“As we have to be conscious of the fact that we do maintain continuity and stability, we cannot be stuck to it, and we have to be alert and agile to meet challenges,” Malhotra said in his first interaction as Governor with media.
In his brief statement, Malhotra also stressed that the central bank will continue to interact with all segments, including financial regulators, state governments and the Centre, to continue the Reserve Bank’s legacy.
“We do not have monopoly of all knowledge,” he said, while stressing on the importance of wide consultations with other stakholders.
The former revenue secretary emphasised that RBI will extensively use technology to further promote financial inclusion.
Malhotra assumed office as the 26th Governor of the RBI earlier today, succeeding his role as the former Revenue Secretary. He will serve a three-year term as the head of India’s central bank.Malhotra succeeds Shaktikanta Das who completed his term as the RBI chief on Tuesday.The Princeton-educated 56-year-old Malhotra will helm the central bank as slowing economic growth and persistent inflation create a rift between the views of the central government and the RBI on the need for lower interest rates.
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Bond yields fell and the rupee weakened following Malhotra’s appointment as traders ramped up bets for an interest rate cut when the central bank reviews policy in February.
The six-member rate-setting panel left interest rates unchanged last week but cut banks’ cash reserve ratio to support liquidity and growth.
“Under Das’ leadership, we had forecast that cuts to the repo rate would only begin in April,” said Shilan Shah of Capital Economics.
“But given the announcement, we are now forecasting the first 25 basis point cut at Malhotra’s first meeting in charge in February.”
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On Tuesday, he told reporters “one has to understand the turf, all perspectives and do what’s the best for the economy.”
A mathematical mind
An engineering graduate, Malhotra was known within the federal finance ministry for his focus on data and trying to build predictive models for government tax revenue.
A person who worked with Malhotra said he was a “hard taskmaster” and held daily review meetings with the “memory of an elephant”. He reads between the lines and focuses on micro details, said the source, who declined to be named.
However, he is known for not overstepping his role or interfering in matters that did not directly involve him, another person said, who also declined to be named.
He shared a cordial relationship with Finance Minister Nirmala Sitharaman, and took decisions on long pending taxation issues, the source added.
These included a contentious call to tax online gaming companies.
Malhotra also led global anti-money laundering watchdog FATF’s evaluation of India, which helped the country get good ratings, said the first source.
In contrast to the RBI’s stand to virtually ban cryptocurrencies, the finance ministry under Malhotra tried to make cryptocurrencies mainstream by requiring virtual digital asset service providers to register with the Financial Intelligence Unit, said the first government source.
He previously helmed the department that listed state-run behemoth Life Insurance Corp.