(Repeats story issued late on Thursday with no changes to text)
By Neha Dasgupta and Suvashree Choudhury
NEW DELHI/MUMBAI Aug 25 When Urjit Patel became
head of the Reserve Bank of India's monetary policy department
three years ago, the to and fro of bankers and traders meeting
officials for cosy, broad-ranging discussions abruptly ended.
Meetings go on to this day, but out went the kind of private
chats that could unsettle markets, occurrences that became known
as "open mouth operations", as opposed to open market operations
the RBI carries out.
As he takes over as RBI governor next month, market players
and economists who have met him expect Patel to instil the same
arm's length approach and unified communication to the
institution as a whole.
That is likely to involve acting as its chief spokesman and
waiting for scheduled reviews to discuss policy in public, which
some traders believe will bring more clarity and transparency to
the RBI's stance as long as Patel communicates it effectively.
"Too much communication can also confuse markets," said A.
Prasanna, an economist at ICICI Securities Primary Dealership
"We will expect clarity from the new governor in the October
policy," he said, referring to the next policy review which will
be Patel's first in charge.
"In case there are any changes in thinking, the policy day
will be a good opportunity for the new governor to lay that
Still, market participants also warned that excessive
distance could leave the RBI cut off from market thinking, and
make it harder to convey important feedback about its policies.
RBI had no comment for this article.
A push towards a more unified communications strategy would
mark an extension of outgoing governor Raghuram Rajan's drive to
transform what some saw as a ponderous organisation with 17,000
staff into a modern, nimble central bank.
It may go also further.
Rajan's tendency to veer off topic and address global
economic issues and India's social agenda raised hackles among
some of Prime Minister Narendra Modi's closest aides, who openly
criticised the RBI chief for talking out of turn.
Patel, widely seen as more introverted than the man he will
replace, must get used the limelight he has so far shunned, but
can be expected to stick more closely to the script, the sources
SMALLER, MORE FORMAL MEETINGS
As RBI deputy governor, Patel has made hardly any public
appearances, although he is widely seen as closely aligned with
Rajan on inflation and the need to clean up bad debt at banks.
That will be welcomed by foreign investors, who see Rajan's
push to control inflation as key to India's economic success,
along with Modi's promises of major reforms.
They may have to wait longer, though, for clues about the
RBI's latest thinking.
Meetings between RBI officials and market participants still
take place at the RBI, but they are smaller, with people called
in for more focussed talks about specific issues.
Market participants, who spoke on condition of anonymity so
as not to jeopardise ties with the RBI, also say Patel is
engaged at meetings, with one banker describing him as "actively
participating, asking questions and giving suggestions."
Another banker added: "You have to be very, very well
prepared to interact with him because he knows a lot of what is
At the same, though, Patel keeps his cards close to his
chest, avoiding giving away too much and confusing the markets
in the process.
In one oft-quoted example, bond markets fell sharply in
July, 2010, when a senior unnamed RBI official was quoted by
several media outlets expressing a much more hawkish stance than
that expressed by then RBI Governor Duvvuri Subbarao after a
meeting with reporters.
Patel's caution is also expected to extend to meetings and
conferences, where market players had long been used to having
RBI representatives participate.
Unlike previous editions, a senior RBI official from the
monetary policy department did not attend the Forex Association
of India's annual gathering last year. Rajan did, however,
address the audience at a separate event.
Patel's desire to avoid public appearances may suit his
character, but as governor that will change - a not
"As he becomes acquainted with the new responsibilities,
he will improve his communication style as well," said Domenico
Lombardi, an economist who has served on the boards of the World
Bank and the International Monetary Fund.
(Additional reporting by Devidutta Tripathy; Writing by Rafael
Nam; Editing by Mike Collett-White)