From Wise Owl to Neelkantha: Ten facts about RBI Governor Urijit Patel

Last Updated: Tue, Sep 04, 2018 13:37 hrs
The RBI Governor Patel attends a news conference after the bi-monthly monetary policy review in Mumbai

Dr Urijit Ravindra Patel, born 1963, aka the Owl on Mint Street, needs little introduction.

The demonetization defined his work and his trademark silence.

An Indian citizen since 2013, Dr. Patel has been associated with various organizations and high-level as well as state-level committees in various advisory roles. Besides the IMF, he has worked with Gujarat Ministry of Finance, Reliance Industries, Dpartment of Economic Reforms, Competition Commission of India, Prime Minister’s task force on Infrastructure, Task Force on Direct Taxes, etc.

As Governor Patel completes two years in office, the jury is still out whether he has been a 'hawk' -- as prescribed by many economists to contain inflationary pressures and to tame the monster of loan defaults -- or a 'dove' as others, including those in the government, wanted him to always cut rates to boost growth.

He remains criticized for the demonetization, but in recent years has shirked from talking on demo and instead focusing on working towards other important tasks. takes a look at the various milestones in his two year tenure as the Central Bank's Governor. From the time, he took over the mantle from Dr Raghuram Rajan to the tackling of demonetisation, and his recent comments made from public outings.

The 24th Governor has made a number of quotes, quips, and announcements. From the eerie silence in 2016 to several management speeches at colleges in recent times, here is a collection that you must not miss. 

Less Chat, more unified Message


Experts and the media called his working style as less chat and more unified message during the initial days.

Around the eve of September 2016, Patel, a deputy Governor back then, was referred to industry circles as being close to Dr. Rajan. He had been labeled as an active banker, participating with active interest and equal caution.

Early 2016, Domenico Lombardi said, "As he becomes acquainted with the new responsibilities, he will improve his communication style as well". Lombardi was an economist who had served on the boards of the World Bank and the International Monetary Fund. This is what industry experts spoke about Governor Patel during his induction as the Governor.

Minutes within the official announcement of being appointed as the RBI governor, bonds and currency markets dropped. "The benchmark 10-year bond yield rose 4 basis points to 7.14%, while the rupee fell to a near one-month low of 67.17/67.18 to the dollar, compared with its close of 67.07," said a Reuters story dated 22nd August 2016.

He officially took to office as the Reserve Bank's 24th Governor on September 4th 2016.

Some of the men he piped to the post were KC Chakrabarty, who was to retire next year. Then there was R Gandhi, a name that had been speculated for almost a full year. Others being speculated were Anand Sinha, G Gopalakrishna of CAFRAL, and even Usha Thorat. Here is the full list

While his predecessor was referred to as the media's darling for explaining key economic concepts, Governor Patel remained largely cocooned. He may have purposely kept himself aloof from the paparazzi simply because wherever he went, the question linked to demonetization. Was it a success or a failure? Everybody has been asking for a simple answer.

Demonetization: Clear Intent to normalize

Pan-waala, Chai-waala, Raddi-Waala, Kaam-waali, Taxi Driver, everybody gave their dose of economics on what hit the nation on 8th November 2016.

Everybody, except for the 24th Governor of the Reserve Bank of India.

Was he hiding, was he unwilling to reveal, was he being told to shut up, so many questions left people puzzled.

How could a Governor go back on his own promise, seemed to be the major grouse.

Even as the issue went political, there were economic and certainly trade related perspectives that needed to be clarified. And, the pressure coming from unexpected quarters did not spare even the Prime Minister- Narendra Modi or even Arun Jaitley- the Finance Minister. It certainly did not spare the Governor.

"Either Prime Minister Narendra Modi or Finance Minister Arun Jaitley would be knowing the minute aspects of demonetization. The RBI Governor should have advised the government properly as to issues involved and the time needed for the banking sector to be ready for the same," D. Thomas Franco, Senior Vice President of the All India Bank Officers Confederation (AIBOC), had said in this report.

Bank's internal resources, the ATM industry, people standing in queues, all were fuming and complaining. Some chose to talk on Twitter, others in hushed voices. Yes, there was a voice, but not from the RBI governor, according to several allegations.

The Congress Party alleged that Urjit Patel was "afraid of revealing information on demonetization"

Patel in a PTI interview in November 2016 said that the central bank was taking all necessary actions to "ease the genuine pain of citizens" with a clear intent to normalize the things as early as possible. 

