It’s very sad Raghuram Rajan, RBI’s most daring, bold and intutive governor ended his term as Governor on 4th September 2016. He plans to return to academia as the term ends. All the social networking sites be it Facebook or Tweeter are flooded with sad messages not only from Indian citizens but also from people outside India.
India’s “rockstar” central bank governor Raghuram Rajan, who had been under fire for some time now, stunned government officials and colleagues on Saturday by announcing he would step down after just a three-year term.
- Rajan went on to make public that he was willing to stay longer but an “agreement” could not be reached
- Rajan added he would be back with his public speeches in India after a break
Who is Raghuram Rajan?
“He graduated from the Indian Institute of Technology, Delhi (won the Director’s Gold Medal for best all-round achievement) in 1985 with a bachelor’s degree in Electrical Engineering, and completed the Post Graduate Diploma in Business Administration at the Indian Institute of Management, Ahmedabad (gold medalist) in 1987. He received a PhD in management from the Massachusetts Institute of Technology in 1991 for his thesis titled “Essays on Banking.””
“While I was open to seeing these developments through, on due reflection, and after consultation with the government, I want to share with you that I will be returning to academia when my term as Governor ends on Sept. 4, 2016,” Rajan wrote in his goodbye letter to RBI staff.
Here we bring to you some of the popular quotes by this legend that comes out from him in his tenure:
1. “I don’t know what you want to call me, Santa Claus, you want to call me hawk, I don’t know. I don’t go by this. My name is Raghuram Rajan and I do what I do.”
2. “I don’t want to take that James Bond (image). But, a banker on the move — I will take that.”
3. “The governorship of the central bank is not meant to win one votes or Facebook “likes”. But I hope to do the right thing, no matter what the criticism, even while looking to learn from the criticism.”
4. “Expectations are high. Clearly I am not a superman. There is a little bit of euphoria in India.”
5.“There is a reason why central bank governors sit at the table along with the finance ministers in G-20 meetings. There may be some virtue in explicitly setting the governor’s rank commensurate with her position as the most important technocrat in charge of economic policy in the country.”
Five hits and one miss: Charting rock-star Raghuram Rajan’s 2 years at RBI
Here’s a look at his hits and misses:
1) Inflation management
High inflation was the biggest puzzle Rajan had to solve when he took over. In 2013, the consumer price index inflation (CPI) was close to 9 percent and whole-sale price inflation, the old favourite of the RBI policymakers, was hovering around 7 percent.
2) Banking sector overhaul
Rajan deserves kudos for spearheading the largest banking sector overhaul, probably, in the history of Indian banking. Under Rajan, the RBI kicked off the differentiated banking regime by giving entry to payments banks and small finance banks, paving way to a banking revolution.
3) Tackling hidden bad loans
Rajan insisted that banks shouldn’t postpone today’s problem to tomorrow and worsen it. The RBI realised the threat posed by hidden bad loans in the banking system. Rajan withdrew the regulatory forbearance on restructured loans, requiring banks to make provisions on restructured loans at par with bad loans. This curbed the practice of banks masquerading bad loans as restructured loans.
4) Battling for RBI’s voice
Rajan ensured that the RBI’s voice is heard when it comes to critical issues pertaining to monetary policy formulation and financial markets.
5) Arresting currency slide
After Rajan took over, the central bank has managed to bring in stability in the currency and money markets. The Indian rupee, which fell to its lifetime low of 68.85 against dollar in August 2013, recovered sharply following a slew of measures taken by the central banks in phases to arrest foreign fund outflows and attract fund inflows to the country. The rupee has been trading largely stable since then except in the recent past, when the currency lost the momentum again tracking the weakness in global markets.