Ra­jan stumps all, not to seek RBI sec­ond in­nings

NEW GUARD In­dia Inc sad­dened; govt says next RBI gov­er­nor to be picked soon

Hindustan Times ST (Mumbai) - HT Navi Mumbai Live - - NAVI MUMBAI - Beena Par­mar let­ters@hin­dus­tan­times.com

MUM­BAI: RBI gov­er­nor Raghu­ram Ra­jan said on Satur­day he won’t seek a sec­ond term af­ter Septem­ber, a sur­prise move by a “rock star” banker who has been a dar­ling of for­eign in­vestors but crit­i­cised by op­po­nents at home for keep­ing in­ter­est rates too high.

Ra­jan’s an­nounce­ment that he will re­turn to academia could un­der­mine in­vestor con­fi­dence in the econ­omy, as in­dus­try backed him for a sec­ond three­year stint over his ef­forts to tame in­fla­tion and sta­bilise the ru­pee. He was also in the mid­dle of a clean-up of mas­sive bad loans in state-run banks.

“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 Septem­ber 4,” the 53-year-old wrote to the RBI staff in a 900word let­ter. “I will, of course, al­ways be avail­able to serve my coun­try when needed.”

The RBI made Ra­jan’s let­ter pub­lic on its web­site and Twit­ter, cit­ing the “sig­nif­i­cance of the mat­ter”.

Hours later, finance min­is­ter Arun Jait­ley said the gov­ern­ment ap­pre­ci­ated Ra­jan’s “good work” and re­spected his de­ci­sion to step down. “A de­ci­sion on his suc­ces­sor would be an­nounced shortly,” he tweeted.

A Reuters re­port named State Bank of In­dia chief Arund­hati Bhat­tacharya, for­mer deputy RBI gov­er­nor Rakesh Mo­han and for­mer finance sec­re­tary Ashok Chawla, among oth­ers, as Ra­jan’s pos­si­ble suc­ces­sor. HT could not in­de­pen­dently ver­ify the re­port.

Ra­jan’s an­nounce­ment came af­ter months of ten­sion with the gov­ern­ment, es­pe­cially over the ques­tion of cut­ting in­ter­est rates. Ra­jan was ac­cused of hurt­ing eco­nomic growth by hold­ing in­ter­est rates but his sup­port­ers pointed out that he reg­u­larly slashed rates with­out tak­ing his eyes off in­fla­tion.

Cut­ting in­ter­est rates boosts growth be­cause loans to in­dus­try be­come cheaper.

Ra­jan en­joys a mass ap­peal not nor­mally as­so­ci­ated with a banker, and has been dubbed “rock star Ra­jan” and In­dia’s “James Bond” as much for his in­tel­lec­tual cal­i­bre as for his hand­some looks.

“I am Raghu­ram Ra­jan and I do what I do,” he fa­mously told re­porters in De­cem­ber af­ter nix­ing crit­i­cism by de­liv­er­ing a 0.5% rate cut, dou­ble the mar­ket ex­pec­ta­tion.

Top in­dus­try lead­ers said they were sad to see him go with many adding that Ra­jan de­served more dig­nity than he was given. “It’s a pity to lose him. I’m won­der­ing what has pre­cip­i­tated this ac­tion by the gov­er­nor,” said HDFC bank chair­man Deepak Parekh.

“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 Septem­ber 4. I will, of course, al­ways be avail­able to serve my coun­try when needed.” - RAGHU­RAM RA­JAN, RBI gov­er­nor, wrote to the cen­tral bank’s staff in a 900-word let­ter

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