How Nirav Modi made a reticent Urjit Patel turn eloquent

NEW DELHI: Urjit Patel, the Governor of the Reserve Bank of India (RBI), has been known to be a man of few words. His reticent image was all the more striking as he took charge from Raghuram Rajan, the celebrity economist who aired provocative views on not just his own job but the government policy and social and political issues too. Never at a loss for words, Rajan was known for his sharp one-liners and witty comebacks and often called the James Bond of the financial world. He even supplied a one-liner in the style of the British spy character: “My name is Rajan and I do what I do.”

Patel’s silence on demonetisation made him an easy target for critics. Most of the public statements on demonetisation have been made by economic affairs secretary Shaktikanta Das. The impression was the government had sidelined RBI and usurped its policy role, confining it to mere execution. The controversy on whether the RBI was part of the decision to implement demonetisation raged for a long time, and Patel seemed to be missing in action. Compared to the larger-than-life image of his predecessor, Patel seemed submissive and reluctant.

But the Nirav Modi-PNB scam has forced Patel to shun reticence and speak out on several contentious issues without mincing words. Yesterday, Patel rejected accusations that the regulator’s laxity was to blame for the Rs 13,000-crore fraud at state-owned Punjab National Bank, suggesting instead that laws need to be changed to ensure punitive action can be taken in time and effectively putting the onus on the government.

Patel didn’t stop at just defending the central bank. He made a pitch for withdrawal of legal immunity from RBI regulations that PSBs enjoy, saying it had led to considerable emaciation, if not complete removal, of RBI powers over corporate governance.

Surprisingly candid for an RBI governor, Patel also made an indirect case for privatisation or reducing the role of state-owned lenders. He said the government should decide what to do with public sector banks if it wanted to optimise the use of taxpayer money.

Like his predecessor Rajan, Patel did not avoid to communicate with the common people this time. Quite uncharacteristically for him, he turned rather eloquent, citing the Hindu mythology to express his position, a clear move to address the people at large. Speaking in the context of ongoing fight against corruption, he said, “If we need to face the brickbats and be the Neelakantha consuming this poison, we will do so as our duty. We will persist with our endeavours and get better with each trial and tribulation along the way,” he said. He went on to extend the mythological comparison, saying that promoters and banks should seek to be on the side of the devas (the gods) rather than asuras (the demons) in this amrit manthan.

Despite his image of a reticent, submissive man, Patel has always shown quiet strength when it was needed. He withstood pressures from various sides after demonetisation, stuck to a low-inflation regime, didn’t lap up the proposal to create a bad bank and opposed farm debt waivers, calling them moral hazards posing inflation risk and undermining an honest credit culture.

With his robust defence of the central bank and castigation of public sector banks, Patel has buried the image of a central banker of few words. And with his mythological references, he has shown he can find eloquence when required.

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