Urjit Patel’s resignation as RBI chief will raise India’s risk perception, says rating agency Fitch
Increased government influence in the central bank could undermine efforts to address the bad loan problem, it added.
Global rating agency Fitch on Wednesday said Urjit Patel’s resignation as Reserve Bank of India governor poses macroeconomic risks, Economic Times reported. Former Revenue Secretary Shaktikanta Das was appointed the head of the central bank on Tuesday, a day after Patel resigned.
The agency said increased government influence in the central bank could undermine the RBI’s efforts to address the bad loan problem, according to Reuters.
In November, the Centre reportedly proposed a change in rules that will enable it to supervise the central bank more closely. This came in the wake of speculation about a rift between the finance ministry and the RBI. Early last month, a few news reports claimed the Centre had sought Rs 3.6 lakh crore capital from the central bank. However, government officials clarified there was no such proposal. Union Finance Minister Arun Jaitley also reiterated that the Centre does not require extra funds from the RBI or any other institution to meet its fiscal deficit target.
Rating agency Moody’s Investors Service did not comment directly on Patel’s exit, but said that attempts to curtail the RBI’s independence would be a credit negative. “We currently assume that the RBI will continue to pursue price and financial stability and implement policies towards these goals,” the agency said in an emailed statement.