Successes in the two year tenure:

Some of the credit-worthy factors in Governor Patel's tenure are as follows:

An important direction from the RBI early in Governor Patel's tenure was to mandate credit bureaus to provide access to a free full credit report to individuals once a year.

Patel's tenure has also seen the RBI working on new guidelines for tackling cyber security concerns, as also pre-emptive cautionary warnings and directions on evolving challenges posed by crypto-currencies.

The RBI has also set up a new Enforcement Department as part of broader plan to develop a rule-based approach to deal with breaches of law, rules and directions and to make the enforcement process stringent and consistent.

As the financial health of banks had deteriorated over the last few years, the RBI has revised norms for prompt corrective action and promptly imposed them on some public sector lenders. The new framework encourages banks to eschew certain riskier activities and focus on conserving capital so that their balance sheets can become stronger.

The RBI has also introduced measures to make banking easier for public, including for senior citizens and differently-abled persons.

It has launched an aggressive awareness campaign on banking regulations and against frauds and introduced a structured communication channel called 'Mint Street Memo'. This exercise got global praise for its communication activities from the bank for International Settlements.

Role at Monetary Policy Committee

Within a month of Patel taking over the top job at the RBI, the Monetary Policy Committee (MPC) framework was introduced to decide on rates and has been functioning decisively since then on its primary objective of inflation targeting, according to expert.

The MPC is an important entity because it decides what interest rates you pay for your loans and the interest-rates you get for your investments in a bank.

Interest-rates kept too high would have meant public outcry; kept too low and it would have attracted the wrath of investors. The MPC for it to succeed had operate in the lines of what George Orwell suggests, "Everything in moderation, including moderation in itself."

But did it really?

We do not wish to delve on the job nature here and whether Governor Patel succeeded in maintaining the moderation. Inflation projections have certainly off-shot or at least been in sync with the RBI's own estimates. The MPC in the last two meetings came out with a rate-hike. Factors for the MPC’s decisions were positive Foreign Direct Investment flows, a rise in crude prices, stronger Greenback, a rise in the US economy, and global uncertainty around inflation numbers.

That, and also the factor of a rise in cash holdings, together with a rise in several sectors were factors for rate hikes.

The RBI has been reported as cautious, but it's still tough for economists to decode whether the 24th Governor has been dovish or hawkish. Read the latest MPC report.

Digest this number. Patel's predecessor, Rajan, the seer, made a whopping 150 basis point cut during his tenure. So far, rate-cuts are yet to be announced.

Both Rajan and Patel viewed inflation as a major evil, needing better control.

Patel at a press conference in 2015 spoke on the trend of accommodative monetary policies being adopted by developed economies. Back then, he quipped, "We are in the midst of the age of competitive depreciation and of a beggar-my-neighbour philosophy. It brings to mind an old African saying that when elephants fight, the grass suffers." The complete story is here.

Currency Woes:

The keywords for the media and press were Demonetization in 2016, GST in 2017, and in 2018 it is Forex and Trade Wars (On a second thought, 2018 had a better keyword- NIMO, Mehul Choksi, PNB, etc. That in later slides).

Crude oil prices have hovered back from a brink to a record high, trade related policies and the China-US angle has been reported every day; and so has the Rupee's constant losing streak.

Even as economists have suggested all is well on the losing front, the Rupee has making fresh record losses. In 2018, it was reported one among the most bleeding currencies.

By July, the Rupee had lost some 8% against the greenback. At the time of writing this story, the Rupee had slumped to Rs 71.37, according to an IANS story.

Patel held that currency wars could dent India's growth.

"We already had a few months of turbulence behind us and it looks like that this is likely to continue for how long I don't know. But the trade skirmishes evolved into tariff wars and now we are possibly at the beginning of currency wars," RBI Governor Urjit Patel said at a press conference dated August 1st 2018.

An Editorial worth noting:

Patel also wrote an editorial in the Financial Times titled 'emerging markets faced a double-whammy'. In the editorial, he warned that drying dollar funding from emerging market economies will result in a dollar double-whammy for emerging economies such as India.

He reasoned that "The Fed must adjust its balance sheet shrinkage to limit the effects of less liquidity."

