Raghuram Rajan gets going at Mint Road

Central bank watchers say one of Rajan's first priority will be to rein in rupee which has depreciated 5% in August

Raghuram Rajan, clearly, is in no mood for a lengthy induction as the next governor of the Reserve Bank of India.

On his first day as officer on special duty in the central bank, 17 days before taking formal charge, Rajan checked into his office, which is on the 18th floor of the headquarters on Mint Road – the same floor where the governor has his office — and met all top officials, including the deputy governors and executive directors to understand their responsibilities and the departments they handle. Rajan went to the cabins of the deputy governors and EDs for the one-on-one meetings.

Central bank sources said Rajan started the day with a breakfast meeting with Urjit Patel, deputy governor in charge of monetary policy, which was not a surprise considering the governor-designate has to unveil the mid-quarter review of the monetary policy on September 18.

This was followed by a meeting with Anand Sinha, who is looking at the issue of banking licences. The lunch meeting was with H R Khan who is charge of the foreign exchange department among other portfolios.

The style he adopted in the meetings was pretty informal as his tenure as the chief economic advisor in the finance ministry ensured he knew most of the top officials already, the sources said. Rajan, sources said, sought feedback from top officials on various issues, including short, medium and long-term goals, issues, expectations and the way forward.

This is the first time that RBI is having an officer on special duty.

Rajan’s sense of urgency on the first day is understandable as he would come in as governor at a critical time for India’s external sector. Even domestically, growth and job creation are falling, even as consumer price inflation remains high.

According to central bank watchers, one of Rajan’s first priority will be to rein in the rupee which has depreciated five per cent in August itself and is hitting lifetime lows every other day. Several steps taken by the central bank in the recent past, including liquidity tightening measures, have proved futile as the rupee’s movement has been largely one way. Apart from supporting the rupee, bringing back growth will be on Rajan’s agenda as GDP growth for 2012-13 was lowest in a decade.

Rajan will have to face other problems, too. For example, public sector banks are sitting on a pile of bad debts. RBI's recent decision to allow business houses to set up banks is another priority area.