RBI chief Rajan named world banking’s ‘Governor of the Year’

Reserve Bank of India governor Raghuram Rajan has gained a second major award in just a little over a year in office. The London-based financial journal Central Banking named Rajan 'Governor of the Year' on Monday.

Dr Rajan said, "This is a recognition of the part the Reserve Bank of India and its staff have been playing in bringing macroeconomic stability to the Indian economy; in creating more competition and new growth opportunities in the banking and financial markets, as well as in expanding financial inclusion."

Rajan was formerly chief economist at the International Monetary Fund. He had earlier won the Best Central Bank Governor award for 2014 from Euromoney magazine (See: Rajan dubbed 'Central Bank Governor of the Year' by Euromoney).

The jury cited his "disciplined and focused approach" to tackling macroeconomic instability, his "deep understanding" of the root causes of economic problems and an "impressive leadership style" as reasons for him winning the award.

Rajan (51) is generally known by the public as one of the few persons who predicted the 2008 global meltdown. But he is also credited with stabilising the rupee and controlling stubbornly high inflation that rocked India's economy for the past three years.

Within a month of his taking over the RBI in September 2013, the rupee recovered from 68 a dollar to 62 a dollar. Consumer price inflation fell from an all-time high of 11.16 per cent in November 2013 to a record low of 4.38 per cent in November 2014.

Inflation edged up to 5 per cent in December 2014 as the base effect advantage wore off, but the rise is within RBI's January 2016 inflation target of 6 per cent.

Dr Rajan has been at the forefront of the much-needed reforms in public sector banks, where bad assets have risen to 12.9 per cent of advances as on September 30, 2014. The same ratio for private sector banks was at 4.4 per cent.

He has put in place a new mechanism for early detection of stressed assets and a central repository of information for large borrowers to check defaults. More debt recovery tribunals and stringent bankruptcy laws for speedy disposal of stressed cases may soon be on their way.