A higher dollar can make our exports competitive, but they still make our Petrol and Diesel besides studying in the US a costly proposition. Rajan in his most recent public outing, an interview, suggested policy makers to look out for the widening Current Account Deficit than worry about the Rupee's weakness. "Going into election year, countries like India and Brazil should try their level best to look as good as possible," Rajan said.

The 'NeelKanth willing to consume poison':

Rajan, the former RBI governor had said that bank governance model needed cleaning up.

In the wake of scams, frauds and rising NPAs, the issues surrounding Gov Patel seem to be only compounding. In 2018, call it an ignominy or another keyword for the media to latch onto the Rs 13500 crore NiMo-PNB scam exposed the governance of India's public banks.

While industry estimates peg overall NPAs at over Rs 10 trillion, the RBI has said the stressed assets (gross NPAs plus restructured standard advances) remained elevated at 12.1% of gross advances at end-March 2018.

In March this year, while speaking at a lecture, Gov Patel said, "I have chosen to speak today to convey that we at the RBI also feel the anger, hurt and pain at the banking sector frauds and irregularities. In plain simple English, these practices amount to a looting of our country's future by some in the business community, in cahoots with some lenders."

"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 endeavors and get better with each trial and tribulation along the way," Patel said.

In another recent report prior to PNB scam, the Governor had been quoted saying that tackling bad debts needed at least $150 billion. Regulatory challenges, he said were impeding the tackling process.

"The government and the Reserve Bank are in dialogue to prepare a package of measures to shore up capital in a time bound manner,” he said.

After the PNB fraud was exposed, the RBI governor was grilled by a Parliamentary Panel. The panel sought to question him on the rising NPAs, and the reforms undertaken by the RBI. He sought to seek more powers for the RBI.

An Ideal Governor:

There is no crash course or a handbook of best practices that prepares an Ideal Governor. But a PTI story at best illustrates how a Governor could act.

The relationship between the Government and the governor is paramount. Frictions are bound to occur, but there is nothing better than D Subbarao's narration. Governor Subbarao, according to a senior banker narrated an incident involving his predecessor YV Reddy.

Y V Reddy while talking to someone over phone kept saying "No, no, no, no, no, yes, no, no, no".

Reddy later disclosed to Subbarao that he was talking to the then finance minister.

He explained that the only 'yes' was in a reply to a question on whether he was able to hear him.


Dr Patel, a Kenyan national until 2013 and armed with a Bachelors in Economics from the London School of Economics and a PhD, observed that it was wrong to blame economists for ills plaguing the economy.

The 'Wise Owl' in an address to a school said that blaming economists for ills plaguing the economy was "patently unfair".

"The fundamental mission of economists is not to forecast crises but to explain how the mankind behaves in the ordinary business of life and in doing so they do warn of crisis formations, suggest pre-emptive strategies and formulate mitigating policies that address those crises that slip through macroeconomic surveillance," Patel said.

He shared the example of an American economist Hyman Philip Minsky, who had researched on financial crises and causes, but attracted little mainstream attention during his life time. He said "it was only in 2007 when the subprime mortgage crisis erupted, that everyone started turning to his writings as they tried to make sense of the chaos engulfing global financial markets."

Since then, the beginning of a financial crisis is often referred to as the 'Minsky moment', Patel explained.

The Wise Owl

At a time when most economists used either the Hawk or Dove philosophy to categorize regulators, Dr Patel brought a new term- 'Wise Owl'.

"An owl is traditionally a symbol of wisdom. So, we are neither doves nor hawks, but owls and we are vigilant when others are resting," he said during an interaction.

The RBI governor's term usually lasts for a term of three years.

In his next term, the RBI Governor will be working alongside the government on various fronts including ambitious goals such as doubling farmers' income, boosting digital payments and providing easier funding to MSMEs.

We wish the Governor a successful and a great next term, and hope his economic reforms and theories do help bring in bringing about the much needed reforms and control inflation (Petrol at Rs 80 per litre in Mumbai is expensive, so is dining out, and even dreaming of pursuing an education abroad).

On a lighter note we seek to remind the Governor to choose a different bird than a Hawk, Dove or even Owl. After all, an Ullu (Hindi for Owl) is a slang for a fool.

If we could, we might suggest the Governor to consider the Peacock instead of an Ullu. The Peacock is the national bird of the country.

Also the Hindi for Peacock- More is what commoners are expecting anxiously. More Jobs, More Growth, and certainly More Strength to the Rupee.