paying more than just lip-service to the fight against inflation. Modi endorsed the inflation fight in his Independence Day speech last Monday, and that will shield Patel as he seeks to consolidate the inflation-targeting framework brought in under the leadership of Rajan. "While we have embraced the idea of the MPC, it has yet to be tested," said another senior government official. "You need a smooth transition from the current system of decision making. Patel can ensure that there are no hiccoughs." Also, with the inflation rate now pushing above 6 per cent, it is vital to send a clear message to investors that the government would not waver in its resolve to keep inflation in check, this official added. "It is very important that the credibility we have acquired in managing inflation doesn't get dented," the official also said. (Reuters)

India: PM Modi regains composure after Rajan shock, visible in naming of new central bank chief

India&#39;s incoming central bank governor&nbsp;Urjit Patel&nbsp;is widely regarded as having the professional and academic credentials he needs to make a success of his new job.

Less well known is whether a man who seems to feel most at ease in his own company commands the communication skills to answer to multiple constituencies and keep a 17,000-strong team on his side.

Patel, deputy governor of the Reserve Bank of India since 2013, demonstrated intellectual heft in overseeing landmark changes to the 81-year old institution, including switching to inflation-targeting and establishing a monetary policy panel to set interest rates.

Now promoted, Patel offers the promise of continuity with most of the policies of the man he will replace, Raghuram Rajan, who was feted by investors for halving inflation and for pulling the country out of its worst currency crisis in over two decades.

Within the RBI, however, Patel is widely viewed as a solitary and at times temperamental figure.

He avoids large meetings and gatherings with colleagues and, in contrast to other deputy governors who had busier public schedules, gives few speeches or media interviews. 
 
That raises questions about how Patel will approach the public aspects of a role that is set to be transformed under changes he largely helped spearhead. 
 
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<h5>The fact that he was reappointed as a deputy governor ... and now promoted ... shows the strong support he enjoys from the government</h5>
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<div class="share-blockquote"><a class="twitter popup" href="http://twitter.com/intent/tweet?text=&quot;The fact that he was reappointed as a deputy governor ... and now promoted ... shows the strong support he enjoys from the government.&quot;" target="_blank">&nbsp;</a></div>
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He will have to seek consensus with five other members of the RBI&#39;s new monetary policy committee.

He must also work closely with heads of state-owned banks as the sector battles to clean up $120 billion of soured loans - a relationship that greatly frustrated Rajan as lenders went only half way towards matching 150 basis points of RBI rate cuts. 
 
Respected by investors

Already known to have a good rapport with government officials, Patel may find his low public profile helps him develop even better ties.

Rajan, by contrast, faced a backlash from hard-right elements in Prime Minister Narendra Modi Bharatiya Janata Party (BJP) for sometimes peppering his public statements with social critiques.

&quot;(Patel) is extremely sensitive and pragmatic about not upsetting the government,&quot; said another senior RBI official who works with him.

&quot;The fact that he was reappointed as a deputy governor ... and now promoted ... shows the strong support he enjoys from the government,&quot; the first official said.

Patel is also likely to share his predecessor&#39;s good reputation among investors.

Both men worked for the International Monetary Fund and studied abroad, in Patel&#39;s case at the London School of Economics and Oxford University before heading across the Atlantic to Yale for his economics doctorate.

Patel has also spent time in the private sector with stints at the Boston Consulting Group and Indian energy conglomerate Reliance Industries&nbsp;and, at the RBI, was seen as the candidate most in tune with Rajan&#39;s policy agenda.

Having beaten off the challenge of, among others, IMF Executive Director Subir Gokarn to get the top job, analysts believe Patel will not kow-tow to the government either.

His reputation suggests he will uphold the independence of the central bank while pushing Modi and his ministers towards fiscal prudence - all welcome traits for investors used to a steady hand at the RBI tiller.

&quot;The new governor needs to reinforce the faith that the external world and Indian markets have in the ... central bank,&quot; said Mihir Vora, Chief Investment Officer of Max life insurance. 
 
(Reuters)

Within the RBI Urjit Patel is widely viewed as a solitary and at times temperamental figure

India's incoming central bank governor Urjit Patel is widely regarded as having the professional and academic credentials he needs to make a success of his new job. Less well known is whether a man who seems to feel most at ease in his own company commands the communication skills to answer to multiple constituencies and keep a 17,000-strong team on his side. Patel, deputy governor of the Reserve Bank of India since 2013, demonstrated intellectual heft in overseeing landmark changes to the 81-year old institution, including switching to inflation-targeting and establishing a monetary policy panel to set interest rates. Now promoted, Patel offers the promise of continuity with most of the policies of the man he will replace, Raghuram Rajan, who was feted by investors for halving inflation and for pulling the country out of its worst currency crisis in over two decades. Within the RBI, however, Patel is widely viewed as a solitary and at times temperamental figure. He avoids large meetings and gatherings with colleagues and, in contrast to other deputy governors who had busier public schedules, gives few speeches or media interviews. That raises questions about how Patel will approach the public aspects of a role that is set to be transformed under changes he largely helped spearhead. The fact that he was reappointed as a deputy governor ... and now promoted ... shows the strong support he enjoys from the government He will have to seek consensus with five other members of the RBI's new monetary policy committee. He must also work closely with heads of state-owned banks as the sector battles to clean up $120 billion of soured loans - a relationship that greatly frustrated Rajan as lenders went only half way towards matching 150 basis points of RBI rate cuts. Respected by investors Already known to have a good rapport with government officials, Patel may find his low public profile helps him develop even better ties. Rajan, by contrast, faced a backlash from hard-right elements in Prime Minister Narendra Modi Bharatiya Janata Party (BJP) for sometimes peppering his public statements with social critiques. "(Patel) is extremely sensitive and pragmatic about not upsetting the government," said another senior RBI official who works with him. "The fact that he was reappointed as a deputy governor ... and now promoted ... shows the strong support he enjoys from the government," the first official said. Patel is also likely to share his predecessor's good reputation among investors. Both men worked for the International Monetary Fund and studied abroad, in Patel's case at the London School of Economics and Oxford University before heading across the Atlantic to Yale for his economics doctorate. Patel has also spent time in the private sector with stints at the Boston Consulting Group and Indian energy conglomerate Reliance Industries and, at the RBI, was seen as the candidate most in tune with Rajan's policy agenda. Having beaten off the challenge of, among others, IMF Executive Director Subir Gokarn to get the top job, analysts believe Patel will not kow-tow to the government either. His reputation suggests he will uphold the independence of the central bank while pushing Modi and his ministers towards fiscal prudence - all welcome traits for investors used to a steady hand at the RBI tiller. "The new governor needs to reinforce the faith that the external world and Indian markets have in the ... central bank," said Mihir Vora, Chief Investment Officer of Max life insurance. (Reuters)

