India

India re-appoints central bank governor Das for 3 more years

2 minute read

The Reserve Bank of India (RBI) Governor Shaktikanta Das greets the media as he arrives at a news conference after a monetary policy review in Mumbai, India, February 6, 2020. REUTERS/Francis Mascarenhas

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MUMBAI, Oct 29 (Reuters) - India has re-appointed central bank governor Shaktikanta Das for three more years or until further orders, in a move welcomed on Friday by markets and economists.

Under Das, the Reserve Bank of India (RBI) has cut key interest rates to record lows and infused massive rupee liquidity into the banking system to shore up an economy hit by the COVID-19 pandemic.

The cabinet's appointments committee approved the decision to re-appoint Das late on Thursday. He first took the helm in December 2018, moving from the position of secretary of the department of economic affairs in the finance ministry.

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The extension is longer than the norm of a two-year term in the last two decades but analysts said that was probably because of the economic situation and the work Das has done.

The move is a sign of the government's "continued trust", wrote Barclays economist Rahul Bajoria.

"Under Governor Das, the central bank has done the heavy lifting to support the economy through the COVID crisis, with fiscal policy playing a supportive role," he added.

"We also view the governor's reappointment as a vote of confidence in the RBI's policy stance."

The central bank has also played a key role in ensuring the government's massive market borrowing programme to support the economy during the pandemic went smoothly without much disruption to markets.

The rupee was trading stronger at 74.74/75 per dollar by 0600 GMT from its close of 74.92, while the benchmark 10-year bond yield was steady on the day at 6.37%.

With markets preparing for reversal of the ultra-loose monetary policy, traders see stability and continuity in the top leadership of the RBI as crucial.

The central bank has taken a more consultative approach with markets under Das, who has been keen to boost transparency and direct communication.

"We continue to expect the RBI to pursue a relatively dovish stance while it focuses on growth, amid a more flexible inflation-targeting regime that has evolved under Governor Das," Bajoria said.

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Editing by Edwina Gibbs and Clarence Fernandez

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