Sanjay Malhotra takes charge as 26th RBI governor

Sanjay Malhotra assumed office as the 26th Governor of the Reserve Bank of India on Wednesday, 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.

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.”

On Tuesday, he told reporters “one has to understand the turf, all perspectives and do what’s the best for the economy.”

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