The government on Friday reappointed Urjit Patel, who headed a committee that paved the way for the proposed monetary policy committee, as the deputy governor of the Reserve Bank of India (RBI) for a second time for a three-year term.
“The government today reappointed Urjit R Patel as deputy governor of RBI, for a further period of three years with effect from taking charge of the post on or after January 11, 2016, or, until further orders, whichever is earlier,” the central bank said in a statement on Friday evening.
Patel joined the central bank on January 11, 2013, months before Raghuram Rajan took charge as the Governor, and has been heading the monetary policy department. Rajan and Patel had earlier worked together in the International Monetary Fund (IMF) in Washington.
The reappointment of Patel assumes significance as in recent past none of the deputy governors got a second term.
On his first day at work as the Governor, Rajan had appointed a committee under Patel to relook at the monetary policy-making and it came up with a report, which advocated a shift to making RBI an inflation-targeting central bank.
After what was speculated to be hectic parleys, the suggestions of the Patel panel were adopted last February with the signing of an agreement between the Government and RBI on February 20.
Speculation was rife that Patel, who keeps a low profile but is considered close to Rajan, will be reappointed.
Apart from Patel, eight people, including RBI executive directors–Michael Patra and Deepak Mohanty–had reportedly appeared for interviews to the Deputy Governor’s (DG) post early December.
Patel, 53, looks after the critical function of monetary policy at the central bank. Patel, a doctorate from Yale University, also had a stint at IMF. He joined RBI as DG when D Subbarao was the Governor and had replaced Subir Gokarn.
RBI has four DGs–two filled from the rank and others hired from outside. Out of the last lot, one is a commercial banker and the other an economist. Governor Rajan’s term is ending on September 3, this year.
The Patel panel report is the basis of the monetary policy committee, which takes a lot of powers of the RBI and the governor as also move to create a public debt management agency.
Under the independent monetary policy committee, which is being set up, the government will set an inflation target to the RBI and the governor will be made answerable to Parliament if he fails to contain inflation at the given target.