India names Shaktikanta Das as new central bank governor

The appointment comes at a tumultuous time for the Reserve Bank of India, which is ensnared in a spat with the government over central bank autonomy.
The appointment comes at a tumultuous time for the Reserve Bank of India, which is ensnared in a spat with the government over central bank autonomy.PHOTO: REUTERS

MUMBAI (BLOOMBERG) - India named Mr Shaktikanta Das as the new governor of the central bank a day after Mr Urjit Patel shocked investors by stepping down before his term ended.

Mr Das, a former top Finance Ministry official, was appointed for a three-year tenure, making him the 25th governor of the 83-year-old institution.

The appointment comes at a tumultuous time for the Reserve Bank of India, which is ensnared in a spat with the government over central bank autonomy.

The new governor has choices to make: whether to let Prime Minister Narendra Modi's government have a tighter supervision of its functioning and extract more capital from the central bank to meet budget deficit, or defend the institution's independence.

Mr Modi, who is facing re-election early next year, also wants the RBI to loosen curbs on some of the weakest banks to ensure lending continues and economic growth gets a boost.

The government also wants liquidity taps to be opened for the crisis-ridden shadow banking sector, which has been making at least three out of 10 fresh loans in the past few years.

The crisis in the sector threatens consumption, the bedrock to growth in Asia's third-largest economy.