India's new central bank chief: Professional yes but does he have needed communication skills?

India&#39;s government promoted Urjit Patel, a deputy governor in charge of monetary policy at the Reserve Bank of India (RBI), to serve as its next governor for a three-year term, it said on Saturday. 
 
He will replace Raghuram Rajan, a former International Monetary Fund chief economist who stunned financial markets in June by announcing he would step down in September and return to academia after a single three-year term at the RBI. 
 
Patel, 52, headed a panel that recommended landmark changes to monetary policy in India, including a switch to inflation-targeting and the creation of a panel to set interest rates. He will start his three-year term on September 4. 
 
&quot;The Appointments Committee of Cabinet has approved the appointment of Dr Urjit R Patel as Governor, Reserve Bank of India for a period of three years,&quot; said the statement from the government. 
 
Patel, who has a doctorate from Yale, had widely been seen as ensuring the most continuity among the candidates believed to be in the running to be the next governor.&nbsp;He had been reappointed in January for another three years as deputy governor in charge of monetary policy, a department he has run since 2013. 
 
Seen as a close lieutenant to Rajan, Patel will now get to implement the policies he had helped shape. 
 
The government is soon expected to announce the composition of a six-member monetary policy committee to decide on interest rates. It will be made up of himself and two other RBI officials, along with three members appointed by the government. 
 
Rajan, who succeeded in halving the inflation rate from the double digit levels prevailing when he took over, also persuaded the government to adopt inflation targeting, setting a medium term central target of four per cent, within a range of two to six per cent, another policy endorsed by Patel. 
 
The new governor takes over at a time when inflation has bust out of the top end of that range. Consumer inflation accelerated to 6.07 per cent in July, the fourth consecutive month it has stayed above the RBI&#39;s near-term target of 5 per cent by March. 
 
Aside from controlling inflation, the new governor will have to follow through on efforts to clean-up banks&#39; bad loans, so that they can once again support the investments needed if India is to keep its place as one of the world&#39;s fastest growing economies. 
 
Patel will also have to navigate India&#39;s tricky political scene. Right-wing members of the ruling Bharatiya Janata Party (BJP) had criticised Rajan for some of his speeches on economic matters and for not cutting interest rates faster. 
 
(Reuters)

He will replace Raghuram Rajan, a former IMF chief economist who stunned the world in June by announcing he would step down in September

India's government promoted Urjit Patel, a deputy governor in charge of monetary policy at the Reserve Bank of India (RBI), to serve as its next governor for a three-year term, it said on Saturday. He will replace Raghuram Rajan, a former International Monetary Fund chief economist who stunned financial markets in June by announcing he would step down in September and return to academia after a single three-year term at the RBI. Patel, 52, headed a panel that recommended landmark changes to monetary policy in India, including a switch to inflation-targeting and the creation of a panel to set interest rates. He will start his three-year term on September 4. "The Appointments Committee of Cabinet has approved the appointment of Dr Urjit R Patel as Governor, Reserve Bank of India for a period of three years," said the statement from the government. Patel, who has a doctorate from Yale, had widely been seen as ensuring the most continuity among the candidates believed to be in the running to be the next governor. He had been reappointed in January for another three years as deputy governor in charge of monetary policy, a department he has run since 2013. Seen as a close lieutenant to Rajan, Patel will now get to implement the policies he had helped shape. The government is soon expected to announce the composition of a six-member monetary policy committee to decide on interest rates. It will be made up of himself and two other RBI officials, along with three members appointed by the government. Rajan, who succeeded in halving the inflation rate from the double digit levels prevailing when he took over, also persuaded the government to adopt inflation targeting, setting a medium term central target of four per cent, within a range of two to six per cent, another policy endorsed by Patel. The new governor takes over at a time when inflation has bust out of the top end of that range. Consumer inflation accelerated to 6.07 per cent in July, the fourth consecutive month it has stayed above the RBI's near-term target of 5 per cent by March. Aside from controlling inflation, the new governor will have to follow through on efforts to clean-up banks' bad loans, so that they can once again support the investments needed if India is to keep its place as one of the world's fastest growing economies. Patel will also have to navigate India's tricky political scene. Right-wing members of the ruling Bharatiya Janata Party (BJP) had criticised Rajan for some of his speeches on economic matters and for not cutting interest rates faster. (Reuters)

Urjit Patel is new Indian central bank governor, will serve 3-year term

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