He always ruled out being a ‘heerleader for the markets’, but it was the multiple rate cuts by RBI Governor Raghuram Rajan and his ceaseless efforts to keep inflation under check that turned out to be the biggest cheers for the Indian financial markets in 2015.
It was one of his most famous oneliners – “I am Raghuram Rajan and I do what I do” — that eventually summed up the year 2015 for the central bank and the same is expected to hold true in the New Year as well when RBI cracks its whip on banks to clean up their balancesheets and also compete with the financial markets when it comes to being source for funds.
Rajan’s term ends on September 3, 2016 and whether the outspoken Governor gets an extension, like his most of his predecessors, or not is something that will be keenly watched in the New Year. It would be interesting in the context of the public postures he has taken on many issues ranging from ‘Making in India’ to his reference to Hitler and on intolerance, which have been interpreted in various quarters as being against the current regime.
At the same time, there have been words doing the rounds that Rajan is personally liked by the Prime Minister and there have been rumours about he being in race for some larger roles including the next head of International Monetary Fund, where he has served in the past as the Chief Economist.
Looking back at 2015, the year will also be remembered for cutting short the wider powers of the central bank, including the Governor’s own prerogative to set the rates or moving the public debt management out of the Mint Road. During the year, RBI became an inflation-targeting central bank, while Rajan also kick-started the era of differentiated banking by giving out in-principle approvals to 11 payments banks and 10 small finance banks.
While the aspirants of small finance banks are populated largely by microfinance institutions, the payments bank licencees are storeyed names from the corporate world such as Ambanis, Birlas, Mahindras as also the telecom biggies like Airtel and Vodafone.